JUDGMENT - Jamdar M.S. J.-The petitioner, which is a Co-operative Society of fisher-men and which is duly recognised by the Fisheries Department of the Government of Maharashtra for the purposes of pisci-culture, seeks to chal-lenge the order passed by the Collector, Nagpur, suspending under sec-tion 308 (1) of the Maharashtra Municipalities Act, 1965, the lease granted to the petitioner Society by the Umrer Municipal Council in respect of the three tanks known as Gao Talao, Hirva Talao and Lulyachi Bodi situated within the municipal limit and also the order in revision gassed by the Regional Director of the Municipal Administration of the Maharashtra State, Nagpur, confirming the order of the Collector. 2. The three tanks, named above, were leased out to the petitioner Society by the Urarer Municipal Council for a period of 5 years ending with 31st March 1980 for fishing and Shingara cultivation. Approval to this lease was accorded by the Director of Municipal Administration on 31st March 1975 (Annexure J). The lease amount was fixed at Rs. 16,000 per year. Before the expiry of this lease, the petitioner submitted an application to the Municipal Council in December 1979 for-a fresh lease. Similar appli- cation was filed by respondent No. 2, which is also a Co-operative Society of fishermen. It appears that the Municipal Council did not consider the appli- cation of respondent No. 2 and by Resolution No. 4 passed in a General Meeting of the Umrer Municipal Council held on 29th January 1980 resolved that the three tanks should be leased out for the period of 3 years commenc- ing from 1980–81 and ending with 1982–83, without any auction, to the petitioner Society in accordance with the direction of the State Government on an annual lease money of Rs. 21,000. Being aggrieved by this resolution, respondent No. 2 submitted an application to the Collector on 29–2-1980 praying for suspension of execution of the above referred Resolution No. 4. Respondent No. 2 prayed for stay of implementation of the resolution. But this request was rejected and the petitioner Society was placed in possession of the three tanks in_pursuance of the lease created by the impugned resolu- tion and the petitioner Society commenced fishing and other operations with effect from 1st April 1980 and also paid to the Municipal Council Rs. 10,000 on 6th April 1980 as part payment of the annual lease money. 10,000 on 6th April 1980 as part payment of the annual lease money. The Collector, however, upheld the contention raised by respondent No. 2 that the resolu- tion was inconsistent with Rule 5 of the Maharashtra Municipalities (Transfer of Immovable Property) Rules, 1967. The Collector also held that -the said resolution is likely to cause annoyance to the public, was against public interest and also unlawful and ordered under section 308(1) of the Maha- rashtra Municipalities Act, 1965, that the Municipal Council shall not execute its resolution No 4 dated 29–1-1980 and shall take action for public auction of the three tanks under the provisions of section 92(3) of the Maharashtra Municipalities Act, 1965 and the rules made thereunder. 3. Being aggrieved by this order, the petitioner society filed Revision Application No. 15 of 1979–80 to the Regional Director, Municipal Admini- stration, Nagpur, while the Municipal Council filed Revision Application No. 6 of 1979–80 under section 318 of the Maharashtra Municipalities Act, 1965. By common order passed on 23rd August, 1980, the Regional Director upheld the order passed by the Collector holding that Rule 5 of the above mentioned Rules was contravened as no permission of the Director was obtained for creating a lease without holding an auction. 4. Shri Madkholkar, the learned counsel for the petitioner contended that section 92(3) of the Maharashtra Municipalities Act, 1965 is a complete code in itself and because of non obstante clause with which the said sub- section begins, rules framed under section 92(1) and (2) have no applicationto the leases covered by section 92(3). He further contended that Rule 10 of the Maharashtra Municipalities (Transfer of Immovable Property) Rules, 1967, which makes the rules applicable to lease made by the Council under sub-section (3) of section 92 and that part of the first proviso to Rule 5 which necessitates recording of reasons and permission of the Director for a lease covered by sub-section (3) of section 92 are ultra vires being inconsistent with the provisions contained in sub-section (3) of section 92 of the Maha-rashtra Municipalities Act. According to him, therefore, the Collector and Regional Director were wrong in placing reliance on these Rules for invalidat-ing the Resolution of the Municipal Council granting lease to the petitioner. According to him, therefore, the Collector and Regional Director were wrong in placing reliance on these Rules for invalidat-ing the Resolution of the Municipal Council granting lease to the petitioner. He also contended that while passing the impugned order, the Collector and the Director ignored the Government circulars which in effect dispensed with the necessity of holding auction in case of leases granted to Co-operative Societies. 5. Section 92, which incorporates provision regarding transfer of municipal property, reads as follows : - “(1) No Council shall transfer any of its immovable property with-out the sanction of the State Government. (2) A proposal of such transfer shall be accompanied by resolution of Council passed at a meeting by a majority of not less than two-thirds of the total number of Councillors and shall in no way be inconsistent with the rules made in this behalf by the State Government. (3) Notwithstanding anything contained in sub-section (1), a Council may lease its immovable property for a period not exceeding three years, and the lessee shall not be allowed to make any permanent constructions on such immovable property. Such lease may be renewed by the Council beyond the period of three years with the permission of tlie Director, so, however, that the total period of any lease shall not exceed seven years.” It will be seen that ordinarily no Municipal Council shall transfer any of its immovable property without the sanction of the State Government. Sub-section (2) requires that the proposal of such transfer shall be accompanied by Resolution of the Municipal Council passed at a meeting by a majority of not less than two-thirds of the total number of Councillors and shall in no way be inconsistent with the rules made in this behalf by the State Govern-ment. Sub-section (3) however, carves out an exception in favour of a lease of immovable property for a period not exceeding 3 years and as per the terms of which the lessee is not allowed to make any permanent construction on the demised property. It is, therefore, clear that for a lease not exceeding 3 years and as per the terms of which no permanent construction is allowed to be made by the lessee, the sanction of the State Government is not neces-sary and, therefore, the Municipal Council is not expected to make a proposal to the State Government in that behalf. It is, therefore, clear that for a lease not exceeding 3 years and as per the terms of which no permanent construction is allowed to be made by the lessee, the sanction of the State Government is not neces-sary and, therefore, the Municipal Council is not expected to make a proposal to the State Government in that behalf. Consequently, therefore, it is not necessary that the resolution for granting the lease should be passed by a majority of not less than two-thirds of the total number of Councillors. The Municipal Council, therefore, would be competent to grant a lease covered by sub-section (2) of section 92 by just passing a resolution by a simple majority. This position is made further clear by the last clause incorporated in sub-section (3) viz; that no such lease or any renewal thereof shall be granted unless supported by a resolution passed at a meeting of the Council. There is also nothing in sub-section (3) which makes it obligatory on the Municipal Council to obtain permission of the Director for granting a lease of immovable property for a period not exceeding 3 years and as per the terms of which the lessee is not allowed to make any permanent con-struction on the immovable property which is the subject matter of the lease. Permission of the Director is made necessary only when such lease is sought to be renewed for a further period. 6. Sub-section (2) empowers the State Government to make Rules governing transfer of its immovable property by the Municipal Council. Sub-section (2) also contemplates that the proposal which the Municipal Council is expected to make to the State Government for sanction shall in no way be inconsistent with the rules made in that behalf by the State Government. The opening clause of sub-section (2) of section 92, however, makes it clear that the proposal which is expected to be consistent with the Rules made under section 92 (2) is the proposal contemplated by sub-sec- tion (1) of section 92 for which sanction of the State Government is necessary. As mentioned above, in view of the non obstante clause with which sec- tion 92 (3) begins, the Tease governed by the said sub-section is neither sub- ject to the requirements laid down in sub-section (2) nor it is expected to comply with the rules made by the State Government. As mentioned above, in view of the non obstante clause with which sec- tion 92 (3) begins, the Tease governed by the said sub-section is neither sub- ject to the requirements laid down in sub-section (2) nor it is expected to comply with the rules made by the State Government. The rules which are expected to be made by the State Government under sub-section (2) of sec- tion 92 govern only those transfers under sub-section (1) which do not come within the purview of sub-section (3) of section 92. 7. Besides the special powers conferred by section 92 (2) on the State Government of making rules regarding transfer* of immovable property belonging to the Municipal Council, the State Government is also generally empowered by sub-section (2) of section 321 of the Maharashtra Munici- palities Act, 1965, which lays down that without prejudice to any power to make rules contained elsewhere in that Act, the State Government may make rules consistent with the Act generally to carry out the purposes of the Act. The rules which are invoked by both the Collector and the Director for invalidating the resolution passed by the Municipal Council are styled as the “Maharashtra Municipalities (Transfer of Immovable Property) Rules, 1967.” These rules are framed by the State Government in exercise of the powers conferred by sub-section (2) of section 321 read with sub-section (2) of sec- tion 92 of the Maharashtra Municipalities Act, 1965, and of all other powers enabling the Government in that behalf. Rule 2 lays down that these rules shall apply to all proposals of transfer of immovable property of a Council under section 92. Apart from this general provision, rule 10 days down that the provisions contained in the rules so far as they relate to transfer of pro- perty by lease shall mutatis mutandis apply to leases made by the Council under sub-section (3) of section 92. 8. Apart from this general provision, rule 10 days down that the provisions contained in the rules so far as they relate to transfer of pro- perty by lease shall mutatis mutandis apply to leases made by the Council under sub-section (3) of section 92. 8. Rule 5, which as mentioned above, was invoked by the Collector and the Director Municipal Administration for striking down the resolution in question reads as follows:- “No immovable property which yields or is capable of yielding an income shall be transferred by sale or lease, except to She highest bidder at a public auction.” Provided that, the Council may, for reasons to be recorded in writing and with the permission of the Director in the case of alease under sub-section (3) of section 92 ajid in any other case, with the sanction of the State Government, transfer any property to any bidder other than the highest bidder at an auction or without holding a public auction: Provided further that, in the case of any transfer of immovable pro-perty by lease the Council shall reserve a reasonable annual rent which shall be payable during the whole term of the lease and in the case of transfer of such property by sale, it shall reserve a reasonable sale value. Provided also that, where stalls, gallas or structures or plots are to be leased to educated unemployed persons under the proviso to rule A, then the lease shall be granted without holding any public auction and the monthly rent to be charged to such leases shall be reasonable rent, which shall not exceed the standard rent or as the case may be, fair rent in accordance with the provisions of any law for the time being in force in the area.” The third proviso was added by an amendment dated 14th September 1972 while the fourth proviso was added by an amendment dated 19th August 1980. We are concerned in this matter with the main provision of the rule and the first proviso. The rule states in unmistakable terms that no immo-vable property which yields, or is capable of yielding an income shall be transferred by sale or lease, except to the highest bidder at a public auction. We are concerned in this matter with the main provision of the rule and the first proviso. The rule states in unmistakable terms that no immo-vable property which yields, or is capable of yielding an income shall be transferred by sale or lease, except to the highest bidder at a public auction. The first proviso, however, permits the Municipal Council to grant lease under sub-section (3) of section 92 to any bidder other than the highest bid-der at an auction or without holding a public auction for reasons to be recorded in writing and with the permission of the Director. It also permits the Municipal Council to transfer any property to any bidder other than the highest bidder at an auction or without holding the public auction with the sanction of the State Government. Rule 6 relates to the notice of the public auction. Rule 7 enjoins a duty on the Chief Officer to record reasons for postponement of the auction. Rule 8 lays down that every auction for trans-fer of immovable property shall take place under the supervision of the Chief Officer. Rule 9 relates to additional conditions to which the auction shall be subject apart from the conditions imposed by the Municipal Council. All these provisions are made applicable by virtue of Rule 10 to leases under section 92(3) of the Maharashtra Municipalities Act. Consequently, there-fore, if the Municipal Council wants to create a lease under sub-section (3) of section 92 it is expected to hold an auction and if the council does not want to hold a public auction for creating such lease in favour of a bidder other than the highest bidder at the auction, it must record its reasons in writing and seek the permission of the Director. As mentioned above, in the present case, the resolution is suspended by the Collector on the ground that permission of the Director was not obtained by the Municipal Council for creating the lease without holding public auction. 9. Sub-section (3) of section 92 does not lay down that for creating a lease for a period not exceeding 3 years and under the terms of which no permanent construction is allowed, the Municipal Council must hold a, public auction and grant the lease to the highest bidder. It also does not contem- plate that the Municipal Council must obtain permission of the Director for creating such a lease. It also does not contem- plate that the Municipal Council must obtain permission of the Director for creating such a lease. The requirements contained in Rule 5 and the provi- sions contained in Rules 6 to 9 relating to manner in which the auction is to be held are, therefore, completely inconsistent with sub-section (3) of sec- tion 92. These provisions go beyond the statutory provisions contained in sub-section (3) of section 92 and take away the power of the Municipal Council to grant a lease for a period not exceeding 3 years and under the terms of which no permanent construction is allowed, by simple resolution passed in a meeting of the council. Rule 10, therefore, which makes the Maharashtra Municipalities (Transfer of Immovable Property) Rules, 1967, applicable to leases covered by sub-section (3) of section 92 and proviso to rule 5 to the extent to which it enjoins an obligation on the Municipal Council to record reasons in writing and to obtain permission of the Director for creating a lease without holding an auction are ultra vires the provisions of the Maharashtra Municipalities Act, 1965 and must be struck down. In our view for creating a lease not exceeding a period of 3 years and under the terms of which no permanent construction is allowed on the immovable property, neither a public auction needs to be held nor permission of the Director is necessary for not holding such an auction. It is also not neces- sary to record reasons and a resolution passed by simple majority would completely satisfy the requirement of section 92(3) for creating a lease con- templated by that provision. 10. As a matter of fact, the Municipal Council has given reasons, though in our view, it was not necessary for granting the lease to the peti- tioner without holding an auction. Resolution No. 4 dated 29–1-1980 by which the lease was granted, reads as follows :- ''Resolution No. 4: To consider the auction of the tanks owned by the Municipal Council as the period of previous lease is expiring. The subject was discussed in detail and after that Shri Kuhiker moved the following resolution duly seconded by Shri Gathibandhe. Resolution No. 4 dated 29–1-1980 by which the lease was granted, reads as follows :- ''Resolution No. 4: To consider the auction of the tanks owned by the Municipal Council as the period of previous lease is expiring. The subject was discussed in detail and after that Shri Kuhiker moved the following resolution duly seconded by Shri Gathibandhe. It is hereby resolved that the three tanks owned by the Municipal Council should be leased away for a period of three years commencing from 1980–81 ending with 1982–83 without any auction to Matsya Yojana Sahakari Sanstha in accordance with directions of the State Government on an annual lease money of Rs. 21,000. The said resolution was put to vote. Two councillors, namely Shri Nandanwar and Shri Dhanvij voted against the resolution, while the remaining twenty councillors voted in favour. Thus the resolution was adopted by twenty votes to two, i.e. by more than 2/3rd of the majority. Sd /-S. G. Parate, President, Municipal Council, Umrer.” The Municipal Council specifically made it clear by this resolution that they granted the lease without holding any auction in accordance with the direc- tions of the State Government. The directions, to which reference is made, are obviously the directions issued by the Government through the various circulars in this behalf. The first Circular issued by the Government Development Department No. 64 dated 24th May 1950 (copy at annexure H), relates to grant of fishing rights to Co-operative Societies of fishermen and it refers to the Government decision that this right shouldbe given by negotia- tions with Co-operative Societies of fishermen or their associations wherever they exist and that the rental should be fixed on the basis of average realisa- tion of the past three years excluding abnormal realisations. This Circular covered only the tanks', rivers etc.; the fishing rights in which were auctioned by the officers under the control of the Public Works Department and the Revenue Department. By Government Resolution No. FDB-1183/29565-111-G issued by the Government of Maharashtra, Agriculture Food and Forests Department dated 25th October 1963, the Government directed that lease of tanks, reservoirs, water sheets etc.; should be for a period not less than 5 years. By Government Resolution No. FDB-1183/29565-111-G issued by the Government of Maharashtra, Agriculture Food and Forests Department dated 25th October 1963, the Government directed that lease of tanks, reservoirs, water sheets etc.; should be for a period not less than 5 years. It was further directed that in case of tanks, reservoirs, water sheets etc; which are in charge of localauthorities and Local Bodies includ- ing Zilla Parishads, Municipalities, Gram Panchayats etc; the same pattern of leasing water tanks etc; should be followed. The departments controlling these local authorities were directed to issue suitable further instructions, if necessary, in that regard. By another Resolution, the Government of Maha- rashtra, Urban Development Public Health and Housing Department, Resolu- tion. No. MUN (H)-4367/6822-N, Sachivalaya, Bombay-32, dated 14th August 1967, the Government advised the Municipal Councils in the State to favourably consider applications tor lease for their tanks, reservoirs, water sheets etc; made by Co-operative Societies of fisheries. The Resolution further directed that the Municipal Councils which could comply with the provision of sub-section (2) of section 92 of the Maharashtra Municipalities Act, 1965, and which were in a position to pass a resolution for that purpose by a majority of 2/3rd of the total number of their Councillors were free to lease their tanks to Co-operative Societies for a period of 5 years while the other Municipal Councils which were unable to comply with the provisions of sub-section (2) of section 92 were free to lease their tanks to the Co-opera- tive Societies for a period of 3 years in the first instance which may further be renewed with the permission of the Director of Municipal Administration subject to the condition that the aggregate period should not exceed 7 years as per sub-section (3) of section 92. • 11. This brings us to the Resolution of Government of Maharashtra, Agriculture, Food and Forests Department No. FDB-1183/29565-III-G dated 25th October 1963 which mainly related to the fixing of the lease rent. A reference, however, is made in para 2 of the Resolution to the procedure adopted by the Zilla Parishads, Municipalities, Gram Panchayats etc; of giving fishing lease to the Co-operative Societies or local fishermen by negotiations. A reference, however, is made in para 2 of the Resolution to the procedure adopted by the Zilla Parishads, Municipalities, Gram Panchayats etc; of giving fishing lease to the Co-operative Societies or local fishermen by negotiations. Shri Madkholkar also pointed out to us the letter No. MUN (M)/4369/845/N dated 10th July 1969 addressed by the Under Secre- tary to the Government of Maharashtra, Urban Development, Public Health and Housing Department, to the President Umrer Municipal Council, Umrer. By that letter attention of the President of the Council was drawn to the Resolution No. MUH (M) 4367/6822/N, dated 14th August, 1969 and (2) No. MUM-1368/40170/N, dated 22nd August 1968 and he was required to lease tanks within Municipal limits to the Co-operative Societies of fisheries as per the said resolution. These were the direc- tions in compliance with which the Municipal Council decided not to hold an auction and to grant the lease to the petitioner because the lease was for a period of 3 years and was one contemplated by section 92 (3). The Collector and the Director of Municipal Administration have completely ignored this aspect of the matter. As a matter of fact, they ignored all the resolutions and circulars referred to above, which were very much relevant for the purpose of considering whether the action of the Municipal Council was contrary to public interest. We, therefore, have no hesitation in coming to the conclusion that the action of the Municipal Council of granting the lease to the petitioner by passing a resolution and without holding the auction was perfectly within four corners of the law and hence the impugned orders passed by the Collector and Director of the Municipal Administration were wrong and cannot be sustained. In this view of ours, it is not neces- sary to consider the questions 'whether the contract of lease was complete, whether the impugned resolution had exhausted itself when the Collector passed the impugned order and whether under these circumstances the Collector could pass the impugned order in exercise of the powers conferred by section 308 of the Maharashtra Municipalities Act. In the result, the petition is allowed. The impugned orders are quashed and the validity of the resolution passed by the Municipal Council granting lease in favour of the petitioner is upheld. No costs. Petition allowed. -----