BEFORE THE MADURAI BENCH OF MADRAS HIGH COURT DATED : 20/09/2007 CORAM: THE HONOURABLE MR.JUSTICE V.RAMASUBRAMANIAN W.P.(MD)Nos.4420 of 2007, W.P.(MD)Nos.4421 to 4423 of 2007 and M.P.Nos.1/2007(All WPs) W.P.(MD)Nos.4470 to 4482/2007 & M.P.Nos.1/2007 (All WPs) and M.P.Nos.3/2007 in W.P.4478 & 4479/2007 W.P.(MD)Nos.4572 to 4577/2007 & M.P.Nos.1/2007 (All WPs) and M.P.Nos.2 of 2007 in W.P.4574 & 4576/2007 W.P.(MD)Nos.4585 to 4592/2007 & M.P.Nos.1/2007(All WPs) W.P.(MD)Nos.4593 to 4599/2007 & M.P.Nos.1/2007(All WPs) and M.P.No.2/2007 in W.P.No.4599/2007 W.P.(MD)Nos.4600 to 4608/2007 & M.P.Nos.1/2007(All WPs) W.P.(MD)Nos.4615 to 4622/2007 & M.P.Nos.1/2007(All WPs) and M.P.Nos.2/2007 in W.P.Nos.4621 & 4622 W.P.(MD)Nos.4641 to 4649/2007 & M.Ps.1 to 3/2007(All WPs) W.P.(MD)Nos.4779 to 4783/ 2007 & M.Ps.1/2007 (All WPs) and M.P.No.2 of 2007 M.K.M.Geeyavudeen ... Petitioner in W.P.4420/2007 S.Natarajan ... Petitioner in W.P.4421/2007 S.Abdul Rahim ... Petitioner in W.P.4421/2007 M.Asan Mohammed ... Petitioner in W.P.4422/2007 S.M.Abdul Raheem ... Petitioner in W.P.4470/2007 Subramanian ... Petitioner in W.P.4471/2007 P.K.M.Shahul Hameed ... Petitioner in W.Ps.4472 & 4473/2007 Asan Mohamed ... Petitioner in W.P.4474/2007 M.Parisha Begam ... Petitioner in W.P.4475/2007 Mohamed Ali Jinna ... Petitioner in W.Ps.4476 & 4477/2007 R.Syed Saleem ... Petitioner in W.P.4478/2007 Rahamadulla ... Petitioner in W.P.4479/2007 Jahir Hussain ... Petitioner in W.P.4480/2007 R.Mahalingam ... Petitioner in W.P.4481/2007 M.Krishnaveni ... Petitioner in W.P.4482/2007 Chandrasekar ... Petitioner in W.P.4572/2007 Sundara Mahaligam ... Petitioner in W.P.4573/2007 Parimalavani ... Petitioner in W.P.4574/2007 Subbiah ... Petitioner in W.P.4575/2007 Apurva Asari ... Petitioner in W.P.4576/2007 A.Sakthivel ... Petitioner in W.P.4577/2007 E.Sheik Dawood ... Petitioner in W.P.4585/2007 G.Ragavan ... Petitioner in W.P.4586/2007 S.Sakthi ... Petitioner in W.P.4587/2007 K.Rengasamy ... Petitioner in W.P.4588/2007 S.Muthu ... Petitioner in W.P.4589/2007 Ramaiah ... Petitioner in W.P.4590/2007 M.Pitchai ... Petitioner in W.P.4591/2007 Raheemkan ... Petitioner in W.P.4592/2007 R.Ambayee ... Petitioner in W.P.4593/2007 N.O.Mohamed ... Petitioner in W.P.4594/2007 D.Mani ... Petitioner in W.P.4595/2007 Valliammal ... Petitioner in W.P.4596/2007 R.Selvaraj ... Petitioner in W.P.4597/2007 Ilanjiyam ... Petitioner in W.P.4598/2007 Abdul Kabar ... Petitioner in W.P.4599/2007 C.Nagarajan ... Petitioner in W.P.4600/2007 P.Ameer Batsha ... Petitioner in W.P.4601/2007 R.Ramalingam ... Petitioner in W.P.4602/2007 Thavamani ... Petitioner in W.P.4603/2007 K.Appan ... Petitioner in W.P.4604/2007 M.Namachivayam ... Petitioner in W.P.4605/2007 K.Arungulalingam ... Petitioner in W.P.4606/2007 E.M.E.Noor Mohamed ... Petitioner in W.P.4607/2007 Farook ... Petitioner in W.P.4608/2007 A.Sebastian ... Petitioner in W.P.4615/2007 M.R.Chinnakannu ... Petitioner in W.P.4616/2007 A.Shajakan ... Petitioner in W.P.4617/2007 M.Alagappan ... Petitioner in W.P.4618/2007 M.Chidambaram ... Petitioner in W.P.4619/2007 M.Muthu ... Petitioner in W.P.4620/2007 S.Thayalan ... Petitioner in W.P.4621/2007 M.Renganathan ... Petitioner in W.P.4622/2007 S.Arumugam ... Petitioner in W.P.4641/2007 K.Dhanalakshmi ... Petitioner in W.P.4642/2007 T.Rajendran ... Petitioner in W.P.4643/2007 Muthukarppan ... Petitioner in W.P.4644/2007 Rajendran ... Petitioner in W.P.4645/2007 M.Perumal ... Petitioner in W.P.4646/2007 A.Periasamy ... Petitioner in W.P.4647/2007 Sheik Hussain ... Petitioner in W.P.4648/2007 P.Abubakkar ... Petitioner in W.P.4649/2007 P.Dhanabal ... Petitioner in W.P.4779/2007 P.Malaiyandi Asari ... Petitioner in W.P.4780/2007 P.Azhagu ... Petitioner in W.P.4781/2007 V.Gopalan ... Petitioner in W.P.4782/2007 M.O.V.K.Abdul Jabber ... Petitioner in W.P.4783/2007 Vs. The Commissioner, ... Respondent in all W.Ps. Pudukkottai Municipality, Pudukkottai. PRAYER in W.Ps.4420 & 4423/2007: Writ Petitions filed under Article 226 of the Constitution of India, praying for the issuance of a Writ of Certiorarified Mandamus calling upon the respondent to produce the records relating to the notice dated 30.04.2007 in Na.Ka.No.17212/06/A4 of the respondent, quash the same and consequently direct the respondent to renew the lease in favour of the petitioner in respect of shop Nos.6 & 1 respectively North Chandaipettai, Pudukkottai for the period from 1.04.2007 to 31.03.2010 by increasing the rent by 15% over and above the existing rent. PRAYER in W.Ps.4421 & 4422/2007: Writ Petitions filed under Article 226 of the Constitution of India, praying for the issuance of a Writ of Certiorarified Mandamus calling upon the respondent to produce the records relating to the notice dated 30.04.2007 in Na.Ka.No.17212/06/A4 of the respondent, quash the same and consequently direct the respondent to renew the lease in favour of the petitioner in respect of shop Nos.20 and 19 respectively Weekly Market, East side vacant site, Pudukkottai for the period from 1.04.2007 to 31.03.2010 by increasing the rent by 15% over and above the existing rent. !For Petitioners ... Mr.R.P.Ramachandran For Petitioners In W.P.4470 to 4482/07 ... Mr.D.Rajakittu for Ms.AL.Gandhimathi ^For Respondent in All WPs ... Mr.P.Srinivas :COMMON ORDER All these writ petitions have been filed by the lessees of various shops owned by the Pudukkottai Municipality, challenging individual communications issued to the petitioners enhancing the monthly rent for the shops, for the purpose of grant of renewal of the leases for a period of 3 years from 01.04.2007. 2.Heard Mr.R.P.Ramachandran, learned counsel for the petitioners in all these writ petitions and Mr.P.Srinivas, learned Standing counsel for the respondent. 3.The enhancement of monthly rent for the shops in question is challenged by the petitioners on the ground that the enhancement is exorbitant and that the fixation has been made in an arbitrary manner in violation of the Government instructions prescribing an increase of 15% over and above the existing rent. The enhancement is sought to be defended by the Municipality on the ground that the Municipal Council passed a resolution on 29.03.2007, resolving to enhance the rent for all the shops whose leases became due for renewal and that the monthly rent was determined on the basis of the market rate of rent prevailing in the area. 4.A perusal of the impugned notices shows two things namely- (a) that the existing rent has been enhanced manifold; and (b) that the enhancement has not been made in an uniform pattern for all the shops. 5.The above two facts can be easily appreciated from the following Tabular Form. S.No. W.P.No. Shop No. Existing Rent Revised Rent 1 4420 of 2007 6 328 4800 2 4421 of 2007 20 70 1386 3 4422 of 2007 19 139 900 4 4423 of 2007 1 116 1575 5 4470 of 2007 5 141 1080 6 4471 of 2007 8 134 1350 7 4472 of 2007 13 100 1350 8 4473 of 2007 14 98 1350 9 4474 of 2007 1 194 2250 10 4475 of 2007 7 125 1350 11 4476 of 2007 11 105 1350 12 4477 of 2007 10 130 1350 13 4478 of 2007 2 87 1512 14 4479 of 2007 1 84 1512 15 4480 of 2007 2 170 2250 16 4481 of 2007 1 152 1200 17 4482 of 2007 2 152 1200 18 4572 of 2007 3 60 750 19 4573 of 2007 1 153 2925 20 4574 of 2007 39 125 5460 21 4575 of 2007 2 26 1380 22 4576 of 2007 53 58 3276 23 4577 of 2007 12 138 2700 24 4585 of 2007 2 43 720 25 4586 of 2007 -
188
2100
26
4587 of 2007
1
215
2520
27
4588 of 2007
3
226
4800
28
4589 of 2007
9
76
5568
29
4590 of 2007
4
84
2400
30
4591 of 2007
5
292
4050
31
4592 of 2007
1
34
1008
32
4593 of 2007
16
127
2160
33
4594 of 2007
10
199
5700
34
4595 of 2007
48
62
3978
35
4596 of 2007
27
55
7776
36
4597 of 2007
1
407
2070
37
4598 of 2007
1
65
2625
38
4599 of 2007
20
83
4212
39
4600 of 2007
24
49
5103
40
4601 of 2007
2
118
2400
41
4602 of 2007
6
138
3645
42
4603 of 2007
3
130
4800
43
4604 of 2007
4
45
3000
44
4605 of 2007
–
85
3000
45
4606 of 2007
22
84
5346
46
4607 of 2007
23
103
6318
47
4608 of 2007
17
59
3600
48
4615 of 2007
32
151
4788
49
4616 of 2007
14
31
624
50
4617 of 2007
30
133
3159
51
4618 of 2007
32A
150
4284
52
4619 of 2007
31
37
6552
53
4620 of 2007
18
40
3060
54
4621 of 2007
3
200
3600
55
4622 of 2007
2
293
3600
56
4641 of 2007
3
40
1500
57
4642 of 2007
6
102
1350
58
4643 of 2007
2
317
10560
59
4644 of 2007
21
105
6075
60
4645 of 2007
4
96
1350
61
4646 of 2007
2
122
1188
62
4647 of 2007
12
105
945
63
4648 of 2007
3
135
1188
64
4649 of 2007
2
205
2070
65
4779 of 2007
1
127
5400
66
4780 of 2007
25
158
8991
67
4781 of 2007
9
56
7200
68
4782 of 2007
28, 28 A
333
18711
69
4783 of 2007
15
40
1020
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 a 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 enquires made in the
locality, which in my considered view could never have formed the basis for
fixing the fair rent for the Municipal Shops.
8.Way back in the year 1970 the Supreme Court had an occasion to consider
the question relating to the method of assessment of annual value of lands and
buildings, in Guntur Municipal Council V. Guntur Town Rate Payers’ Association
(AIR 1971 Supreme Court 353). Though the said case related to the method of
assessment of annual value of buildings for the purpose of determining the
property tax payable, the said decision gives a clue as to how the Municipality
is obliged to determine the fair rent for the buildings for the purpose of
deciding the annual value of the buildings. The Supreme Court held in the said
judgment as follows:
“Section 82 (2) of the Act makes provision for the fixation of annual value of
lands and buildings. The test essentially is what rent the premises can lawfully
fetch if let out to 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
standard rent which would be payable for a particular premises under the Rent
Control Act in force during the year of assessment.
There is no distinction between buildings the fair rent of which has
actually been fixed by the Rent Controller and those in respect of which no such
rent has been fixed. When the controller has not fixed the fair rent, the
municipal authorities will have to arrive at their own figure of fair rent in
accordance with the principles laid down in the Rent Control Act.”
9.The aforesaid decision in Guntur Municipal Council case was followed in
Dewan Daulat Rai Kapoor V. New Delhi Municipal Committee ((1980) 1 SCC 685) and
later in Morvi Municipality V. State of Gujarat and others ((1993) 2 SCC 520).
In para 7 of the said decision the Supreme Court held as follows:
“7.It is not necessary for us to go a detailed discussion of the pros and cons
of the question since the question is no longer res integra. The decisions of
this Court rendered in Corporation of Calcutta V. Smt Padma Debi, Corporation of
Calcutta V. Life Insurance Corporation of India, Guntur Municipal Council V.
Guntur Town Rate Payers’ Association and Dewan Daulat Rai Kapoor V. New Delhi
Municipal Committee have consistently held that it is not the value of
occupation of the property to the tenant, but the rental income from it to the
owner which is to be taken into consideration while estimating the reasonable
return that a landlord can expect from his property.”
10.In East India Commercial Co-operative Private Limited V. Corporation of
Calcutta ((1998 4 SCC 368), the Supreme Court held that when the Municipal Act
requires the determination of the annual value, that Act has to be read along
with the Rent Restriction Act which provides for the determination of fair rent
or standard rent. In para 17 of the said judgment it was held as follows:
“17.From the aforesaid decisions, the principle which is deducible is that when
the Municipal Act requires the determination of the annual value, that Act has
to be read along with the Rent Restriction Act which provides for the
determination of fair rent or standard rent. Reading the two Acts together the
rateable value cannot be more than the fair or standard rent which can be fixed
under the Rent Control Act. The exception to this rule is that whenever any
Municipal Act itself provides the mode of determination of the annual letting
value like the Central Bank of India case relating to Ahmedabad or contains a
non obstante clause as in Ratnaprabha case then the determination of the annual
letting value has to be according to the terms of the Municipal Act.”
11.The aforesaid decisions were considered in Commissioner V. Griha
Yajamanula Samkhya ((2001) 5 SCC 651). Though in para 35 of the said decision,
the Supreme Court held that the Hyderabad Municipal Corporation Act is a
complete Code for assessment of property tax and that there is no provision in
the statute that the fair rent determined under the Rent Control Act in respect
of a property is binding on the Commissioner, the Supreme Court nevertheless
held in para 37 that “the intent and purpose of the exercise to determine the
annual rental value is to avoid arbitrariness in the process of assessment of
the tax.”
12.In India Automobiles (1960) Limited V. Calcutta Municipal Corporation
((2002) 3 SCC 388), it was argued that conflicting views had emerged from the
case in Corporation of Calcutta V. Padma Debi (AIR 1962 SC 151) up to the case
in Commissioner V. Griha Yajamanula and others. But the Supreme Court pointed
out that the law was settled on the point though distinction was made in some
cases with reference to the relevant Municipal law. In para 24 of its judgment
the Supreme Court held as follows:
“24.We do not find any conflict in the judgments of this Court so far as the
determination of annual value of the property under the municipal law is
concerned. Distinction, if any, is based upon the relevant provision of the
statute of a State with which this Court was dealing, particularly with respect
to such statutes which contained a non obstante clause. We are of the view that
the basis for determination of annual rent value has to be the standard rent
where the Rent Control Act is applicable and in all other cases reasonable
determination of such rent by the municipal authorities keeping in view various
factors as indicated herein earlier, including the rent which the tenant is
getting from his sub-tenant. In appropriate cases the owner of the property may
be in a position to satisfy the authorities that the gross annual rent of the
building of which the annual valuation was being determined cannot be more than
the actual rent received by such owner from his tenant. The municipal
authorities shall keep in mind the various pronouncements of this Court, the
statutory provisions made in the specified Municipal Acts, keeping in mind the
applicability or non-applicability of the Rent Act and the peculiar
circumstances of each case, to find out the gross annual rent of the building
including service charges, if any, at which such land or building might, at the
time of assessment, be reasonably expected to let from year to year in terms of
Section 174 of the 1980 Act.”
13.Thus it is clear that if the provisions of a particular municipal law
are silent about the method of determination of annual rental value, the
municipalities are entitled to take recourse to the provisions of the relevant
rent control legislation for the purpose of determining the annual rental value.
Therefore, the same analogy has necessarily to be imported for the purpose of
determining the rent chargeable by municipalities for the buildings let out by
them to third parties, especially in the absence of any provision for the method
of fixation of rent for the buildings owned by municipalities.
14.The Tamil Nadu District Municipalities Act by itself does not contain a
provision either for letting out the buildings owned by municipalities or the
method of fixation of the rental value of such buildings. It is only by the
executive fiat that the Government had been directing the municipalities to
adopt some method of fixation of fair rent. Section 303 (1) of the Tamil Nadu
District Municipalities Act, 1920 empowers the State Government to make rules to
carry out the purposes of the Act. Sub-section (2) of Section 303 lists out the
matters in relation to which such rules may be issued by the Government. Clause
(d) under Sub-section (2) of Section 303 reads as follows:
“(2) in particular and without prejudice to the generality of the foregoing
power they may make rules –
(d) as to the conditions on which property may be acquired by the municipal
council or on which property vested in or belonging to the municipal council may
be transferred by sale, mortgage, lease, exchange or otherwise.”
Thus it is left to the rule making power of the Government to provide for the
conditions on which the property belonging to the municipal council may be
transferred.
15.In exercise of the power so conferred under Section 303 (1) of the
Tamil Nadu District Municipalities Act, 1920, the Government appears to have
issued statutory rules. These rules are called “The Conduct of Election of
Municipal Councilors Rules, 1962”. Though the nomenclature given to the rules is
misleading, the said rules cover various aspects. Chapter I of the said rules
deals with “General Administration”; Chapter II deals with “Budget,
Administration Report and Audit”; Chapter III deals with “Establishment”;
Chapter IV deals with “Receipts and Expenditure”; Chapter V deals with
“Assessment and Collection of Taxes”; Chapter VI deals with “Collection of other
Revenues”; Chapter VII deals with “Education – Medical – Vaccination”; Chapter
VIII deals with “Public Works”; Chapter IX deals with “Debt Heads” and Chapter X
deals with “Accounts, Registers and Returns”. These rules are available in
Volume I of “Municipal Manual”, the copies of which are now rare to find.
16.Interestingly each rule in the aforesaid rules is also termed as
Paragraphs. Paragraph 12 of the aforesaid rules deals with “Acquisition and
Transfer of Immovable Property by Municipal Councils.” Several conditions and
restrictions are imposed under paragraphs 12-2 to 12-8 of the aforesaid rules,
on the transfer of –
(i) immovable properties vesting in but not belonging to a municipal
council;
(ii) immovable properties belonging to a municipal council; and
(iii) properties such as road-sides and street margins.
Paragraph 12-4 deals with Transfer of immovable property belonging to a
Municipal Council by way of lease and it reads as follows:
“12-4: Transfer by lease of immovable property belonging to a Municipal
Council.-
(1) A Municipal Council may lease out any immovable property belonging to it:
Provided that no such lease shall be valid in case the period of the lease
exceeds three years or where the lessee is permitted to put up any building or
structure whether of masonry, bricks, wood, mud or metal, unless the sanction of
the Inspector of Municipal Councils and Local Boards has been obtained therefor.
(2)The lease deed shall be in Form III (a) in Schedule III appended to
these rules with such variations as circumstances may require.”
17.The manner in which transfers and leases of immovable properties
belonging to Municipalities could be granted, is detailed under paragraph 12-7
of the aforesaid rules, which reads as follows:
“12-7: Publication of proposed transfers and leases.-
(1) In every case of transfer or lease falling under rule 12-3, 12-4, 12-5 or
12-6, the Municipal Council shall publish a notice of the proposed transfer or
lease, giving full particulars of the property to be transferred or leased, the
name of the proposed transferee or lessee and the consideration for the transfer
or the rent reserved under the lease-
(a)in the District Gazette, if the consideration for the transfer exceeds
Rs.500 or if the rent reserved under the lease exceeds Rs.100 per annum and
(b)by affixture in a conspicuous position-
(i) at the offices of the Municipal Council, of the Collector of the
district and of the Revenue Divisional Officer,
(ii) at the taluk office,
(iii) at the Village chavadi of the village in which the property is
situated, and
(iv) on the property to be transferred or leased.
(2)In every case where such transfer or lease is to be by public auction,
a notice with full particulars of the property to be transferred or leased shall
be published-
(a)in the District Gazette and in one or two prominent Local
Newspapers circulated within the jurisdiction of the Municipal Council if the
consideration for the transfer exceeds Rs.500 or if the rent reserved under the
lease exceeds Rs.100 per annum,
(b)in the manner specified ii clause (b) of sub-rule (1); and
(c) by tom-tom in suitable places.
(3)The Municipal Council may dispense with the publication in the District
Gazette as required by sub-rules (1) and (2) in the cases of leases which are
granted during the course of a financial year owing to the failure of the
original lessee to fulfil the terms of his lease.
(4)Publication of the notice in the District Gazette as required by sub-
rules (1) and (2) shall not be necessary during the continuance of the present
war.”
18.It appears from paragraph 12-8 that the leases of any immovable
property belonging to the Municipalities would be valid only if the lessee is
made to pay such assessment, ground-rent or quit-rent as the Collector may
determine. It is perhaps in the light of the said paragraph that the Government
of Tamil Nadu issued G.O.Ms.No.147 Municipal Administration and Water Supply
Department dated 30.12.2000, prescribing certain guidelines for the renewal of
leases and for fixation of rent. Paragraph 4(3) of the said Government Order
reads as follows:
“3.mt;thW. nkYk; K:d;whz;LfSf;F mspf;fg;gLk; Fj;jif. g[jpa Fj;jifahff;
fUjg;gl;L. g[[jpjhf Fj;jifj; bjhif eph;zapf;fg;gl ntz;Lk;/ ,g;g[jpa Fj;jifj;
bjhif mg;gFjpapy; eilKiwapYs;s thlif kjpg;gpd; mog;gilapy; (Market rental value)
eph;zapf;fg;gl ntz;Lk;/ mt;thW eph;zak; bra;a. mg;gFjpapy; efuhl;rpahy; fle;j
Xuhz;oy; Vyj;jpy; tplg;gl;l filfspd; thlifj; bjhif. jdpahh; filfspd; thlif mst[.
muR my;yJ muR rhh;e;j epWtd’;fs; jdpahhpd; fl;olj;jpw;F mYtyf trjpf;nfh gpw
,dj;jpw;nfh. brYj;Jk; thlif mst[ nghd;wit mog;gilahff; bfhs;sg;gl ntz;Lk;/
,Jnghd;W fzf;fplg;gl;l thlif kjpg;gpd; mog;gilapy; xU rJu mst[f;fhd thlif
eph;zapf;fg;gl;L mjd; mog;gilapy; cs;shl;rp mikg;g[fspd; filf;fhd g[jpa Fj;jifj;
bjhif eph;azapf;fg;gl ntz;Lk;/ vg;goapUg;gpDk; g[jpajhf eph;zapf;fg;gLk; thlifj;
bjhif brd;w Mz;L thlifiatpl Fiwe;jJ 15% TLjyhf ,Uf;fntz;Lk;/”
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 Councilors 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 nevertheless 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
(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.
21.But the said Government Order is also silent on the question as to how
the market rate of rent is to be determined. Therefore, the method of
determination of rent as fixed under para 4(3) of the previous Government Order
G.O.Ms.No.147, dated 30.12.2000 does not appear to have undergone any change,
under the recent Government Order G.O.Ms.No.92, dated 03.07.2007. In any case
the respondent is obliged to follow the recent order G.O.Ms.No.92, dated
03.07.200, only in respect of leases which are in force as on the date of issue
of the G.O. namely, 03.07.2007, by virtue of the direction issued in the last
line of para 4(ii). In the present case, the Municipal Council of the
respondent passed a resolution on 29.03.2007 fixing the rent payable for all the
shops, for the purpose of considering the question of renewal of the leases with
effect from 01.04.2007. Therefore, the order applicable to the case on hand is
only G.O.Ms.No.147, dated 30.12.2000. But unfortunately both the Government
Orders do not prescribe a scientific method of fixation of fair rent.
22.Interestingly, the previous Government Order G.O.Ms.No.147, dated
30.12.2000 prescribed an enhancement of rent by a minimum of 15% over and above
the existing rent. In other words, the Government Order gave a leverage to the
Municipal Councils to fix a rent which is not less than 15% over and above the
existing rent. But the present Government Order G.O.Ms.No.92, dated 03.07.2007
has fixed 15% enhancement uniformly without any leverage for the Municipal
Council. It is not known as to how far the present Government Order would be
valid, if tested on the touchstone of the Tamil Nadu District Municipalities Act
and the rules issued thereunder.
23.However, I am not for a moment, concerned with the question of validity
of G.O.Ms.No.92, dated 03.07.2007 in this case. The aforesaid Government Orders
were referred to, just for the purpose of testing whether they throw any light
upon the method of fixation of rent. But they do not, except to some extent, in
para 4(3) of G.O.Ms.No.147, dated 30.12.2000. But the method of fixation of rent
provided in para 4(3) of the said G.O. is also not scientific.
24.Therefore, one has to necessarily seek an extraneous aid for the
purpose of finding out as to how the rent for a building offered on lease by the
Municipality is to be fixed. As seen from the decision of the Supreme Court in
Guntur Municipal Council case, the method of fixation of fair rent as prescribed
under the Rent Control Act was imported into the District Municipalities Act for
the purpose of enabling the Municipality to determine the annual value of the
buildings. Therefore, by the same analogy, the fair rent for the buildings
offered on lease by Municipalities, has also to be determined on the same basis.
In the absence of a specific provision in the Tamil Nadu District Municipalities
Act, 1920 the recourse to the method of fixation of fair rent as provided under
the Tamil Nadu Buildings (Lease and Rent Control) Act, alone, in my considered
view, could provide a scientific and logical basis for the fixation of fair
rent.
25.Recourse to the provisions of the Rent Control Act for the purpose of
determining the fair rent that could be charged by municipalities for their
buildings would not only avoid arbitrariness but also ensure uniformity in the
matter of charging rent. The Tabular Form extracted in para 5 above shows that
in one case the enhancement of rent by the respondent is by 5 times (Serial
No.36 Shop No.1). On the other extreme the enhancement in respect of Shop No.31
(Serial No.52) is by 177 times. Such enhancement, in individual cases may even
be justified but such justification will go on record only if the method of
fixation is scientific and uniform.
26.In view of the above, all the Writ Petitions are allowed, the impugned
notices are set aside and the respondent Municipality is directed
(a) To determine the fair rent for each of the shops taken on lease by the
petitioners, separately by adopting the same principles as laid down under the
Tamil Nadu Buildings (Lease and Rent Control) Act, for fixation of fair rent.
(b) After determining the fair rent on a provisional basis, by adopting
the above method, the respondent shall serve notices on the writ petitioners,
enclosing copies of the working sheets containing details of the calculations so
made and call upon the lessees to furnish their objections in writing.
(c)After the lessees submit their objections, to the notices so issued by
the respondent, the respondent shall pass final orders fixing the fair rent. It
is made clear that such fixation of fair rent, shall be with effect from
01.04.2007, since the exercise for enhancement of rent was undertaken by the
Municipality with effect from 01.04.2007.
(d)It is also made clear that the lessees should furnish whatever
documents they rely upon, for the purpose of arriving at the fair rent for the
building, along with their objections, so that the exercise of determining the
fair rent can be completed by the Municipality at the earliest.
No costs. Consequently, connected miscellaneous petitions are closed.
sgl
To
The Commissioner,
Pudukkottai Municipality,
Pudukkottai.
The Registry is directed to send
a copy of the Judgment to
1.The Secretary to Government,
Municipal Administration and
Water Supply Department,
Fort St. George, Chennai – 600 009.
2.The Commissioner for Municipal Administration,
Chepauk, Chennai – 5.