JUDGMENT T.C. Raghavan, Ag. C.J. 1. The questions involved in these writ appeals are the same; and the writ petitions giving rise to these appeals have been disposed of by a common judgment by a learned Single Judge. The main point argued before us is that the Kerala Municipalities (Remission of Revenue to Lessees and Contractors) Rules, 1967 are ultra vires the rule making powers of the Government under S.344 of the Kerala Municipalities Act. 2. S.344 of the Municipalities Act gives power to the Government to make rules; and sub-s.(1) thereof provides generally that the Government may make rules to carry out all or any of the purposes of the Act not inconsistent therewith. And sub-s.(2) provides that, in particular and without prejudice to the aforesaid general power, the Government may make rules on the several heads mentioned therein in the several clauses. It is contended that the impugned rules will not come within any of the several clauses mentioned in sub-s.(2) That may be so. But then, the question still remains whether the rules will not come within the general power contained in sub-s.(i). 3. Now, the rules impugned regulate remission to be given to lessees and contractors. One of the rules says that all lessees of revenue from municipal councils, all lessees of immovable property belonging to or vested in municipal councils and all persons who have entered into contracts with municipal councils shall be held strictly to the terms of their leases or contracts: and that is nothing but an affirmation or restatement of the law. Another rule says that remission shall be granted only in particular circumstances, namely, only in cases in which the lessees or contractors are prevented from carrying out their part of the leases or contracts by reason of some extra ordinary extrinsic causes which could not reasonably have been expected, etc; and the remission shall bear a reasonable proportion to the loss sustained, and when the amount to be remitted exceeds Rs.1000/- the previous sanction of the Director of Municipalities shall be obtained. Yet another rule says that the penalties provided in the leases or contracts shall be strictly enforced in accordance with the terms of the leases or contracts. This rule also regulates the penalties payable for belated payment of instalments due under leases or contracts. 4. Yet another rule says that the penalties provided in the leases or contracts shall be strictly enforced in accordance with the terms of the leases or contracts. This rule also regulates the penalties payable for belated payment of instalments due under leases or contracts. 4. The argument of the counsel of the appellants is that these rules are not intended to carry out all or any of the purposes of the Act as contemplated by sub-s.(1) of S.344. Now, the administration of the municipality is certainly one of the purposes of the Act; and entering into contracts and granting leases will also come within the purposes of the Act, Therefore, the Government has power to make the impugned rules under S.344(1) of the Act to carry out the purposes of the Act. 5. The next contention urged is that these rules, at any rate, will not apply to the contracts involved in these appeals. The appellants took contracts for collecting fees from the markets and cart stands and also executed contracts to the municipality agreeing to pay the amounts in instalments: the contracts contained a provision that, if any instalment was defaulted, the contractor was liable to pay a certain penalty. The appellants defaulted some of the instalments; and they also filed applications for remission of the instalments. The municipal council passed resolutions giving them remission too. At this stage, it may be useful to refer to two dates. The new rules came into force on 13th June 1967; and the remissions were given by resolutions passed on 13th October 1967 after the impugned rules came into force. The argument is that, since the contracts in these cases were earlier than the date on which the new rules came into force, the rules could not have given power to vary the terms of the contracts already existing. Under S.28 of the Act, the municipal administration vests in the municipal council subject to the provisions of the Act, which shows that the vesting of the administration in the council is subject to S.344 as well, which is one of the provisions of the Act and which confers power on the Government to make rules. It then follows that, if rules are made under S.344, such rules must apply to the administration which vests in the municipal council. It then follows that, if rules are made under S.344, such rules must apply to the administration which vests in the municipal council. Entering into contracts and granting leases are part of the administration by the municipal council; and if such administration is vested in it by S.28 only subject to S.344, the rules made under the latter section must evidently control the administration vested in the council by the former section. Therefore, reading S.28 and S.344 of the Act together, it goes without saying that the rules framed under S.344 the impugned rules also apply to the administration vested in the municipal council. 6. The further question is whether there is any substance in the argument thatthe rules are not retrospective: the argument is that, since the contracts wereearlier than the coming into force of the rules, the rules cannot beretrospectively applied to the existing contracts. This argument is not correct,because the rules are not, in fact, retrospectively applied. What has been done is only to apply the rules to (the remissions given after 13th June 1967 when the rules came into force. On 13th October 1967 when the municipal council passed the resolutions allowing remission, it had no power to grant remission otherwise than as contemplated by the rules. Therefore, this argument has also no force. 7. Lastly it is urged that the municipal council should have heard the representations of the appellants, if any, before the council varied the resolutions already passed by it. As already indicated, the resolutions granting remission were passed on 13th October 1967. Thereafter, on 26th July 1968, the impugned resolutions were passed. Admittedly, before these latter resolutions were passed, the appellants were not given any opportunity to make representations: they were not intimated about the council's move to pass such resolutions or to consider the question afresh. It is suggested before us by the counsel of the municipality that the earlier resolutions granting remission were, in fact, illegal and non existent, so that, when the municipal council passed subsequent resolutions, no question of hearing the representations of the appellants arose. This argument is not correct, because legal or illegal, valid or void, resolutions were passed granting remission and the fact was also intimated to the appellants, who, relying on such intimations, did not pay the defaulted instalments. This argument is not correct, because legal or illegal, valid or void, resolutions were passed granting remission and the fact was also intimated to the appellants, who, relying on such intimations, did not pay the defaulted instalments. Thereafter if the municipal council wanted to change its decision and pass other resolutions varying the earlier resolutions, the council should have heard the representations, if any, of the appellants. 8. There is one other matter which has to be considered. The penalty imposed for the defaulted instalments is referred to by the Single Judge. The learned Judge has pointed out that the penalty Works out to interest at 43.8 per cent, which is certainly unconscionable; and the learned Judge has also observed that the appellants need pay only reasonable compensation for the breach of the contracts. We would make it clear that the reasonable compensation need be only interest at 6 per cent on the defaulted instalments from the respective dates of default. The counsel of the appellants has brought to our notice three orders of the Director of Municipalities relating to these three cases. In two of them, the Director has said that the municipal council was at liberty to grant remissions up to Rs.1000/- and should get the previous sanction of the Director if the remissions Were to be higher than Rs.1000/-. In the other case, the Director has stated that the appellant therein was not entitled to any remission as contemplated by R.3 of the impugned rules. The municipal council does not appear to have considered whether the appellants were entitled to any remission, below Rs.1000/- or above Rs.1000/- in the two cases; and in the third case also the council does not appear to have considered the claim of the particular appellant for remission. The resolutions indicate merely that the municipal council has rejected the claim for remission. In view of this and in view of the fact that the municipal council did not give the appellants an opportunity to make representations, we feel that some modification has to be made in the order passed by the Single Judge. 9. The writ appeals are allowed in part and the municipal council is directed to consider the representations of the respective appellants, if any, and pass resolutions as contemplated by the new rules. In the circumstances, we pass no order regarding costs.