K.B.N. Singh, C.J.
1. The writ appeal and the writ petitions are taken up together as common questions of law and facts are involved in all these cases. The writ appeal is filed against the dismissal of the writ miscellaneous petition filed by the appellant praying for injunction pending disposal of the writ petition. For the sake of convenience, the appellant in the appeal is also referred to herein as the Petitioner.
2. The writ petitions are directed against the order of the Collector of Kanyakumari district directing the Monday Market Town Panchayat to lease out the shops by public auction after setting aside the revision of the rentals made by the Panchayat. The petitioners in these cases had taken settlement of the lease in respect of the respective shops by public auction. The original lease was for a period of three years. Thereafter, the Panchayat revised the rental and offered to the petitioners to take a fresh lease for a further period of three years on the revised rental. The petitioners challenged the order of revision before the Collector contending that the enhancement was not justified. It is admitted position before us that in all these cases, the Collector set aside the order of revision of rental, but directed settlement to be made by public auction. It is this part of the order, as already stated, which is under challenge before us.
3. Learned Counsel appearing on behalf of the petitioners submitted that the Collector having set aside the revision of rental, the petitioner are entitled to a renewal of the lease in their favour at the old rental for a period of three years under Sub-rule (1-I) of Rule 12 of the Tamil Nadu Panchayat Rules framed under the Tamil Nadu Panchayat Act, 1958. Learned Counsel for the Panchayat, however, contended that settlement of lease in respect of shops should be effected only by public auction, as that will help the Panchayat in getting a higher rental. These rival contentions of the parties call for determination in these writ petitions. The relevant rules in this regard may be usefully quoted:
R. 12(1-B)(a): 'All the leases of shops, rooms, garages, markets, canteens, hotels, lodging houses and other permanent buildings belonging to the Panchayat and for which rent is payable for each month or for a longer period shall be effected by public auction. Such auction shall be conducted by the executive authority or by a person duly authorised by him who shall give full publicity thereto in such manner as he considers suitable.
(b) The executive authority shall place the bids at the auction, before the Panchayat which shall determine which of the bids shall be accepted.
(c) 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.
(d) The lease shall be for a period of three years.
4. This is the rule on which the learned Counsel on behalf of the Panchayat relies for his submission that settlement of the shops etc., has to be made as a rule by public auction. Learned Counsel on behalf of the Petitioners, however, relies, on Sub-rule (1-I) of Rule 12 in support of his submission that in case the Panchayat does not revise the rental, the Panchayat is bound to renew the lease in favour of the lessee on the old rental. The relevant rule reads as under:
R. 12(1-I): 'If the Panchayat decides not to revise the rent, the lease shall be renewed in favour of the lessee for a further period of three years
In our opinion, there is force in the contention of the learned Counsel for the petitioners. Initial settlement of the shops is bound to be made by public auction under the rules, that is to say, settlement by private treaty or negotiation is completely excluded from the purview of the Act. If the initial period of lease comes to a close, it is open to the Panchayat three months before the end of the lease period to revise the rental of the shops taking into consideration the subsequent increase, if any, in the market value of the building, the appreciation, if any, in the rental value of the building and other similar buildings in the locality, considerations of the locality in which the building is situated and such amenities as are available in respect of the building concerned including nearness to the Railway Station and Bus Stand, as provided for in Sub-rule (1-C). After such a revision is made, the Panchayat is required to inform the lessee' at least one month in advance before the expiry of the lease that the rental has been revised and that the lease will be renewed in his favour for a period of three years, if the lessee agrees to pay the revised rent. The lessee is required by Sub-rule (1-D)(ii) to reply to the executive authority at least fifteen days in advance of the expiry of the said lease. In case, the lessee accepts to take a lease on the enhanced rental, Sub-rule (1-E) makes it obligatory on the part of the Panchayat to renew the lease in favour of the assessee. This sub-rule may be usefully quoted:
(1-E): If the lessee expresses his willingness to pay the revised rent, the lease shall be renewed in his favour for a further period of three years.
Therefore, it is apparent that Sub-rules (1-E) and (1-I) do not support the contention of the learned Counsel for the Panchayat that public auction is the only mode of settlement of lease of the shops by the Panchayat. At least in two circumstances, exception has been made for renewal of the lease for another term of three years, first, as mentioned above, when there is no revision of the rental and secondly when there has been a revision and the revision is accepted by the lessee. In the circumstances, there is no option under the rules but to renew the lease in favour of the existing lessees.
5. We shall now consider the legality of the order of the Collector in ordering public auction after first setting aside the enhancement of the rental made by the Panchayat. The relevant rules on this point are Sub-rules (1-F), (1-G) and (1-H). In exercise of the powers conferred under Sub-rule (l-H)(i), the Collector, in the appeal before him, may confirm or vary the rent as revised by the Panchayat. Under Sub-rule (1-H)(ii), the lessee shall be liable to pay the rent as determined in the appeal from the date of expiry of the original lease. The proviso to Sub-rule (1-H)(ii) makes it clear that in case the lessee does not desire to have the renewal of the lease on the enhanced rental as fixed by the Collector in the appeal, the lease of the building shall be effected by 'public auction' in the manner as specified in Sub-rule (1-B) quoted supra. That is another circumstance to show as already held by us that public auction can only be held where the lessee refuses to accept the enhanced rent.
6. In the instant cases, after the Collector has set aside the revision of the rental, the effect of the order will be as if there is no revision of the rental at all. In such a situation, Sub-rule (1-I) will come into operation and the lessee will be entitled to a renewal on the old terms as a matter of course for a period of three years. The rule does not envisage that the Collector, while setting aside the revision, has any power vested in him to direct settlement of the lease by public auction. As the order of the Collector in this regard, is contrary to the rules it is set aside.
7. We are informed that not only the initial period of lease, but also the period for which the petitioners would be entitled to a renewal had expired. That is a matter of detail which will be looked into by the authorities. In all cases where the renewal period has also expired, the Panchayat will proceed to make the settlement in accordance with the rules and the observations made above.
These writ petitions are accordingly allowed, and writ appeal disposed in terms thereof. There will be no order as to costs in any of these petitions and the appeal.
W.P. NO. 1841 of 1980:
Gopala Pillai ... Petitioner
The State of Tamil Nadu rep. by the Collector of Kanyakumari District and two Ors. ... Respondents
8. This petition may be dealt with separately. The petitioner was a lessee of the shop for the period from 1-9-1976 to 31-8-1979 on a monthly rent of Rs. 52/- fixed at the public auction. After the expiry of the said period, the Panchayat instead of resettling the lease in favour of the petitioner as it was bound to do under Sub-rule (1-I) as there was no revision of the rental, straightaway went in for public auction for settlement of the shop for a further period of three years. At the said auction, one Chellavadivoo was the highest bidder, his bid being Rs. 315/- per month. At the said auction, the petitioner took part and his bid was for Rs. 127/-. This auction is challenged in the writ petition. During the pendency of the writ petition the petitioner obtained an interim injunction restraining the successful bidder from disturbing the petitioner's possession on condition of his paying rental of Rs. 315/- per month. We are informed that that condition has been complied with by the petitioner. For the reasons stated by us in the connected writ petition which we have disposed of to-day, the public auction being illegal, the proceedings of the auctions are quashed. The period from 1-9-1979 to 31-8-1982 was the period of renewal of the petitioner. The petitioner is liable to pay rental at the rate of Rs. 127/- per month as offered by him for this period. The petitioner will be entitled to refund of the amount paid in excess for this period. It will be open to the Panchayat either to revise the rent and go in for a renewal or to take such steps for settlement in accordance with the rules. The petitioner will be liable to pay rental at the rate of Rs. 127/- per month for the period he remains in possession of the shop before the next settlement. This writ petition is accordingly allowed. There will be no order as to costs.