IN THE HIGH COURT OF JUDICATURE AT MADRAS DATED : 04.02.2010 CORAM : THE HONOURABLE Mrs.JUSTICE R.BANUMATHI and THE HONOURABLE Mr.JUSTICE M.M.SUNDRESH Writ Appeal Nos.928 to 938 of 2002 & WA MP Nos.1815 to 1825/2002 W.A.Nos.928 to 938/2002: D.Kannan ... Appellant in W.A.928/2002 R.Thiagarajan ... Appellant in W.A.929/2002 V.Murugan ... Appellant in W.A.930/2002 V.Pethu Chettiar ... Appellant in W.A.931/2002 T.M.Rajaji ... Appellant in W.A.932/2002 B.Chandra Bose ... Appellant in W.A.933/2002 T.Nagalakshmi ... Appellant in W.A.934/2002 P.Ravikumar ... Appellant in W.A.935/2002 P.Murugan ... Appellant in W.A.936/2002 M.Subbulakshmi ... Appellant in W.A.937/2002 V.Prabhakaran ... Appellant in W.A.938/2002 vs. 1. The Commissioner of Municipal Administration, Chepauk, Chennai-5. 2. The Commissioner, Theni-Allinagaram Municipality, Theni. ... Respondents in all W.As. Prayer: Writ appeals filed under Clause 15 of the Letters Patent against the common order of the learned single Judge of this Court made in W.P.Nos.4207 to 4211 and 5645 to 5650/2002 dated 15.03.2002. Petitions presented to this Court under Article 226 of the Constitution of India to issue writ of Certiorari calling for the records relating to the notice issued by the 2nd Respondent in his proceedings in Na.Ka.No.994/2001/m1 dated 09.01.2002 and quash the same as illegal in so far as the arbitrary enhancement of the rent of the petitioner Shop in No.1 (East) (W.P.No.4207/02) No.3 (East) (W.P.No.4208/02) No.9 (West) (W.P.No.4209/02) No.2 (West) (W.P.No.4210/02) https://hcservices.ecourts.gov.in/hcservices/ No.3 (West) (W.P.No.4211/02) No.6 (West) (W.P.No.5645/02) No.4 (East) (W.P.No.5646/02) No.8 (West) (W.P.No.5647/02) No.2 (East) (W.P.No.5648/02) No.5 (West) (W.P.No.5649/02)and No.7 (West)(W.P.No.5650/02) respectively at Municipal lodging Complex, Theni Allinagar Municipality Bus stand, Theni. For Appellant : Mr.G.Masilamani in all W.As. Senior Counsel for Mr.M.Ajmal Khan For Respondents : Mr.M.Dhandapani – R1 in all W.As. Spl. Government Pleader(W) Mr.R.Kanniappan - R2 COMMON JUDGMENT R.BANUMATHI,J Challenge in these Writ Appeals are dismissal of Writ Petitions [W.P.Nos.4207 to 4211 and 5645 to 5650/2002] declining to interfere with the enhancement of rent effected by the 2nd Respondent-Theni Allinagaram Municipality. Since all the Writ Appeals arise out of common order of learned single Judge and common questions are involved, all the Writ Appeals are taken up together and disposed of by this Common Judgment. 2. Appellants have been the lessees under 2nd Respondent-Theni Allinagaram Municipality in respect of the shops situated at the Municipal Bus Stand, Theni since 1985. They are running Sweet stalls, Bakery Stalls and Petty shops. Initially, period of lease was for three years and the same was extended periodically enhancing the rent by 15% once in three years. By an order dated 09.01.2002, 2nd Respondent has revised the rent at Rs.45/- per sq.ft. for the period from 01.10.2001 to 30.09.2004. Challenging the same, Appellants have filed Writ Petitions in W.P.Nos.4207 to 4211 and 5645 to 5650/2002 on the ground that 2nd Respondent-Municipality has arbitrarily enhanced the rent by 300% to 500% from the original rent as contemplated under G.O.Ms.No.147 Municipal Administration and Water Supply Department dated 30.12.2000. Appellants are not disputing the powers vested with the Respondents in enhancing the rent periodically; but opposed the revision made by 2nd Respondent as unilateral, excessive and contrary to the terms and conditions of G.O.Ms.No.147 Municipal Administration and Water Supply Department dated 30.12.2000. 3. Learned single Judge dismissed all the Writ Petitions observing that rent has been revised by the 2nd Respondent-Municipality after https://hcservices.ecourts.gov.in/hcservices/ the resolution passed by the Municipal Council. Learned single Judge further observed that rent fixed by the Respondents at Rs.45/- is reasonable. 4. Challenging the enhancement and order of learned single Judge, Mr.G.Masilamani, learned Senior Counsel for Appellants contended that the impugned order enhancing the rent to 300% to 500% is arbitrary and exorbitant and violative of G.O.Ms.No.147 Municipal Administration and Water Supply Department dated 30.12.2000. Learned Senior Counsel would further submit that as per G.O.Ms.No.147 Municipal Administration and Water Supply Department dated 30.12.2000, market value has to be determined and when the Municipality proceeded to take the market value for fixing the rent, it ought to have acted fairly, reasonably and not arbitrarily. 5. Mr.Dhandapani, learned Special Government Pleader appearing for 1st Respondent submitted that powers vested with 2nd Respondent- Municipality to enhance the rent cannot be challenged. It was further submitted that as per G.O.Ms.No.147 Municipal Administration and Water Supply Department dated 30.12.2000, when the Municipal Council has passed a resolution enhancing the rent on par with other shops, Appellants could have no valid objection. It was further argued that 15% is not a fixed enhancement and as per G.O.Ms.No.147 Municipal Administration and Water Supply Department dated 30.12.2000, it could only be the minimum amount. 6. Mr.Kanniappan, learned counsel for 2nd Respondent-Municipality submitted that only after ascertaining the market value prevailing in the locality, rent was fixed. It was further submitted that Appellants Murugan, Ravikumar, Pechi Chettiar themselves participated in the public auction offering higher rent and while so, they cannot insist upon enhancement of rent by 15% per year. 7. It is seen that prior to G.O.Ms.No.147 Municipal Administration and Water Supply Department dated 30.12.2000, as per the order of the Supreme Court, Municipality has followed the system of enhancing 15% rent once in three years. In G.O.Ms.No.147 Municipal Administration and Water Supply Department dated 30.12.2000, Government decided to delegate the power to the respective Local body Councils to decide, whether to auction the shops and lands belong to the local bodies in public auction or to lease out to the same lessees. If the Local Body Councils decide to lease out the immovable shops and lands belong to the Local Bodies to the same lessees, the following rules and regulations will have to be followed:- i) Generally, initial leasing of the immovable properties belong to the local bodies has to be done in Public Auction. ii) If the lessee or licensee (legal heirs, agents) for the first three years in respect of the Shops and Lands intend to continue the lease, application has to be preferred to the respective Commissioner/Duty Officer within three months https://hcservices.ecourts.gov.in/hcservices/ before the expiry of the existing lease period. iii) If the lease is for further period of three years as aforesaid the lease has to be construed as new lease and new lease amount has to be determined. The new lease amount has to be determined by considering the Market rental value prevailing in the locality. To fix the Market rental value, the rent fetched by the Municipality for the Shops auctioned in the last one year in the locality, the Rental Value of the Shops owned by the Private persons paid by the Government and it's concerns to the Private Shops and Private Buildings have to be considered as basic factors. As aforesaid calculated rental value has to be determined for one square feet and on that basis the new lease amount for the Shops belong to the local bodies has to be determined. In any event, the newly determined Rental value shall be more than 15% of the previous year rental value. iv) The application preferred by the lessee, the determined rental value and the particulars has to be placed before the Municipal Council. If the earlier lessee is permitted to continue the lease for a further period of three years without auctioning, the acceptance for the new lease has to be obtained from the Applicant within 15 days. 8. According to 2nd Respondent, as per G.O.Ms.No.147 Municipal Administration and Water Supply Department dated 30.12.2000, market value is to be arrived by taking into account the prevailing rate of rent around that area and rent has been fixed on square feet basis and on that basis the Municipal Council has passed the resolution. As per Muncipal Council's Proceedings, instructions were given in G.O.Ms.No.147 Municipal Administration and Water Supply Department dated 30.12.2000 and lessees were given reasonable time of 15 days to express their willingness by making applications. 9. Contention of Appellants is that 2nd Respondent-Municipality while fixing the market rental value of the shops has to take into account three factors viz., (i) rent fetched by the Municipality for last one year; (ii) rental value of the shops owned by the private persons; and (iii) rent paid by the Government and it's concerns to the private shops and private buildings by private individual in the same locality. Learned Senior Counsel for Appellants submitted that 2nd Respondent- Municipality has not taken into account the above factors for determining the market rental value and enhancement of rent by 300% to 500% for the shops situated in the Municipal Complex is arbitrary and exorbitant. 10. As we have pointed out earlier, as resolved by the Municipal Council, lessees were informed about their willingness to renew their lease by notice dated 17.02.2002 and the same was served on them. As contemplated under G.O.Ms.No.147 Municipal Administration and Water Supply Department dated 30.12.2000, reasonable opportunity was https://hcservices.ecourts.gov.in/hcservices/ afforded by 2nd Respondent-Municipality seeking willingness of the Appellants. Appellants who have become tenants in 1985 cannot insist for 15% increase in perpetuity. As rightly submitted by learned Special Government Pleader, 15% increase in rent was only a concession given by way of offer and it cannot be in perpetuity for an unlimited period. In our considered view, the power conferred on the Municipal Council to bring the Municipal property has been exercised reasonably and fairly. 11. By perusal of the order of learned single Judge, it is seen that the Appellant Murugan [Appellant in W.A.No.930/2002] himself participated in the auction held in the previous year and offered Rs.170/- per sq.ft. in respect of Shop No.12-B located on the eastern side of bus stand and paying the same from 01.03.2001. In the said auction, yet another Appellant Ravikumar who has filed W.P.No.5647/2002 [Appellant in W.A.No.935/2002] has also participated in the public auction and offered Rs.61.50 per sq.ft. The bid offered by Murugan was approved as highest. Yet another Murugan who has filed W.P.No.5648/2002 [Appellant in W.A.No.936/2002] has also participated in the auction conducted by the Respondents and offered rent at the rate of Rs.45/- per sq.ft. and paying the same from 11.02.2000 in respect of Shop No.4. Having participated in the public auction and offering to pay Rs.170/-, Rs.61.50 and Rs.45/- per sq.ft. respectively, Appellants cannot insist upon continuance of lease by mere 15% increase. 12. In the counter-affidavit, it is averred that one Raju, Panneerselvam, Ramasamy and Nallammal agreeing to pay the enhanced rent at the rate of Rs.45/- per sq.ft. in respect of Shop Nos.19, 16, 18 and 17 respectively which are located in the same shopping complex. Contention of 2nd Respondent-Municipality is that rent in respect of all the shops situated in the very same shopping complex has been revised by the Respondents uniformly at Rs.45/- per sq.ft. and Appellants alone cannot raise objection for enhancement of rent. 13. Learned Senior Counsel for Appellants submitted that consent given by the other lessees for enhancement of rent is not a ground for enhancing the rent by 300% to 500%. It was further contended that the other four tenants [Raju, Panneerselvam, Ramasamy and Nallammal] who are said to have given consent are not running the shops in the same shopping complex and they are running the shops in front of Theni-Allinagaram Municipality bus stand building and opening the shops round a clock for 24 hours. It was further contended that Appellants are running shops in the ground floor of Lodging Complex wherein the passengers have no direct access and Appellants can open their shops only between 9.00 A.M. and 9.00 P.M. It was further argued that shops being situated in the ground floor of Lodging complex, shops are not accessible to passengers and while so, shops in the ground floor of Lodging complex cannot be treated on par with the other shops situated in the front portion of Theni- Allinagaram bus stand. https://hcservices.ecourts.gov.in/hcservices/ 14. As per G.O.Ms.No.147 Municipal Administration and Water Supply Department dated 30.12.2000, a lease is construed as a fresh lease once in three years. Taking into account the market value, Municipal Council has passed resolution fixing the rental value which has been made based upon the prevailing market value by taking into consideration but the shops owned by private and public. Such a decision arrived at on a consideration of the available materials cannot be put into scrutiny by invoking Article 226 of Constitution of India. 15. For discharging its civic responsibilities, Municipality will have to augment its revenue only from proper property tax, toll and rent from its shopping complex. Holding that claim of lessee for extension by lease by enhancement of rent by 15% of previous rent is liable to be rejected, in AIR 1998 Madras 217 [A.Sathar v. The District Collector, Coimbatore], the Division Bench of this Court held as under:- "2. ..... The extension granted earlier by the Panchayat, to the appellant would not mean that the appellant is entitled to continue in possession of the premises in question for ever by paying ridiculously low rent. We are of the view that the extension of the lease to the appellant is against the interest of the panchayat. As already noticed the rental income from the properties owned by the Panchayat is one of the sources of income to the Panchayat. Therefore, the interest of the Panchayat cannot be jeopardized by permitting the appellant to continue in possession of the premises in question at the enhanced rate of 15 per cent as prayed for. There are absolutely no merits in this writ appeal and the same is dismissed." 16. In (2003) 3 MLJ 691 [M.Palanisamy and others v. Sriramapuram Town Panchayat, rep. by its Executive Officer, Sriramapuram, Dindigul District and others], the Division Bench of this Court held that rule does not recognize any right in any person who has been successful at one auction to claim a right to remain in the premises for ever by merely agreeing to pay 15% more than the rate at which the lease rental was being paid for the earlier three year period. We find no substance in the contentions raised by the Appellants, since what is offered to the Appellants is only an offer by way of concession enabling them to continue the shops in which they were the licensees. 17. Earlier, by the interim order dated 10.04.2002 in WA MP Nos.1815 to 1825/2002 in W.A.Nos.928 to 938/2002, First Bench of this Court granted interim stay on condition that Appellants to pay Rs.28/- per sq.ft. It is stated that from the year 2000 onwards, Appellants are paying the rent only at the rate of Rs.28/- per sq.ft. and not Rs.45/- per sq.ft. levied by 2nd Respondent-Municipality for the year 2000 – 2003. Learned counsel for Respondents submitted that for the year 2004–2007 and 2007–2010, Appellants have to pay the https://hcservices.ecourts.gov.in/hcservices/ enhanced rent. Appellants have not made out any substantial ground warranting interference with the order of learned single Judge. When dismissing all the Writ Appeals, Appellants are directed to pay rent at the rate of Rs.45/- per sq.ft. 18. In the result, all the Writ Appeals are dismissed. Consequently, WA MP.Nos.1815 to 1825/2002 are closed. No costs. Appellants are directed to pay difference in arrears of rent within a period of four weeks from the date of receipt of copy of this Judgment, in default, it is open to the 2nd Respondent-Municipality to take appropriate action to recover the arrears of rent from the Appellants. In future, 2nd Respondent-Municipality is also at liberty to deal with the shops in accordance with law by bringing it in public auction, if the law so provides. Sd/- Asst. Registrar //true copy// Sub Asst.Registrar bbr To 1. The Commissioner of Municipal Administration, Chepauk, Chennai-5. 2. The Commissioner, Theni-Allinagaram Municipality, Theni. 11 cc to Mr.M.Ajmal Khan, Advocate, Sr.No.7714 1 cc to Mr.R.Kanniappan, Advocate, Sr.No.6647 1 cc to Government Pleader, Sr.No.7321 Common Judgment W.A.Nos.928 to 938/2002 KG {CO} TP/12.2.2010. https://hcservices.ecourts.gov.in/hcservices/