IN THE HIGH COURT OF JUDICATURE AT MADRAS DATED: 16.9.2011 CORAM: THE HONOURABLE MR.JUSTICE V.DHANAPALAN Writ Petition Nos.16731 and 16812 of 2011 & M.P.Nos.1 and 2 of 2011 (in each case) N.Kannan .. Petitioner in W.P.No.16731 of 2011 S.Soundararajan .. Petitioner in W.P.No.16812 of 2011 Vs. 1. The District Collector, Dharmapupri District, Dharmapuri. 2. The Block Development Officer, Harur Panchayat Union, Harur, Dharmapuri District. .. Respondents in both the Writ Petitions Writ Petitions under Article 226 of the Constitution of India, praying for issuance of Writs of Certiorarified Mandamus, to call for the entire records of the second respondent's Auction Notice issued in Proceedings in Na.Ka.No.1308/10/A2, dated 8.7.2011 and quash the same insofar as the auction of the petitioner's shop No.3 (in W.P.No.16731 of 2011) and the petitioner's shop No.1 (in W.P.No.16812 of 2011) are concerned situated in Harur Panchayat Union Building, Harur and thereby direct the respondents to renew the lease of the shop No.3 (in W.P.No.16731 of 2011) and the shop No.1 (in W.P.No.16812 of 2011) for a further period of three years as per G.O.Ms.No.92, Municipal Administration and Water Supply Department, dated 3.7.2007 in pursuance of the petitioners' representations dated 20.5.2011(in W.P.No.16731 of 2011) and dated 16.5.2011 (in W.P.No.16812 of 2011). For petitioners : Mr.K.A.Ravindran for M/s.Durai Gunasekaran For respondents : Ms.V.M.Velumani, Spl.G.P. ORDER By consent of the learned counsel appearing for the parties, the Writ Petitions themselves are taken up for disposal. https://hcservices.ecourts.gov.in/hcservices/ 2. What is challenged in these writ petitions filed by the respective petitioners, is the auction notice issued by the second respondent in proceedings in Na.Ka.No.1308/10/A2, dated 8.7.2011, seeking to quash the same insofar as the auction of the petitioners' shop Nos.1 (in W.P.No.16812 of 2011) and 3 (in W.P.No.16731 of 2011) are concerned, situated in Harur Panchayat Union Building, Harur and the petitioners sought for a consequential direction to direct the respondents to renew the lease of the said shops for a further period of three years as per G.O.Ms.No.92, Municipal Administration and Water Supply Department, dated 3.7.2007 in pursuance of the petitioners' representations dated 16.5.2011 (in W.P.No.16812 of 2011) and dated 20.5.2011 (in W.P.No.16731 of 2011). 3. It is the case of the petitioners that they were declared as the highest bidders for lease of the respective shops situated in Harur Panchayat Union Building, Harur in the year 2004 and 2006 respectively, which are under the control of the second respondent. The second respondent used to conduct the auction of the shops once in 11 months overlooking the Government Order in G.O.Ms.No.92, Municipal Administration and Water Supply Department, dated 3.7.2007. For the past seven years, the petitioners have been declared as the highest bidders and for 2010-2011, the bid amounts for the shops, namely Shop No.3 (in W.P.No.16731 of 2011) was Rs.8,200/- and for shop No.1 (in W.P.No.16812 of 2011) was Rs.3,700/-. The petitioners have been paying the rent regularly without default and running the hotel and xerox centre respectively in the said places, in the name of Kannan Hotel (in W.P.No.16731 of 2011) and Vetri Xerox (in W.P.No.16812 of 2011) respectively. 4. According to the petitioners, as per the said G.O., the shops owned by the Municipalities and Panchayats are to be given in auction with the following conditions: (i) for the first time, all the immovable properties of the Municipalities have to be auctioned; (ii) Municipal shops are auctioned for three years' period. On the expiry of the 3rd year, it can be renewed automatically upto 9 years. The lease amount has to be enhanced 15% once in 3 years and it applies to the present leases; (iii) the lessees have been given preference after the expiry of 9 years with an option to renew the lease for a further period of 9 years on assessing the rent. If the lessees do not agree to renew the leases, the property can be brought to auction. 5. The petitioners have been carrying on the business in the said shops for the past 7 years and 5 years respectively and they have another two years and four years as per the abovesaid G.O. to renew the leases for two years and four years respectively at the https://hcservices.ecourts.gov.in/hcservices/ enhanced rent of 15% over the present rent. The petitioners have got another nine years' period to renew the leases as per Clause 3 of the abovesaid G.O. on the expiry of nine complete years. 6. Since the petitioners' lease expired on 31.3.2011, they have made representations to the respondents on 20.5.2011 and 16.5.2011 respectively to renew the lease for a further period of three years by enhancing the rent for 15% on the present lease amount. The said representations have been acknowledged by the respondents, but were considered till date. They are under the hope that their leases would be renewed automatically by applying the said G.O. dated 3.7.2007, but to their shock and surprise, the second respondent issued the impugned auction notice dated 8.7.2011, in and by which, the shop Nos.1 and 3 would be brought to auction on 18.7.2011 at 11 a.m. in the second respondent's Office. Aggrieved by the said action of the respondents, the petitioners challenged the said auction notice dated 8.7.2011 seeking a direction to the respondents to consider their representations on the ground that the action of the respondents is against the said G.O. and their right will be prejudiced if their representations are not considered. 7. The second respondent has filed separate counter affidavits with identical averments, inter-alia stating as follows: (a) The Writ Petitions are misconceived and are not maintainable either in law or on facts. The petitioners have filed the above writ petitions on the misconception that G.O.Ms.No.92, Municipal Administration and Water Supply Department, dated 3.7.2007 is applicable to the facts of the present cases. On the other hand, only the Tamil Nadu Panchayats (Procedure for conducting Public Auction of Leases and Sales in Panchayats) Rules, 2001, (for short, 'the Rules') are applicable and the second respondent is conducting the auction as per the Rules which are valid and legal. (b) The second respondent admit that the auction is being conducted in respect of the shops, and lease is granted for 11 months every time. It is true that the petitioners are successful bidders for the past seven years in respect of the shop Nos.1 and 3 in Harur Panchayat Union Office Building, Harur. The allegation that the petitioners are paying rent regularly, is denied. The petitioners are defaulters and their own documents show that they are not paying the monthly rent regularly. (c) G.O.Ms.No.92, dated 3.7.2007 is not applicable to the second respondent-Panchayat. Only the abovesaid Rules are applicable. The said Rules are framed under Section 242(2) of the Tamil Nadu Panchayat Act (for short, 'the Act') and has statutory force. As per Rule 4 of the said Rules, the Panchayat can lease out its own land or immovable property and no lease can be exceeded more than three years. Further, Rule 11 of the Rules empowers the Panchayat to fix https://hcservices.ecourts.gov.in/hcservices/ the period of lease. It also fixes maximum lease period initially for three years and renewal for further period of three years. As per this Rule, the second respondent has fixed the lease period as 11 months and at the expiry of 11 months, the properties are re- auctioned. This procedure is followed with a view to get maximum lease rent so that the schemes of the Panchayat can be implemented smoothly. (d) It is true that the lease in favour of the petitioners expired on 31.3.2011. Due to election to the Parliament, the shops could not be auctioned. The representations of the petitioners dated 20.5.2011 and 16.5.2011 could not be disposed of as the election process just concluded. Further, the petitioners are not entitled to renewal of leases for the periods as mentioned in the said G.O. Any lease can be granted by the Panchayat only as per the said Rules, which are statutory in nature and therefore, the impugned auction notice was issued which is valid and legal. (e) This Court directed to hold the auction as per the schedule, but stayed the confirmation only. The respondents proceeded with the auction which was held on 18.7.2011 and the petitioners also participated and the highest bid was Rs.21,300/- p.m. and Rs.5,200/- respectively for the said shops. The amounts are Rs.13,100/- and Rs.1,500/- more than the last year lease amount. Every year, in the auction, the lease amount is increased by the bidders and the Panchayat is being benefited by the increased lease amount, which is utilised for the welfare schemes of the Panchayat for the benefit of the general public. (f) The details of the highest bid lease amount for the years in the respective Writ Petitions are as follows: Year W.P.No.16731 of 2011 W.P.No.16812 of 2011 2007-2008 Rs.2,520/- Rs.2,350/- 2008-2009 Rs.2,475/- Rs.2,450/- 2009-2010 Rs.2,500/- Rs.2,500/- 2010-2011 Rs.8,200/- Rs.3,700/- 2011-2012 Rs.21,300/- Rs.5,200/- (g) One Mr.S.Raja, son of Sivaraman is the highest bidder in respect of Shop No.3 in W.P.No.16731 of 2011 and one Mr.S.Sundarrajan, son of Singaram, brother of the petitioner in W.P.No.16812 of 2011, is the highest bidder. (h) Therefore, the contentions raised in the grounds to the Writ Petitions are untenable, unsustainable, and contrary to law as per the well settled judicial pronouncements. The petitioners have not https://hcservices.ecourts.gov.in/hcservices/ made out any case, the second respondent prayed for dismissal of the Writ Petitions as well as the miscellaneous petitions. 8. Mr.K.A.Ravindran, learned counsel representing Mr.Durai Gunasekaran, learned counsel for the petitioner, strenuously contended that as per the said G.O, dated 3.7.2007, it is incumbent on the part of the respondents to renew the leases for a maximum period of nine years, as the petitioners have already enjoyed the properties for a period of seven years and therefore, the remaining period of leases is to be granted to them and the representations made by the petitioners in this regard are to be considered by the respondents. 9. On the other hand, Ms.V.M.Velumani, learned Spl.G.P. appearing for the respondents submitted that fetching the highest revenue is the prerogative of every Panchayat to augment the revenue for the schemes of the Panchayat and G.O.Ms.No.92 is not applicable to the Panchayats when there is statutory rules framed under Section 242 of theTamil Nadu Panchayats Act, which is a force of law, and therefore, the petitioners claim cannot be granted in view of the Rules framed under the said Act. Learned Spl.G.P. further contended that as per the Rules, the maximum period of lease at the first instance is three years and thereafter, the renewal for another three years and more than that, no person is entitled to have the benefit of any renewal of the lease. 10. Heard the learned counsel appearing for the parties and perused the material documents available on record and the relevant Act/Rules. 11. It is not in dispute that the petitioners are the highest bidders and they were granted leases in respect of the respective shops from 2004-2005 and thereafter, the leases have been renewed periodically for the past seven years and the said leases expired on 31.3.2011 and thereafter, due to Parliamentary Elections, the respondents could not proceed with the public auction, however, they have initiated proceedings for public auction, vide the impugned auction notice dated 8.7.2011 for inviting applications for the shop Nos.1 and 3 of the respective petitioners and at this stage, the petitioners have challenged the said auction notice on the ground that as per the said G.O.Ms.No.92, their request for renewal of the leases, has to be granted for the further period of three years, and therefore, the petitioners are entitled to continue the leases till their representations are considered. 12. It is to be stated that the Government is empowered to make the Rules under Section 242 of the Act and under Section 242(2) in particular, and without prejudice to the generality of the foregoing power, the Government may make Rules and Section 242(2)(xxv) lays down as to the form and contents of licences, permissions and notices https://hcservices.ecourts.gov.in/hcservices/ granted or issued under this Act, the manner of their issue or the method of their service, and the modifications, suspension or cancellation thereof. Strengthened by the above provisions of law, the Government has framed the Rules in the year 2001, which are in force. The Rules are called as "The Tamil Nadu Panchayats (Procedure for conducting Public Auction of Leases and Sales in Panchayats) Rules, 2001". These Rules were framed, vide G.O.(Ms).No.277, Rural Development (C-4) Department, dated 22.11.2001. Rule 4 of the said Rules provides for "lease of land and immovable property belonging to a Panchayat", by which the Panchayat shall have the power to lease out its own land or any other immovable property to it as referred to in Rule 3, provided that no such lease shall be valid in case the period of lease exceeds three years or where the lessee is permitted to put up any building or structure whether of masonry, brick, wood, mud or of any materials unless the sanction of the Inspector has been obtained therefor. Rule 11 of the Rules deals with the period of lease, by which, the Panchayat shall, in respect of the property other than the property vested with it, fix the period of lease of right to enjoy the property and the period of lease of properties as specified in the Table, subject to conditions prescribed under this Rule and with respect to the said Table, in item 2, it states regarding the nature of property, namely, own buildings used as shops, rooms, carriages, canteen, hotels, lodging houses, rest-sheds, and the maximum lease period at a time is three years initially and renewal for a further period of three years. 13. From a reading of the above Rules, it is very clear that in respect of the shops leased out to the petitioners, they shall have the right of leases initially for a period of three years and thereafter, with a renewal period of another three years. In the instant case, the petitioners had the benefit of the leases for seven years, which expired on 31.3.2011. However, due to the Parliament Elections, the respondents could not proceed with the public auction, but they have started the process by issuing the impugned auction notice dated 8.7.2011 and it is also specifically averred by the respondents that the petitioners have also participated in the public auction, and one Mr.S.Sundarrajan, son of Singaram, the brother of the petitioners, was the highest bidder in respect of Shop No.1 in W.P.No.16812 of 2011 and one Mr.S.Raja, son of Sivaraman, was the highest bidder in respect of Shop No.3 in W.P.No.16731 of 2011. Accordingly, the respondents have finalised the tender process. 14. At the time of hearing of the Writ Petitions, this Court was inclined to grant interim stay by allowing the respondents to proceed with the public auction, and conclude it as scheduled, but the confirmation of auction was stayed and accordingly, the respondents conducted the public auction on 18.7.2011 and concluded the same, but now they are yet to confirm the public auction to the successful bidders as directed by this Court. https://hcservices.ecourts.gov.in/hcservices/ 15. The legal principles are well settled in the matters of tenders and the power of judicial review in the matter of contractual transactions is very limited, unless it is shown to this Court that the auction process is arbitrarily exercised or actuated with bias or with mala-fide intention. In the absence of such arbitrariness or the other grounds, the petitioners cannot have any kind of relief from this Court, since the respondents have even allowed the petitioners with the leases for seven years, even though the Rules provided only for a maximum period of six years only. The petitioners with an intention that the Government Order dated 3.7.2007 will have application to their case, claim that their leases are to be renewed for a period of nine years. The petitioners are with misconception and the have misconstrued that their entire claim is based on the said G.O., when the Rules of the Panchayat are governed by the term of the leases and the conditions prescribed therefor. It is not the case of the petitioners that they are not governed by the said Rules and they state that they are only governed by the said G.O. When such being the position, the petitioners' challenge to the tender process, in the absence of any arbitrariness or mala-fide intention or actuated with bias, this Court cannot entertain these Writ Petitions by invoking the power of judicial review under Article 226 of the Constitution of India, to stall the public auction and accordingly the petitioners' claim and challenge to the public auction notice, is misconceived and the same deserves to be rejected. 16. For the foregoing reasonings and discussion and on analysing the entire facts involved in these Writ Petitions and considering the Rules position, the challenge made by the petitioners is devoid of merits and the Writ Petitions deserve no merit consideration, and therefore, the Writ Petitions are liable to be dismissed. Accordingly, the Writ Petitions are dismissed. No costs. The Miscellaneous Petitions are closed. It is hereby directed that the respondents shall conclude the public auction and confirm the same and proceed with the award of leases to the successful bidders. Sd/ Asst.Registrar //True Copy// Sub.Asst.Registrar cs To 1. The District Collector, Dharmapupri District, Dharmapuri. https://hcservices.ecourts.gov.in/hcservices/ 2. The Block Development Officer, Harur Panchayat Union, Harur, Dharmapuri District. 1 cc To Government Pleader, SR.No.51869 1 cc To Government Pleader, SR.No.57906 W.P.Nos.16731 and 16812 of 2011 rk(co) pmk.7.10.2011 https://hcservices.ecourts.gov.in/hcservices/