IN THE HIGH COURT OF JUDICATURE AT MADRAS DATED:10.01.2011 CORAM: THE HONOURABLE MR.JUSTICE V.DHANAPALAN W.P.Nos.12778 and 20304 of 2010 W.P.No.12778 of 2010: 1. P.N.Chinnasamy 2. P.Nagaraj 3. K.Rajasekar 4. L.Jothimani 5. N.Nanjukutti 6. K.Thamilarasan 7. M.Palanisamy 8. N.Baskaran 9. M.Palanisamy 10. Veluchamy 11. D.Dhanamani 12. C.Kembaiyan 13. M.Mallika 14. R.Arumugam ... Petitioners vs. 1. The Assistant Director of Town Panchayat, Coimbatore District, Coimbatore. 2. The Executive Officer, Periyanaickenpalayam Selection Grade Town Panchayat, Coimbatore – 641 020, Coimbatore District. 3. D.Rajkumar 4. C.Udayakumar 5. R.Sandosh 6. M.Loganathan 7. M.Deepakumar 8. S.Jagannathan 9. M.Vijayakumar 10. K.Gopal 11. P.R.Manoharan ... Respondents (R3 to R11 impleded as per order dated 21.9.2010 in M.P.4/2010 inW.P.No.12778/2010 by VDPJ) https://hcservices.ecourts.gov.in/hcservices/ Writ Petition filed under Article 226 of the Constitution of India praying for the issuance of a writ of certiorarified mandamus to call for the records issued by the 2nd respondent by way of impugned notification in Na.Ka.No.696/09 A1; dated 07.06.2010 and to quash the same and to direct the respondents to renew the shops belonging to the petitioners for a further period of 3 years from 01.06.2010 to 30.06.2013 by accepting 15% enhanced rent. W.P.No.20304 of 2010: 1. P.N.Chinnasamy 2. A.Bannari 3. R.Gunavathi 4. D.Dhanamani ... Petitioners vs. 1. The Director of Town Panchayat, Kuralagam, Chennai 600 108. 2. The Assistant Director of Town Panchayat, Coimbatore District, Coimbatore. 3. The Executive Officer, Periyanaickenpalayam Selection Grade Town Panchayat, Coimbatore 641 020. Coimbatore District. ... Respondents Writ Petition filed under Article 226 of the Constitution of India praying for the issuance of a writ of certiorarified mandamus to call for the records issued by the 3rd respondent by way of impugned notification in Na.Ka.No.696/09 A1; dated 16.08.2010 and to quash the same and to direct the respondents to renew the shops belonging to the petitioners for a further period of 3 years from 01.09.2010 to 31.08.2013 by accepting 15% enhanced rent. For Petitioner in both W.Ps. : Mr.S.Ramesh For R-1 in W.P.No.12778/2010 : Mr.S.Gopinathan, & R1 & R2 in W.P.No.20304/2010 Additional Government Pleader and Mr.R.Neelakandan, Government Advocate For R-2 in W.P.No.12778/2010 : Mr.L.S.M.Hasan Fizal, & R-3 in W.P.No.20304/2010 Government Advocate For R3 to R11 in W.P.No.12778 of 2010 : Mr.A.Mohammed Ismail https://hcservices.ecourts.gov.in/hcservices/ C O M M O N O R D E R As 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 https://hcservices.ecourts.gov.in/hcservices/ 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. https://hcservices.ecourts.gov.in/hcservices/ 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/A1, 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 https://hcservices.ecourts.gov.in/hcservices/ 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 https://hcservices.ecourts.gov.in/hcservices/ 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 AIR 2000 Madras 393 in the case of Tamil Nadu Municipal Shop Merchants Association and etc. vs. State of Tamil Nadu and others "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, https://hcservices.ecourts.gov.in/hcservices/ having come into possession by way of public auction, they cannot now oppose public auction." (ii) yet another decision of this court reported in (2008) 1 MLJ 682 in the case of M.K.M.Geeyavudeen and others vs. Commissioner, Pudukottai Municipality, Pudukottai "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 https://hcservices.ecourts.gov.in/hcservices/ (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 1970 (2) SCC 803 in the case of The Guntur Municipal Council vs. The Guntur Town Rate Payers' Association etc. "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 others, 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. https://hcservices.ecourts.gov.in/hcservices/ 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