IN THE HIGH COURT OF JUDICATURE, ANDHRA PRADESH AT HYDERABAD (Special Original Jurisdiction) WEDNESDAY, THE TENTH DAY OF SEPTEMBER TWO THOUSAND AND EIGHT PRESENT THE HON'BLE MR JUSTICE B.SESHASAYANA REDDY WRIT PETITION NO : 14395 of 2008 Between: 1 Kandukuri Venkata Sitarama Anjaneya Sarma, S/o. K. Rajeshwar Rao, R/o. Eluru, West Godavari District. 2 Janjanam Sankaara Rao, S/o. Venkateswarlu, R/o. Eluru, West Godavari District. ..... PETITIONERS AND Eluru Municipal Corporation, Eluru, West Godavari District, Rep. byits Commissioner. .....RESPONDENT Petition under Article 226 of the constitution of India praying that in the circumstances stated in the Aﬃdavit ﬁled herein the High Court will be pleased to issue a Writ, order or direction, more particularly, one in the nature of Writ of Mandamus, (a) declare the action of the respondent corporation in enhancing the existing rent by more than 400% by Proceedings ROC No. A1/2216/2008 dated 9-5-2008 and A1/2216/2008 dated 9-5-2008 as illegal, arbitrary and violative of Article 14 and 91 (G) of the Constitution of India; and (b) direct the respondent corporation to enhance the rent of the petitioners after following due process of law and strictly in the terms of rental agreement i.e., enhance rent upto 33 1/3% and pass Counsel for the Petitioners: MR.ABHINAND KUMAR SHAVILI Counsel for Respondent: MR.S.NAGESWARA REDDY The Court made the following : ORDER: This writ petition has been ﬁled by the petitioners, who are two in number, assailing the action of the respondent- Corporation in enhancing the existing rent, which is being paid by the petitioners, at Rs.867/- and Rs.996/- respectively, to Rs.3653/- and Rs.4,197/- respectively. This is a second journey of the petitioners to this Court. Earlier, these petitioners along with one Lakkimseti Malleswara ﬁled W.P.No.5438 of 2008 assailing the action of the respondent-Corporation in sealing their respective leased premises. They also moved W.P.M.P.No.7049 of 2008. An interim order came to be passed in the said WPMP on 24.03.2008. The respondent-Corporation ﬁled W.V.M.P.No.1062 of 2008. The said vacate stay petition came to be dismissed by order dated 22.04.2008. The order passed in the vacate stay petition reads as hereunder. “WVMP. No.1062/2008 is ﬁled seeking to vacate the interim orders passed in WPMP. No.7049/2008, dated 24.03.2008. WPMP. No.11118/2008 is ﬁled seeking a direction to the respondent to open the seals of the petitioners’ shops and permit them to do their regular business. It is not in dispute that all the three petitioners are the tenants in respect of the shops bearing Nos.4, 8 and 16 situated in “Prakasam Municipal Shopping Complex” at Narasimharaopet, Eluru and the suits ﬁled by them for declaration that they are entitled to continue to be tenants on the existing rent as per law, were decreed as prayed for, giving liberty to the Municipality to ﬁx the rent over the suit schedule shops by following the due procedure, as laid down under the Rules of the Andhra Pradesh Municipalities Act. It is stated that by the date of the decree, whatever rents are liable to be paid are paid. It is stated that thereafter there are no speciﬁc notices seeking enhancement of the rent and there was no eviction proceedings also. While so, without issuing any notice, there was an attempt for forcible eviction of the petitioners by sealing their respective shops. This Court having initially granted status quo on 13.03.2008, thereafter granted interim direction on 24.03.2008, directing the respondents to open the seals put on the respective shops of the petitioners. It is stated that the said order has not been complied with. Therefore, the petitioners filed WPMP. No.11118/2008. A counter has been ﬁled by the respondent stating that the 1st petitioner fell in arrears of Rs.4,86,684/-, 2nd petitioner fell in arrears of Rs.5,78,114/- and 3rd petitioner fell in arrears of Rs.3,99,056/- which is calculated as per the Rules, enhancing 33 1/3% on every three years as per the Rule 12(1) of the Andhra Pradesh Municipalities (Regulation of Receipts and expenditure) Rules, 1965. It is stated that in fact the 3rd petitioner paid a sum of Rs.2,01,168/- but the other petitioners have not been paid. A perusal of the counter, prima facie, goes to show that the decree of the civil suit has not been followed by issuing a notice or by following due procedure prescribed in law before enhancing the rent, therefore, I am of the prima facie opinion that the demand of enhancing rent without periodically enhancing the rents by following due procedure, appears to be unsustainable. Therefore, the arrears of said demand cannot, prima facie, be upheld. Having regard to the facts of the case, the interim order granted earlier i.e., on 24.03.2008 is made absolute. Accordingly, WVMP. No.1062/2008 is dismissed. A perusal of the notice issued by the respondent in ROC No.A1/1780/2007, dated 10.01.2008, goes to show that the rents from 1993 onwards have been enhanced @ 3 1/3% on expiry of three years every time up to 2007. I am of the opinion that the respondent Municipality cannot enhance the rent if the rent has not been enhanced three years prior to the expiry of the said notice and demand of all the arrears at a time. The respondent is entitled to enhance the rent on every three years by following due procedure under Rules. If the rent is agreed, they will pay, otherwise, they may vacate, but they cannot enhance the rents at a time from 1993 onwards. Therefore, the said notice also appears to be unsustainable. Having regard to the facts of the case, WPMP No.11118/2008 is allowed, directing the respondents to open the seals of the petitioners shops forthwith, subject to payment of the enhanced rent, pursuant to the notice that may be given by the respondent and on further paying a sum of Rs.1,00,000/- (Rupees one lakhs only) by the 1st petitioner and Rs.1,50,000/- (Rupees one lakh and ﬁfty thousand only) by the 2nd petitioner, which will subject to the result of the writ petition. The seals shall be opened forthwith. The amounts, ordered to be paid by the petitioners, shall be paid within a period of four weeks from today.” The respondent-Corporation while demanding the amount as directed by this Court in vacate stay petition, also directed the petitioners to pay enhanced rent of Rs.3,653/- and Rs.4,197/- respectively. This writ petition is ﬁled assailing the demand of the respondent-Corporation by way of special notice with regard to enhancement of rent as indicated above. Sri S. Nageswara Reddy, learned Standing Counsel of Eluru Municipal Corporation received notice on behalf of the respondent. The respondent ﬁled counter aﬃdavit. Sri S.A. Khader Saheb has sworn to the counter aﬃdavit ﬁled on behalf of the respondent-Corporation. It is stated in the counter aﬃdavit that the rent has been enhanced as per Rule 12(1) of the Andhra Pradesh Municipalities (Regulation of Receipts & Expenditure) Rules 1968 of A.P. Municipalities Act. For better appreciation, I may refer paras-4 and 5 of the counter aﬃdavit and they read as hereunder. It is submitted that the allegation made in para-2 that the 1st petitioner and established Medical Shop under the name and style of Uma Medicals and taken the shop in Municipal Prakasam Complex at N.R.Pet, Eluru for lease is true. It is not true to suggest that the Municipality had abnormally enhanced rent during 1993 and questioning the action of the then Eluru Municipality the petitioners herein had ﬁled original suits and the suits were decreed in their favour is not true and correct. The 1st petitioner ﬁled O.S.No.83/1993 before the 1st Additional District Munsiﬀ, Eluru for declaration to continue him as a tenant on the existing rent as per law and the Municipality is restrained by means of permanent Injunction for interfering with the peaceful possession of the 1st petitioner over the plaint schedule property as a tenant until he is evicted and the Eluru Municipality was at liberty to ﬁx the rent over the suit schedule property after the due process of law as laid down under the rules of A.P. Municipalities Act is not true and correct. It is also true that the 2nd petitioner herein has ﬁled O.S.No.79/1993 seeking identical relief on the said suit is also decreed on 5.12.1996. It is true that by virtue of suits decreed in favour of petitioners, the petitioners are continuing and enjoying the peaceful possession of their respective shops. The petitioners did not pay the enhanced rent in spite of notice given by the respondent for every 3 years. It is submitted that it is not true to suggest that the respondent is trying to evict the petitioners forcibly without giving any notice or orders on the ground that the petitioner herein fell in arrears of rent. The respondent never issued the notice to the petitioners to evict from the property. The arrears of the rent for every three years were calculated as deﬁned in Rule 12(1) of Regulation of receipts & Expenditure Rules 1968 of A.P. Municipalities Act and enhanced the rent at 33. 1/3% per 3 years as follows. 1st petitioner: 1996-1999 Rs.1156-00 1999-2002 Rs.1541-00 2002-2005 Rs.2055-00 2005-2007 Rs.2740-00 2007-2009 Rs.3652-00 I submit that, as per the Calculations by enhancing 33. 1/3% for every 3 years under Rule 12(1) of Receipts and expenditure Rules of A.P. Municipalities Act the figure arrived is correct. 2nd petitioner 1996-1999 Rs.1328-00 1999-2002 Rs.1771-00 2002-2005 Rs.2361-00 2005-2007 Rs.3148-00 2007-2009 Rs.4196-00 I submit that, as per the calculation by enhancing 33. 1/3% for every 3 years under rule 12(1) of A.P. Municipalities Act the figure arrived is correct. When the writ petition came up for admission and hearing, with the consent of the learned counsel appearing for the parties, the writ petition itself is taken up for ﬁnal disposal. Heard learned counsel appearing for the petitioners and learned Standing Counsel appearing for the respondent- Corporation. Learned counsel appearing for the petitioners submits that enhancement of rent by 400% is impermissible and therefore, the proceedings impugned in the writ petition are liable to be set aside. Learned Standing Counsel appearing for the respondent- Corporation submits that the enhancement of rent is as per the market value of shops situated in the vicinity wherein the shops leased out to the petitioners are situated. A further submission has been made that Lakkimseti Malleswara, who joined with the petitioners in the earlier round of litigation, agreed for enhancement of rent, and therefore, the petitioners can be permitted to raise objection for enhancement of rent as indicated in the proceedings impugned in the writ petition. Indisputably the respondent-Corporation has power to enhance the rents once in three years as provided in Rule 12(1) of Andhra Pradesh Municipalities (Regulation of Receipts & Expenditure) Rules, 1968 (hereinafter referred to Rules 1968 for short). For better appreciation, I may refer Rule 12(1) reads as hereunder. 12(1) All sales of :-- (a) the produce or usufruct of trees. (b) Wind fallen and withered trees. (c) Tools and plant, (d) Old Stores and materials, (e) Leases of the buildings, or the terraces, of buildings, shops or godowns, and of land belonging to the Municipal Council, the rents of which are expected to exceed Rs.200/- per annum:; (f) Right to collection of fees in municipal markets, slaughter houses, ﬁsheries and sale of fish in fresh water tanks. (g) Framing out the collection under Section 344 (3) of the Act of any advertisement tax, fees for wash houses, fees for licences leviable for sale of articles in public streets, and licence fees, and (h) Sweeping and compost shall, be eﬀected by public auction which shall be conducted by the Commissioner or by a person duly authorized by him who shall give full publicity thereto in such manner as he considers suitable. The bids at the auction shall be placed by the Commissioner before the authority competent to enter into a contract under Section 43 of the Act. The said authority shall determine which of the bids at the auction shall be accepted. Where the bid accepted is not the highest bid, the reasons for rejecting a bid or bids higher than the one accepted shall be recorded in writing. Provided that (in the case of sales of leases of properties referred to in clause(e), if at a public auction held, the bid is found to be lower than that obtained in the previous year and if the previous year’s leases desires the continuance of the lease at the old rate, the concerned authority may not withstanding the public auction held, grant to lease him: (provided further that in the case of the properties referred to in clause (e), the Municipal Council may renew the lease for a period of three years at a time and with the prior sanction of the Government for a period exceeding three years and not exceeding twenty-ﬁve years without conducting public auction, if the present lease agrees to renew the lease in his favour at an amount which will be at 33 1/3% above the earlier rent or the prevailing market value of such shops situated in the vicinity, whichever is higher.) The council may also in special circumstances and with the prior sanction of the Government, renew the lease at a rate not less than 15% over the existing rate of annual lease. For this purpose, the municipal council shall get the willingness of the occupying tenant within three months before the expiry of the existing lease. If a reply is not received within ﬁfteen days from the date of receipt of intimation by the tenant, the Commissioner shall take steps for leasing out the same through public auction before the expiry of the existing lease; The ﬁrst petitioner ﬁled O.S.No.83 of 1993 and the second petitioner ﬁled O.S.No.79 of 1993 on the ﬁle of the ﬁrst Additional District Munsiﬀ, Eluru apprehending dispossession without following due process of law. Their suits came to be decreed. In a way, the respondent- Corporation has been mandated to follow the due process of law in the event of petitioners are required to be dispossessed from the premises in their occupation. The power to enhance the rents is given to the respondent-Corporation by virtue of Rule 12(1) of the Rules 1968, which has been extracted supra. It is the grievance of the petitioner that enhancement of rents at 400% is impermissible. The special notice served on the petitioner indicates that the respondent-Corporation proposed to enhance the rents at Rs.3,653/- and Rs.4,197/- in respect of the premises in occupation of the petitioners. In that view of the matter, I deem it appropriate to treat the special notice as show cause notice to the petitioners so as to enable the petitioners to submit their explanation as to how the enhancement of rents at the rate indicted above is unjustiﬁed. Reserving liberty to the petitioners to submit their explanation to the special notice within a period of two weeks from today, the Writ Petition is disposed of at the admission stage. _________________________ (B. Seshasayana Reddy, J.) 10th September, 2008 Js. ASSISTANT REGISTRAR // TRUE COPY // SECTION OFFICER To 1 Eluru Municipal Corporation, Eluru, West Godavari District, Rep. byits Commissioner. 2 2 CD copies.