ASHOK BHAN, J. ( 1 ) APPELLANT-THE Town Panchayat, Harapanahalli, being aggrieved of the order passed by the Single Judge directing the appellant to allot in favour of each of the writ petitioner-respondents in W. P. Nos. 30845 to 30849 of 1998 a shop in the building constructed by it for a period of four years 11 months at the rate of Rs. 2,500/- and a further direction to allot a shop in favour of each of the writ petitioner-respondents in W. P. No. 30850 to 30854 of 1998 at a rate of Rs. 3,500/- per month for a period of 4 years 11 months, has filed these appeals challenging the impugned order. ( 2 ) FACTS: Respondent-writ petitioners (for short, 'the respondents') were tenants in respect of certain shop premises belonging to the appellant. The said shop premises came to be demolished by the appellant as per the directions of the Deputy Commissioner, Harapanahally (hereinafter referred to as 'respondent 2') for the purpose of widening the roads. Later on a scheme was introduced by the Government of India by virtue of which respondent 2 got constructed 22 shops in the land belonging to the appellant. The dimension of each of the shop is 11 ft x 22 ft. Subsequently, the said shops were notified for allotment to the members of the public by means of an auction. Auction was conducted and bid offered in respect of 12 shops were accepted. However, in view of the interim order passed by this Court in respect of 10 shops, the auction conducted was not finalised. ( 3 ) RESPONDENTS filed the writ petitions contending that since they were admittedly the tenants carrying on business in the premises belonging to the appellant, the appellant and respondent 2 should be directed to allot the shops to the respondents on preferential basis by accepting reasonable rent from the respondents. It was pointed put that in respect of Hospet Town Municipal Council, the 2nd respondent, who got the shops constructed out of the funds made available under the similar scheme sponsored by the Government of India had reserved shops to the tenants who were displaced. It was pointed put that in respect of Hospet Town Municipal Council, the 2nd respondent, who got the shops constructed out of the funds made available under the similar scheme sponsored by the Government of India had reserved shops to the tenants who were displaced. Under these circumstances, when the 2nd respondent was implementing the scheme sponsored by the Government of India and got the shops constructed out of the funds made available by the Government of India, there was no justification for the 2nd respondent to proceed to auction the shops within the municipal limits of the appellant. The respondents being poor displaced persons carrying on business either as barbers or other allied professions akin to that are entitled to the allotment of the shops on preferential basis by accepting a reasonable rent. Reliance was placed upon the judgment of the Supreme Court in the case of M/s. Labha Ram and sons and Others v State of Punjab and Others. The appellant and respondent 2 being the instrumentality of the State were required to act in a reasonable and fair manner in their directions. Offer was made by the writ petitioners in W. P. Nos. 30850 to 30854 that they were prepared to pay the rent at the rate of Rs. 3,500/- per month with the stipulation that they will be prepared to enhance the rent by ten per cent after the expiry of two years period of the lease. Similarly for the shops in W. P. Nos. 30845 to 30849 of 1998 the petitioners were prepared to pay rent at the rate of Rs. 2,500/- as rent with a similar stipulation of increase in rent after the expiry of two years period of the lease. ( 4 ) IN the statement of objections filed by the appellant and respondent 2 it was submitted that the shops in question were constructed by investing huge money and were required for public purposes and for the developmental activities of the Municipality concerned. It was pointed out that the adjoining shops were auctioned at a monthly rent of Rs. 7,200/- and under those circumstances, there was no justification to allot the shops in question in favour of the respondent-writ petitioners at the rate less than at which the shops are auctioned in the public auction. It was pointed out that the adjoining shops were auctioned at a monthly rent of Rs. 7,200/- and under those circumstances, there was no justification to allot the shops in question in favour of the respondent-writ petitioners at the rate less than at which the shops are auctioned in the public auction. It was conceded that if the respondents were willing to take the shops at the rate at which they were given to others in public auction, the shops in respect of which the bid had not been confirmed and which were available, could be allotted to the respondents. ( 5 ) IN the light of the rival submission made by the Counsel for the parties, the learned Single Judge formulated the following two points for consideration: 1. Whether the petitioners are entitled for allotment of the shops in question on preferential basis? 2. If so, whether the respondents can be compelled to take reasonable rent from the petitioners ignoring the rate at which the other shops had been sold in public auction? ( 6 ) INSOFAR as the first question is concerned, learned Single Judge held that, in view of the statement made by the Counsel for the appellant that if the respondents are willing to pay the rent at which the highest bid was offered the appellant had no objection to the allotment of the shop; and as the fact that respondents were the tenants in respect of the shops belonging to the appellant, which came to be demolished for the purpose of widening the road, it is just and reasonable to direct the appellant and respondent 2 to allot the shops to the respondents, on the second point Single Judge took the view that most of the respondents belong to the lower rank of the society; two were barbers, one was carrying on footwear business, one was automobile repairer. They had been carrying on business/profession in the shops which were demolished for the last more than 10 years. It was held that the respondents were entitled to take the shops on rent at a reasonable rent ignoring the rate at which the other shops were sold in public auction. Keeping all this in view Single Judge disposed of the writ petitions with the following directions:" (I) The respondents are directed to allot in favour of each of the petitioners in Writ Petition Nos. Keeping all this in view Single Judge disposed of the writ petitions with the following directions:" (I) The respondents are directed to allot in favour of each of the petitioners in Writ Petition Nos. 30845 to 30849 of 1998 a shop in the building constructed by respondents 2 and 3, for a period of four years and 11 months; and for the first two years, they (i. e. , petitioners) shall pay a monthly rent of Rs. 2,500/- and after the expiry of two years, they shall pay ten per cent of the enhanced rent, as agreed to by them. (ii) The respondents are directed to allot in favour of each of the petitioners in Writ Petition Nos. 30850 to 30854 of 1998 a shop in the building constructed by respondents 2 and 3, for a period of 4 years and 11 months; and for the first two years, the petitioners shall pay a monthly rent of Rs. 3,500/- and after the expiry of two years, they shall pay ten per cent of the enhanced rent, as agreed to by them. (iii) All the petitioners are directed to deposit with the second respondent three months' rent as advance. On the petitioners offering to deposit the advance rent, the respondents shall comply with the direction given in this order, within two weeks from the date of receipt of a copy of this order. (iv) The petitioners shall execute necessary lease agreement in favour of the second respondent as per the terms and conditions set out in the tender notification Annexure-G and it is made clear that the petitioners are bound by those terms and conditions. (v) In the event of the wives of the petitioners in W. P. Nos. 30846 and 30852 of 1998 are willing to take the premises which they have bid at the auction held, they can take the same and in that event, the petitioners in Writ Petition Nos. 30846 and 30852 of 1998 are not entitled for allotment of separate shops, as directed above". ( 7 ) COUNSEL appearing for the appellant does not object to the allotment of the shops in question on preferential basis to respondents if they are prepared to pay the rent at which the highest bid was offered. 30846 and 30852 of 1998 are not entitled for allotment of separate shops, as directed above". ( 7 ) COUNSEL appearing for the appellant does not object to the allotment of the shops in question on preferential basis to respondents if they are prepared to pay the rent at which the highest bid was offered. tt was contended by him that the present shops were constructed by spending huge amount and the expenditure incurred is more than one lakh for each shop. Each shop measures 11' x 22'. Old shops which were occupied by the respondents were smaller one measuring less than 10' x 10'. Looking to the expenditure incurred towards construction, the rent could not be less than what had been given at the auction held by the appellant regarding the 12 other shops. That in any case the learned single Judge could not proceed to fix the rent himself. ( 8 ) COUNSEL for the parties have been heard. ( 9 ) SUPREME Court in M/s. Labha Ram's case, supra, in paragraphs 12, 16 and 17 observed as under:"12. It is by virtue of the said power that the Government authorised colonization Department to deal with the matter. The words 'or otherwise transferred by auction, allotment or otherwise' in section 3 (2) of the Township Act are quite wide enough to enable the Government to take into consideration various factors including equitable considerations for deciding in what manner and on what conditions the lands and posts in the new Mandi should be allotted. But such wide powers are not intended to be used to the detriment of the victims of the newly created Mandis. It is not that the State Government must sell the land or the building by auction without any other option. Rule 3 which has been framed under Section 3 (2) and Section 25 (a) of this Act states that the lands and buildings shall be sold by the State Government by public auction or allotment. In the case of sale by public auction the sale price shall be the reserve price or the price offered by the highest bidder whichever is higher. In the case of sale by allotment the sale price can be determined by the State Government from time to time keeping in view the market price thereof . In the case of sale by public auction the sale price shall be the reserve price or the price offered by the highest bidder whichever is higher. In the case of sale by allotment the sale price can be determined by the State Government from time to time keeping in view the market price thereof . While allotment of buildings and plots is made, the State Government has a duty to take into account the handicaps to which existing dealers are subjected on account of creation of the new Mandi. Section 4 of the Mandi Township Act imposes a bar that no one shall erect or occupy any building or use or develop any site without the previous permission in writing of the 'administrator'. In such a situation the only avenue open to the traders is through the allotments sanctioned by the authorities. 16. We do not suggest that Government should give preference to the erstwhile dealers by providing free allotment of buildings or plots nor to fix a rate which is below the reserved price. It is open to the Government to fix up any rate above the reserved price for such licensed dealers, of course such fixation should not be at unreasonable rates. 1/. We are, therefore, of the view that the decision of the three judges Bench in Prem Chand Trilok Chand v State of Haryana, requires no rethinking. Hence, we direct the respondents to provide preference to the appellants in the matter of allotment of building or plot in the light of the observations made above". ( 10 ) IN our considered view the learned Single Judge could not determine the rate of rent himself and it should have been left open to the authorities to fix a reasonable rate of rent as per observations made by the Supreme Court in paragraph 16 of the judgment in Labha Ram's case, supra. However we agree with the finding recorded by the learned single Judge that the respondents are entitled to the allotment of the shops on preferential basis. ( 11 ) APPEALS are partly accepted. The order of the Single Judge is modified in the following terms:1. Respondents are held entitled to the allotment of the shops in question on preferential basis. However we agree with the finding recorded by the learned single Judge that the respondents are entitled to the allotment of the shops on preferential basis. ( 11 ) APPEALS are partly accepted. The order of the Single Judge is modified in the following terms:1. Respondents are held entitled to the allotment of the shops in question on preferential basis. Appellant is directed to allot the shops for which the bid was not been accepted or confirmed to the respondent-writ petitioners, whosoever is willing to take the shops after fixing a reasonable rent as per the direction of the Supreme court in paragraph 16 of the judgment referred to above within two months from the date of receipt/production of the copy of this judgment. 2. Appellant shall fix the rate of rent in terms of and as per the directions contained in paragraph 16 of the order of the Supreme court in Labha Ram's case, supra. 3. Wives of writ petitioners in W. P. No. 30846 of 1998 and W. P. No. 30852 of 1998 in case they are willing to take the premises to which they had given bid at the auction held, they can take the same and in that event the writ petitioner in these two petitions would not be entitled to allotment of separate shops. 4. In case any shop remains vacant and respondents are not willing to take the shops then the appellant would be at liberty to let out the shop/shops as per their rules/regulations. ( 12 ) APPEALS are accepted in the above terms. No costs. --- *** --- .