HON’BLE SRI JUSTICE R. SUBHASH REDDY Writ Petition Nos.19374 of 2002 & 20133 of 2006 Common Order: As much as the parties in both these writ petitions are common and the issues, which arise for consideration, are inter-connected, they are heard together and disposed of by this common order. 2. W.P.No.19374 of 2002 is filed by Ukkunagaram Merchants Welfare Association, Visakhapatnam seeking Mandamus declaring the action of the respondents in enhancing the licence fee for the shops allotted to the members of the petitioner-association over 150% of the existing licence fee and further demanding security deposit and advance amount of Rs.3,000/- for low-cost shops and Rs.15,396/- for regular shops as illegal and arbitrary and a consequential direction not to enhance the present rates of licence fee. 3. The Visakhapatnam Steel Plant Township, which is known as Ukkunagaram, is established by the Visakhapatnam Steel Plant and is renamed as Rashtriya Ispat Nigam Ltd. The said township is established by the Steel Plant for the purpose of accommodation to its employees, security personnel, contracting agencies, staff members of schools etc. In the township, certain shopping complexes were constructed as much as township is situated at a distance of 30 kms., from Visakhapatnam and 10 kms. from Gajuwaka Municipality. In the township, there are about 114 regular shops and 38 low- cost shops. Low-cost shops are for doing businesses like pan shops, saloons, milk booths, cobbler shops, newspapers vendors etc. Regular shops are for doing businesses like cloth merchants, general stores, medical stores etc. Out of the total number of 114 regular shops, the first respondent- company issued licences for about 47 shops during the years 1984 to 1986 by entering into agreements. During the same period, about 38 low-cost shops were also issued licences. The members of the petitioner-association are the licencees for the said shops and they have entered into individual agreements of licence with a clause for payment of licence fee, advance licence fee, security deposit etc. As per the terms of the agreement, there is a clause for enhancement of licence fee also. The licences are issued initially for a period of 11 months and continued thereafter from time to time. When the respondents had issued notices for enhancement of licence fee for 47 regular shops and 38 low-cost shops, informing about the proposed enhancement and also for depositing the security deposit and advance amount, the petitioner-association filed W.P.No.19374 of 2002. 4. In this writ petition, it is the case of the petitioner- association that unilateral enhancement of licence fee and security deposit over 150% than the existing licence fee is illegal and arbitrary. It is their grievance that as much as the township is restricted to the employees of the respondent- company and in view of the minimum business they are doing, they are not in a position to pay the licence fee at the increased rates. It is stated that most of the employees of the first respondent-company do not reside in the township and further in view of the availability of markets, there is no scope for the members of the petitioner-association for doing better business. 5. So far as W.P.No.20133 of 2006 is concerned, the petitioner-association is seeking directions to the respondents to implement the notification issued by the Greater Visakhapatnam Municipal Corporation, notifying monthly rental values, in exercise of powers under Section 212 of the Hyderabad Municipal Corporation Act, 1955, which is made applicable to the Municipal Corporation of Visakhapatnam, for the purpose of charging licence fee to the shops in the township. In this writ petition, it is the case of the petitioner- association that when monthly rental value is notified by the Municipal Corporation, in exercise of statutory power under the provisions of the Act, it is obligatory on the part of the first respondent-company to charge licence fee as per the monthly rental value as notified by the Municipal Corporation. 6. Separate counter affidavits are filed in the writ petitions. 7. In W.P.No.19374 of 2002, the first respondent-company has filed counter affidavit. In the counter affidavit, while, generally, denying the various allegations made by the petitioner-association, it is stated that 47 regular shops and 38 low-cost shops were allotted during the years 1984 to 1986 by entering into agreements. It is stated that subsequent to the year 1993, respondents have allotted 33 regular shops by conducting auction and in the auction so conducted, the Steel Plant received bids ranging from Rs.114/- to Rs.205/- per sq. meter, whereas regular shops allotted during the years 1984 to 1986 were on payment of licence fee between Rs.17/- to Rs.19/- per sq. meter. It is also stated that over a period of time, the maintenance expenses have increased and considering the disparity in the rates of licence fee paid by 33 shops allotted on auction and 47 shops allotted during the years 1984 to 1986, respondents have decided to enhance the licence fee. Accordingly, taking various factors into consideration, the first respondent thought it fit to enhance the licence fee to Rs.40/- per sq. meter for regular shops and to enhance the licence fee from Rs.100/- to Rs.250/- for low-cost shops with an annual enhancement of 5%. It is also averred in the counter affidavit that as the licences are issued pursuant to agreements entered into with the individual allottees, which provide clause for enhancement of licence fee, and as the licence fee is enhanced keeping in mind the disparity between the rates of licence fee of the allottees of similar shops during the years 1984 to 1986 and the offers made in the auction conducted in the year 1993; as such, there is no illegality or any arbitrariness so as to interfere with the said enhancement, under Article 226 of the Constitution of India. 8. Similarly, in W.P.No.20133 of 2006, a separate counter affidavit is filed. In the counter affidavit, while, generally, denying the allegations of the petitioner-association, it is stated that the notification issued by the local authority, fixing monthly rental value, for the purpose of determining the property tax payable, cannot have any effect on the owners of the premises, to restrict their right to fix lease or licence fee. As such, it is the case of the respondents that the relief sought in the writ petition is misconceived and there is no basis at all for seeking such relief. It is stated that the provision under Section 212 of the Hyderabad Municipal Corporation Act and the Rules made thereunder enable the Corporation to fix annual rental value by taking into consideration certain parameters mentioned therein. It is further stated that the terms of agreement provides for payment of licence fee, advance licence fee and security deposit and there is a clause relating to enhancement of licence fee also. It is also stated that out of 85 shops for which notices were issued for enhancement, licencees of 28 shops expressed their willingness to pay licence fee at enhanced rates and in spite of the same, writ petitions are filed on behalf of all the members of the petitioner-association. 9. Heard Sri Noushad Ali, learned counsel, for Sri M.L. Ali - learned counsel for the petitioners and Sri W.B. Srinivas, learned counsel, for Sri V. Ravinder Rao - learned counsel for the respondents. 10. It is contended by the learned counsel for the petitioners that the action of the respondents in issuing notices for enhancement of licence fee over 150% of the existing licence fee is illegal and arbitrary. It is submitted that grant of licences to the members of the petitioner-association is pursuant to agreements entered into with such members and the decision taken by the first respondent, which is a Govt. company, should be in conformity with the principles under Article 14 of the Constitution of India. It is submitted that in view of the nature of business being done by the members of the petitioner-association, they cannot be deprived of the licenced premises by enhancing the licence fee more than 100% of the existing licence fee. It is further submitted that as much as the notification, fixing monthly rental value, is notified by the Municipal Corporation, having surveyed various areas, it is obligatory on the part of the respondents to follow the same for the purpose of charging licence fee for the members of the petitioner-association. In support of his submissions, learned counsel for the petitioners has relied on judgments of the Hon’ble Supreme Court in the cases of M/s. Dwarakadas Marfatia and sons v. Board of Trustees of the Port of Bombay[1] and Bharat Petroleum Corporation v. Maddula Ratnavalli and others[2]. 11. On the other hand, it is contended by Sri R. Ravinder Rao, learned counsel appearing for the respondents, that licences are granted to the members of the petitioner- association by entering into agreements with them, with a clause which empowers the first respondent company to enhance the licence fee; as such, it is not open to the petitioner-association to challenge such enhancement in absence of deprivation of any right of the petitioner, either fundamental or statutory. It is submitted that with regard to regular and low-cost shops, time to time, licences were issued and further keeping in mind the fact that the licence fee fetched in the auction conducted for the remaining shops is much more higher, the licence fee being paid by the members of the petitioner-association is enhanced, which is far less than the fee for the remaining shops. It is further submitted that as much as the licence fee is in accordance with the terms of the agreement and the same is fixed keeping in mind the disparity existing between similarly placed persons, it cannot be said that the action of the respondents is arbitrary and illegal. It is further submitted that the notification issued by the Municipal Corporation, fixing monthly rental value, in exercise of power under Section 212 of the Hyderabad Municipal Corporation Act, 1955 is on a different consideration altogether and the same is not binding on the first respondent-company, which owns shops in the complexes constructed by it. The learned counsel appearing for the respondents, in support of his submissions, relied on a judgment of the Hon’ble Supreme Court in the case of Rajasthan Housing Board and another v. G.S. Investments and another[3]. 12. In view of the above submissions of the learned counsel, two aspects arise for consideration in these writ petitions. Firstly, whether the enhancement of licence fee and the security deposit by the first respondent-company is illegal so as to hold that such action of the respondents is not in conformity with the Rights guaranteed under Article 14 of the Constitution of India. Secondly, for the purpose of charging licence fee, whether a notification issued by the Municipal Corporation, fixing monthly rental value, in exercise of power under Section 212 of the Hyderabad Municipal Corporation Act, 1955, is binding on the first respondent-company. 13. It is not in dispute that the shops in question are constructed by the first respondent-company with its own funds for the purpose of providing facilities to the residents of the township and the employees working in the first respondent-company. The shops for which licences are issued, are of two categories, i.e., one is regular shops and the other is low-cost shops, it is stated that low-cost shops are being used for businesses like pan shops, saloons, cobbler shops etc., and regular shops regular shops are being used for businesses like clothing, medical and general stores etc. Out of the 114 regular shops, licences were issued for about 47 shops during the years 1984 to 1986 from time to time and at the same time licences were also issued for 38 low-cost shops and the licencees have entered into agreements and are doing businesses by taking possession of the shops, pursuant to such agreements. The agreements also provide a clause for enhancement of licence fee. Though allotment of shops was made by granting licences from 1984 to 1986, for the purpose of issuing licences further, it is evident from the counter affidavit that 33 regular shops were put to auction from 1993. It is stated in the counter affidavit that in the auction so conducted, the first respondent-company received bids ranging from Rs.114/- to Rs.205/- per sq. meter, for the regular shops, whereas the regular shops which are allotted to the licencees during the years 1984 to 1986 were paying licence fee of Rs.17/- to Rs.19/- per sq. meter. Though in the auction conducted after 1993, the first respondent-company received bids ranging from Rs.114/- to Rs.205/- per sq. meter; in spite of the same, the enhancement is Rs.40/- per sq. meter, which is far below the bids received in public auction. Similarly, for low-cost shops, Rs.100/- was being collected and the same has been enhanced to Rs.250/-. For both the categories of shops, there is a clause for an annual enhancement of 5%. In that view of the matter, there is reasonable basis for enhancing the licence fee from Rs.17/- to Rs.19/- per sq. meter for regular shops, to Rs.40/- per sq. meter and from Rs.100/- to Rs.250/- per sq. meter for low-cost shops, with a condition of 5% annual enhancement. Though, in the judgment of M/s. Dwarakadas Marfatia (1 supra), the Hon’ble Supreme Court held that even in contractual matters, all actions including contractual dealings are subject to judicial review and the action of the State and its instrumentalities must be reasonable, further, in the case of Bharat Petroleum Corporation Ltd., (2 supra), the Supreme Court has held that reasonableness and non-arbitrariness are hallmarks of an action by the State and reasonable action is required on the part of the State even where it is acting as a “landlord” or “tenant”. Keeping in mind the principles laid down by the Hon’ble Supreme Court in the judgments referred above, it is to be examined in each and every case whether the action complained is just and proper or whether it is arbitrary. In the present case, it is to be noticed that, when auction was conducted for similarly located shops in the township, they have fetched higher licence fee than the fee, which is sought to be fixed. In that view of the matter, by no stretch of imagination the action of the respondents in enhancing the licence fee can be said to be either illegal or arbitrary so as to interfere with the decision taken by the first respondent- company, in these petitions filed under Article 226 of the Constitution of India. 14. Further, the judgment relied on by the learned counsel for the respondents, in the case of Rajasthan Housing Board (3 supra), supports the case of the respondents as much as in the said judgment, the Hon’ble Supreme Court has held that while issuing tenders if the Government tries to get the best person or the best quotation the question of infringement of the Rights guaranteed under Article 14 of the Constitution of India will not arise. In view of the rational basis adopted by the first respondent-company in fixing/enhancing the licence fee, as is evident from the counter affidavit, wherein reasons for such enhancement are elicited, it cannot be said that such enhancement of licence fee is illegal or arbitrary and that there is encroachment of Fundamental Rights guaranteed under Article 14 of the Constitution of India. At the same time, I find that there is no basis either for the petitioner-association to seek directions to apply the rental value notified, under the Hyderabad Municipal Corporation Act, 1955, which is made applicable to Visakhapatnam Municipal Corporation, for the purpose of fixing rents by the first respondent-company. The notification issued by the Visakhapatnam Municipal Corporation for fixing the monthly rental value, in exercise of power under Section 212 of the Hyderabad Municipal Corporation Act, is based on the norms laid down in the Act, to achieve the object of the same, which is wholly different and distinct. Merely because such rental value is notified, for the purposes of implementation of the provisions of the Hyderabad Municipal Corporation Act, 1955, the same cannot restrict the first respondent-company, which is the owner of the shopping complexes, to follow the fair procedure, which is adopted based on the highest licence fee fetched in the auction, for fixing the licence fee for the remaining shops. 15. For the foregoing reasons, both the writ petitions deserve to be dismissed and are accordingly dismissed, however, in the circumstances, without any order as to costs. ____________________ R. SUBHASH REDDY, J. September 15, 2009. MRR [1] (1989) 3 SCC 293 [2] 2007 (6) SCC 81 [3] 2007 (1) SCC 477