1. The petitioners are residing in the area over which Robertson pet Town Municipal Council (herein after referred to as the 'Council') has jurisdiction. There are two shop premises belonging to the Council situate in a busy part of the said municipal area. That on 23-7-1971 the Deputy Commissioner, Kolar, in exercise of his power under Section 306 of the Karnataka Municipalities Act, 1964 (hereinafter referred to as the 'Act'), suspended the order of the President of the Council to dispose of the lease-hold rights in respect of two shops under a private treaty as he was of the opinion that it could be done only after due publication of the intention of the Council to do so. Contrary to the said decision of the Deputy Commissioner, the President allotted the two, premises on 17-6-1972 in favour of respondents 2 and 3 on lease at Rs. 75/- each per month. The Council did not advertise that the lease-hold rights of the premises in question would be disposed of as required by law before doing so.
It however, ratified the action of the President on 31-1-1973. The petitioners who were interested in securing the leasehold rights have filed these petitions questioning the validity of the grant in favour of respondents 2 and 3. They have contended that the premises in question would have fetched much more than Rs. 75/- per month if the leasehold rights had been disposed of after giving due publicity and that respondents 2 and 3 have been allowed to have an unlawful advantage over other persons by the secret arrangement entered into between them and the Council.
2. It should be mentioned at this stage that the petitioners instituted a suit in 0. S. No. 94 of 1973 on the file of the Munsiff, K. G. F. questioning the validity of the grant of leases made in favour of respondents 2 and 3 and they obtained an order of temporary injunction. The said temporary injunction was vacated by this Court in C. R. P. No. 93 of 1974.Immediately thereafter the petitioners filed the above writ petitions,
3. The Council-respondent-1 has filed statement of objections. In para 4 of the statement of objections it is stated as follows:
'The people of the town were aware of the fact that the two premises are going to be leased out. On account of the fact that the public was aware of the fact that the premises in question were going to be leased out, applications had been received from many persons. In regard to 'the applications of the petitioner in W.P. No. 3919/1974, he did not make any definite offer as to the quantum of rent. Hence his application could not at all be considered. Petitioner in W. P. No. 3920/1974 had not applied at all. The leases have been granted to respondents 2 and 3 as their offers were the highest. It is very relevant to note that petitioners have not stated that they were ready and willing to take the leases at Rs. 75/- p. m. or that the lease amounts would have been higher if the same were by public auction. It is submitted that there has been absolutely no prejudice or injury in any manner to the Municipality.'
It is also contended that the petitions filed on 21-8-1971 suffer from laches.
4. Rule 39 of the Karnataka Municipalities (Guidance of Officers, Grant of Copies and Misc. Provisions) Rules. 1966, reads as follows:
'39. Procedure in respect of lease sale or auction.
Save as otherwise provided in the Act or Rules, when the municipal council proposes to lease, sell or auction any moveable or immovable property, it shall give notice of such lease, sale or auction by:
(i) affixing copies thereof on the notice board of the offices of the municipal council;
(ii) exhibiting copies thereof in all municipal reading rooms and places considered by the municipal council to be conspicuous within the municipality;
(iii) publication in a daily newspaper having wide circulation within the municipality;
(iv) by beat of drum or circulation of notice in the locality.'
It is not disputed that the above procedure of giving due publicity to the disposal of the leasehold rights was not adopted before the leases were granted in favour of respondents 2 and 3. The lease was originally granted in favour of respondents 2 and 3 for a period of eleven months as per orders of the President of the Council dated 17-6-1972 (vide Exhibits D and E). Even though the period of eleven months had elapsed, no action has been taken by the Council to terminate the leases and to dispose of the lease-hold rights in accordance with law.
5. The object of giving due publicity to the proposal to dispose of a leasehold rights in respect of a property belonging to a local authority before it is so disposed of is quite obvious. Such publication is necessary, first, in order to realise the highest possible income and, secondly, to prevent persons incharge of the Municipal Council from disposing of the lease-hold rights in favour of persons in whom they are interested. The necessity for having a rule of that nature has been explained by this Court in Gurumurthappa v. The Corporation of the City of Bangalore, 1962 Mys LJ (Supp) 162 = (AIR 1962 Mys 92) while dealing with a case arising under the City of Bangalore Municipal Corporation Act. The relevant part of the decision reads as follows: -
''' The cumulative effect of these provisions is to make the Commissioner alone responsible for all transactions entered into on behalf of the Corporation. The other bodies mentioned in the Act only act as checks on him; they can merely limit his power and not take it away. These provisions are founded on sound political philosophy, Graft and patronage are the greatest enemies of democratic forms of Government. The conflicts between idealism and opportunism are eternal. There is need to keep away the politician from economic pastures lest both politics and economics should get tainted.'
Proceeding further their Lordships have observed as follows: -
'Democracy as is often said is a way of life and not merely a form of Government. There is little danger from those who openly attack our democratic institutions. But the real danger comes from those who undermine the foundation of our democratic society by the covert attacks and sinister methods. The danger is all the greater if the guardians of our political institutions are not true to their professions, These are not mere political theories but real dangers that lurk in the corners. Eternal vigilance is the price that we have to pay for assuring to ourselves the benefits of our political institutions. This Court as one of the guardians of the Constitution shall always keep up its vigil against those dangers.'
It is unfortunate that in this case notwithstanding the fact that the Deputy Commissioner, Kolar had suspended an earlier decision of the President to dispose of leasehold rights contrary to Rule 39, the Council has tried to circumvent the law by disposing of the lease-hold rights in favour of respondents 2 and 3 without complying with Rule 39 and in persisting before this court that what had been done by the Council earlier was in accordance with law.
6. Disobedience of Rule 39 cannot be overlooked, It is a mandatory rule, It is intended to protect public revenue. Matters relating to public revenue cannot be dealt with arbitrarily and in the secrecy of an office. Whatever is done in that regard should be done in accordance with law which, in the instant case, requires due publicity to be given to the intention to dispose of lease-hold rights in the prescribed manner. Adoption of and ad hoc procedure cannot be countenanced.
7. The above view is in conformity with the view of the Supreme Court in Guruswamy v, State of Mysore, : 1SCR305 in which the question of disposal of excise privileges under the Mysore Excise Act, 1901 and the Rules made thereunder arose for consideration. In that case, the Supreme Court observed as follows: -
'The procedure of tender was not open here because there was no notification and the furtive method adopted of settling a matter of this moment behind the backs of those interested and anxious to compete is unjustified, Apart from all else, that in itself would in this case have resulted in a loss to the State because as we have said, the mere fact that the appellant has pursued this writ with such vigor shows that he would have bid higher. But deeper considerations are also at stake, namely the elimination of favouritism and nepotism and corruption: not that we suggest that that occurred here, but to permit what has occurred in this case would leave the door wide open to the very evils which the legislature in its wisdom has endeavoured to avoid. All that is part and parcel of the policy of the legislature. None of it can be ignored.'
8. It is thus clear that even if there is no proof of loss, it is the duty of the court to interfere with a transaction entered into contrary to Rule 39 because the question involved is one of general importance and of high public policy. Since it is not disputed that Rule 39 was not followed in the instant case before disposing of the lease-hold rights in question, the impugned orders granting them in favour of respondents 2 and 3 have to be set aside.
9. There is no substance in the contention that there was delay in filing the petitions. As mentioned earlier, the petitioners had obtained an order of temporary injunction in the suit filed by them and that was vacated only in 1974 in C. R. P. 93 of 1974. These petitions were filed immediately thereafter. Moreover, the continuance of the leases in question causes loss to the Council every day. By filing these petitions, the petitioners have discharged a public duty. This is not a case in which the delay can be a ground to dismiss the petitions.
10. In the result, these petitions are allowed. The leases granted in favour of respondents 2 and 3 are set aside. The Council is directed to dispose of the lease-hold rights in question in accordance with law. Respondents 2 and 3 are directed to put the Council in possession of the premises within ten days from today.
11. A copy of this order shall be sent to respondent-1 as well as to the Deputy Commissioner, Kolar within a week.
12. Petitions allowed.