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2000 DIGILAW 503 (AP)

Vummalaneni Saroja v. tenali Municipality, Tenali

2000-07-18

N.V.RAMANA

body2000
N. V. RAMANA, J. ( 1 ) PETITIONER seeks a Writ of Mandamus to set aside the leasehold rights granted in favour of the 2nd respondent by the 1st respondent in respect of Ac. 11_00 of land including 39 coconut trees in D. Nos. 468/2, 469/2, 477 and 483 situate in Nelapadu village, within the limits of Tenali municipality, Guntur District. ( 2 ) THE brief facts, according to the petitioner, are: The Tenali Municipality is having Ac. 11-00 of wet land situate in d. Nos. 468/2, 469/2, 476/2,477 and 483 in nelapadu village which is within the limits of Tenali Municipality. That land was acquired for storage of drainage water of tenali Municipality. As the drainage scheme is not yet finalised, the land is not being utilised for the said purpose. The land is usually called as drainage land The tenali Municipality used to lease out the land to third parties every year to raise paddy crop and collect the lease amount. On 19-2-2000, the Municipality issued a gazette notification calling for applications for conducting auction of leasehold rights of the land along with other items. The auction conditions are governe4 by the A. P. Municipalities (Regulation of Receipts and expenditure) Rules, 1968 issued by the government in G. O. Ms. No. 686, Municipal administration Department, dated 30-7-1968. According to the petitioner, clause (6) of Rule 7 of the above rules governs the auction. One of the conditions of auction is that the auction will be knocked down in favour of the highest bidder and he shall also produce solvency certificate to prove his ability that he has capacity to fulfil the auction conditions. The lease is from 1-5-2000 to 30-4-2001. The auction was conducted in the first week of april 2000 and the petitioner was declared as the highest bidder as she offered rs. 54,000/ -. The petitioner and one gummadi Bhavannarayana are the only participants in the auction. Petitioner states that after the bid was knocked down in her favour, one Thota Sambasivarao, a resident of Ramalingeswarapeta of Tenali made a representation to the 1st respondent on 9-4-2000 stating that he is prepared to pay a sum of Rs. 70,000/ towards the lease amount. Pursuant to this, 1st respondent directed the said Sambasivarao to deposit the bid amount within 24 hours in his rc. No. 201/2000/a dated 11-4-2000. But, he failed to deposit the said amount. 70,000/ towards the lease amount. Pursuant to this, 1st respondent directed the said Sambasivarao to deposit the bid amount within 24 hours in his rc. No. 201/2000/a dated 11-4-2000. But, he failed to deposit the said amount. Thereafter, the 2nd respondent herein (Nallajala Nagaiah) made representation to the 1st respondent expressing his willingness to deposit Rs. 71,100/- towards the lease amount. The 1st respondent directed the 2nd respondent to deposit rs. 71,100/- by 24-4-2000. According to the petitioner, all this was done behind her back and the Municipality favoured the 2nd respondent because he belongs to the Tenali municipal Chairman s group. Petitioner alleges that the Municipality also passed a resolution to grant lease in favour of the 2nd respondent without conducting negotiations and without issuing any notice to her and contrary to the procedure prescribed. According to the petitioner, the municipality has filed Caveat Petition no. 36 of 2000 in the Court of Prl. Junior civil Judge, Tenali. Petitioner further states that the matter has taken place in a secret way and so she is not in a position to produce any papers except the Caveat petition. Hence, the writ petition. ( 3 ) THIS writ petition is filed on 22-5-2000. On 23-5-2000, this Court while admitting the writ petition, passed the following interim order in WPMP No. 11629 of 2000:-"there shall be interim suspension subject to the condition of the petitioner depositing Rupees one lakh with the Municipality within one week from today pursuant to the auction conducted in the first week of April, 2000. In default to deposit the amount within the time stipulated, the WPMP stands dismissed. " ( 4 ) SUBSEQUENT to the above interim direction of this Court, petitioner filed wpmp No. 14855 of 2000 on 30-6-2000. In that application, the petitioner stated that when she approached the 1st respondent on 27-5-2000 with the sum of Rs. 1,00,000/ he refused to receive the same, in spite of the interim order of this Court. She states that she has taken a demand draft for rupees one lakh from State Bank of Hyderabad, tenali Branch and handedover the same in the office of the 1st respondent and by way of abundant caution she issued a telegram on 29-5-2000 to the 1st respondent about the same. Inspite of the same, the petitioner alleges that respondents 1 and 2 are obstructing her to cultivate the land. Inspite of the same, the petitioner alleges that respondents 1 and 2 are obstructing her to cultivate the land. As the agricultural season has commenced, petitioner sought a direction to the 1st respondent to accept the demand draft for rupees one lakh dated 27-5-2000 deposited as per the interim order of this Court and to perform all other formalities without causing any obstruction to the petitioner to cultivate the land. ( 5 ) THE first respondent-Tenali municipality filed WVMP No. 1467 of 2000 along with counter-affidavit seeking to vacate the interim order dated 23-5-2000. Denying the allegations of the petitioner, the 1st respondent stated that the land in question is being leased out commencing from 1997 onwards and the lease commences on 1st May of every year and concludes by 30th April of the succeeding year. It is stated that the husband of the petitioner by name Vummalaneni Janaki ramachandra Rao was the lessee of the land for 1999-2000 and he knocked down the lease for Rs. 52,400/- in that year. For the present year, the auction was notified in the guntur District Gazette Extraordinary no. VI, dated 9-2-2000 and the auction notification was published on 5-2-2000 fixing the date of auction as 21-2-2000 and because there are no participants the auction was postponed to 1-3-2000 and to 18-3-2000. Petitioner, through her husband janaki Ramachandra Rao, participated in the auction along with the only other participant Gummadi Bhavannarayana and the petitioner became the highest bidder for rs. 54, 000/- fbr 2000-2001. As the bid amount is not uptq the expectation of the municipality, the 1st respondent through his letter Roc. No. 201/2000-Al, dated 28-3-2000 requested the petitioner to participate in the negotiations. Though she received the letter on 28-3-2000 itself, she did not participate in the negotiations. When the 1st respondent received an offer of Rs. 70,000/- from one Thota sambasivarao and when the petitioner was requested by letter dated 9-4-2000 to participate in the negotiations she did not do so. Thereafter Nallajala Nagaiah by his letter dated 20-4-2000 offered Rs. 71,100/ towards the lease amount for 2000-2001 and the lease was finalised in his favour and the land was handed over to the 2nd respondent on 1-5-2000 and a copy of the proceedings is also sent to the petitioner, who refused to receive the same. Thereafter Nallajala Nagaiah by his letter dated 20-4-2000 offered Rs. 71,100/ towards the lease amount for 2000-2001 and the lease was finalised in his favour and the land was handed over to the 2nd respondent on 1-5-2000 and a copy of the proceedings is also sent to the petitioner, who refused to receive the same. It is submitted that the petitioner having received the notices dated 28-3-2000 and 19-4-2000 cannot complain of violation of principles of natural justice and that as per the general conditions of the auction notification the Municipal Council is empowered either to accept or reject any offer or postpone the auction, without assigning any reasons whatsoever. ( 6 ) IT is further averred in the counter of the first respondent that the husband of the petitioner (Vummalaneni Janaki ramachandra Rao) filed a civil suit, O. S. No. 207 of 2000 in the Principal Junior Civil judge s Court at Tenali, for a declaration that the action of 1st respondent in entering the name of the 2nd respondent in the records of the Municipality as tenant of suit schedule property as illegal and void and for consequential permanent injunction restraining the defendnats-therein from interfering with his peaceful possession. No injunction was granted by the Civil Court and the matter was adjourned to 5-6-2000. As already stated, the husband of the petitioner was the lessee for the previous year (1999-2000) and during this year he participated in the auction as representative of his wife and suppressing all these facts the petitioner has filed the present writ petition. ( 7 ) NALLAJALA Nagaiah, the 2nd respondent, filed W. V. M. F. No. 1286 of 2000 along with his counter. He contends that the auction conditions are not governed by rule 7 (6) and (7) of A. P. Municipalities (Regulation of Receipts and Expenditure) rules, 1968 and the petitioner obtained interim order from this Court by misrepresentation. The petitioner has not come to this Court with clean hands and she is not entitled to any relief in this writ petition, as she suppressed the factum of her husband filing the civil suit and failing to get any injunction order from that Court. Petitioner is prosecuting parallel proceedings, one in the civil Court and another in this Court by way of the present writ petition. Petitioner is prosecuting parallel proceedings, one in the civil Court and another in this Court by way of the present writ petition. A reading of the plaint in o. S. 207/2000 indicates that the petitioner has got knowledge that the 2nd respondent became the lessee of the land in question, the 2nd respondent stated that on 1-5-2000 possession of the land was handed over to him by the first respondent, after ne deposited the lease amount of Rs. 71,100/-, in the presence of the Revenue Inspcctor-II and Assistant Engineer-II, Tenali, and as on today he had spent a sum of Rs. 2,000/- as cultivation expenses. He ultimately prayed for dismissal of the writ petition. ( 8 ) HEARD all the learned Counsel appearing for the respective parties. Perused the record produced before me. All the Counsel agreed for disposal of the writ petition itself. ( 9 ) THE point for consideration is whether the action of the 1st respondent in accepting the offer of the 2nd respondent is sustainable and whether the petitioner is entitled to any relief in this writ petition? ( 10 ) POINT:- The contention of the learned counsel for the petitioner is that the 1st respondent, having put the leasehold rights to public auction and the petitioner having offered the highest amount, has no right or authority whatsoever to deny confirmation of the lease in favour of the petitioner; there is no provision whatsoever in the auction conditions to entertain any private negotiations with third parties after the auction proceedings are over; the amount offered by the petitioner is higher than the amount offered by the lessee of the previous year. Even though there is a condition in the auction notice which empowers the 1st respondent to reject any offer, as a next step the first respondent ought to have put the leasehold rights to reauction instead of going for private negotiations, especially with third parties who have not participated in the auction and he relied on the decision of a learned single Judge of this Court in Y. Srinivasulu reddy vs. Tirumala Tirupathi Devasthanams. It is submitted by the learned Counsel for the petitioner that the petitioner is now willing to pay rupees one lakh in accordance with the interim directions of this Court dated 23-5-2000 and therefore the petitioner should be awarded the lease in question for the year 2000-2001. It is submitted by the learned Counsel for the petitioner that the petitioner is now willing to pay rupees one lakh in accordance with the interim directions of this Court dated 23-5-2000 and therefore the petitioner should be awarded the lease in question for the year 2000-2001. ( 11 ) THE learned Counsel for the 1st respondent-Municipality contended that the municipality published the tender notice in the local newspaper vaartha on 5-2-2000. He submitted that inspite of issuing notices to the petitioner to participate in the negotiations, the petitioner failed to participate in the negotiations and she even refused to receive the notices and this conduct of the petitioner amply demonstrates that she is not really interested in taking the lease. Since the lease amount offered by the petitioner is not acceptable to the 1st respondent, the 1st respondent called for private negotiations, keeping in view the best interests of the municipality. The 1st respondent is not obliged to accept the offer of the petitioner, and it has the discretion to enter into private negotiations. The offer of rupees one lakh given by the petitioner before this Court is only to impress the court. The husband of the petitioner, who was the lessee of the leasehold rights for the previous year, has engineered this second round of litigation. He filed O. S. 207/2000 in Junior Civil Judge s Court, Tenali, questioning the present auction, though he participated in the present auction as the representative of his wife viz. , the petitioner-herein. The petitioner, having failed to get an order from the civil Court indirectly through her husband, now filed this writ petition suppressing all material facts. It is submitted that even though this Court granted interim directions on 23-5-2000, by the time the 1st respondent received the interim orders, already possession was delivered to the 2nd respondent on 1-5-2000. ( 12 ) COUNSEL for the 2nd respondent argued that sub-rules (6) and (7) of Rule 7 of the A. P. Municipalities (Regulation of receipts and Expenditure) Rules have no application to the present case, and that only A. P. Municipalities (Acquisition and transfer of Immovable Properties) Rules, 1967 will apply to the lease in question. He submits that even though the petitioner was given notices and reasonable opportunity, she did not participate in the negotiations. He submits that even though the petitioner was given notices and reasonable opportunity, she did not participate in the negotiations. The petitioner got filed the suit O. S. 207/2000 through her husband in the civil Court at Tenali and having failed to get any injunction filed this writ petition suppressing the said fact of filing the suit, and so the petitioner has not come to this court with clean hands. The 2nd respondent participated in the negotiations and deposited the amount of Rs. 71,100/ within 24 hours of receipt of notice on 24-4-2000. After that, the matter was placed before the Municipal Council and on 28-4-2000 the Council also approved his offer and in the presence of the officials concerned possession of the land was delivered to the 2nd respondent on 1-5-2000. The 2nd respondent submitted that he ploughed Ac. 4-00 of land out of ac. 11-00 leased out to him by spending a sum of Rs. 2,000/ -. Counsel for 2nd respondent relied on the following observations of this Court in the decision in b. Jaya Babu vs. The Regional Manager (GR) apsrtc, and contended that the 1st respondent has got the authority and power to enter into negotiations and finalise the lease:-". . . . . THE Courts are normally reluctant to interfere in such matters of contract in proceedings under Article 226 of the constitution. It is only when it is demonstrated that there was an element of arbitrariness, or violation of equality clause enshrined in Article 14 of the Constitution in the matter of granting any contract that the Courts decide to intervene. In the present case, what we find is that under clause 11 of the tender notice, the corporation had a right to reject all or any of the tenders. It was not bound to accept the highest offer and in the facts and circumstances of the case, the decision of the Corporation not to award the contract to the writ petitioner i. e. , the third respondent herein, cannot be said to be an arbitrary decision. Further, the tender notice in the present case did not contemplate any negotiation after the opening of the tenders. As per the tenders submitted by the various tenderers, the offer of the writ appellant was the highest. Further, the tender notice in the present case did not contemplate any negotiation after the opening of the tenders. As per the tenders submitted by the various tenderers, the offer of the writ appellant was the highest. Under the circumstances, if the writ appellant did not participate in any such negotiation and/or if the Corporation over-looked the offers that were received during negotiations, that cannot be made a ground for quashing the contract awarded to the writ appellant. All desirous persons similarly situated were allowed to submit tenders and the third respondent herein was also not denied an opportunity to compete and, therefore, there appears no violation of Article 14 of the constitution. " ( 13 ) THIS decision is not applicable to the facts of the case on hand. The reason is in that case the writ appellant and the 3rd respondent also participated in the tenders for running the canteen in Siddipet a. P. S. R. T. C. Bus Station and the Court did not find any violation of Art. 14 of the constitution because all the similarly situated persons were allowed to submit their tenders and there was no denial of opportunity to anybody. ( 14 ) IN the case on hand, the petitioner offered her bid, which is the highest one among the two offers on the date of auction. If really the first respondent intended to protect the interests of the municipality, while rejecting the offer of petitioner, the 1st respondent ought to have put the leasehold rights to reauction after giving wide publicity. But, the first respondent did not choose to adopt that course. Instead, strangely, the first respondent entered into private negotiations with third parties, who have not even participated in the original auction. This type of procedure adopted by the 1st respondent, which is a municipality, cannot be allowed. If it is allowed, there will be no sanctity in conducting public auctions by local bodies. It lacks transparency and it will affect the interests of the municipality/ local body. It is well-settled by umpteen number of decisions of the Apex Court and various High Courts that the State or the instrumentalities of the State, while dealing with its properties, should act fairly conforming to the principles of natural justice and fair play and shall always strive to protect the best interests of the State. It is well-settled by umpteen number of decisions of the Apex Court and various High Courts that the State or the instrumentalities of the State, while dealing with its properties, should act fairly conforming to the principles of natural justice and fair play and shall always strive to protect the best interests of the State. ( 15 ) IT is suffice to refer to the following pertinent observations of the Supreme court, in Chairman and M. D. , SIPCOT, Madras vs. Contromix Pvt. Ltd. :". . . in the matter of sale of public property, the dominant consideration is to secure the best price for the property to be sold. This can be achieved only when there is maximum public participation in the process of sale and everybody has an opportunity of making an offer. Public auction after adequate publicity ensures participation of every person who is interested in purchasing the property and generally secures the best price. But many times it may not be possible to secure the best price by public auction when the bidders join together so as to depress the bid or the nature of the property to be sold is such that suitable bid may not be received at public auction. In the event, the other suitable mode for selling of property can be by inviting tenders. In order to ensure that such sale by calling tenders does not escape attention of an intending participant, it is essential that every endeavour should be made to give wide publicity so as to get the maximum price. These considerations which govern the sale of public property have been held to be applicable to a sale of property by the State Financial Corporations under section 29 of the Act in Mahesh chandra case (1992 SCW 3629) (supra ). In that case this Court has held that sale by public auction is universally recognised to be the best and most fair method and is beyond reproach and, if it is not possible to adopt the same method, sale may be held by inviting tenders, but in that event every endeavour should be made to give wide publicity to get the maximum price. The said decision cannot be construed as laying down that a sale by tender is impermissible and invalid. The said decision cannot be construed as laying down that a sale by tender is impermissible and invalid. The learned Judges, in that case, have referred to the decisions of this Court in Sachidnanda Pandey vs. State of West Bengal ( AIR 1987 SC 1109 ) and Haji T. M. Hassan vs. Kerala financial Corporation ( AIR 1988 SC 157 ) wherein. it has been held that one of the modes of securing the public interest, when it is considered necessary to dispose of a property, is to sell the property by public auction or by inviting tenders. It cannot, therefore, be said that a sale by inviting tenders is ipso facto invalid. The validity of such a sale will have to be considered in the light of the facts and circumstances of the particular case. " ( 16 ) IN the case on hand, no valid reasons are assigned by the 1st respondent for entering into private negotiations with third parties. Notice to the other aspirants, viz. , bhavannarayana and Thota Sasmbasiva rao - who have given their offers much earlier to the offer of the 2nd respondent-are not given by the 1st respondent calling them to participate in the negotiations. ( 17 ) AS long back as in 1980, the Apex court in Kasturilal Lakshmi Reddy vs. State of jammu and Kashmir, observed:". . . IT must follow as a necessary corollary from this proposition that the government cannot act in a manner which would benefit a private party at the cost of the State; suck an action would be both unreasonable and contrary to public interest. The government, therefore, cannot for example give a contract or sell or lease out its property for a consideration less than the highest that can be obtained for it, unless of course there are other considerations which render it reasonable and in public interest to do so. " ( 18 ) I have perused the record produced by the Counsel for the 1st respondent. The notice published in the local newspaper does not reflect the auctioning of leasehold rights of the land in question. If really the municipal Commissioner is sincere and diligent, he ought to have taken steps to publish all the items of municipal property, which are put to public auction. Undoubtedly, the auctioning of leasehold rights of municipal land of an extent of ac. If really the municipal Commissioner is sincere and diligent, he ought to have taken steps to publish all the items of municipal property, which are put to public auction. Undoubtedly, the auctioning of leasehold rights of municipal land of an extent of ac. 11-00 is a major item. Unfortunately, this item is not at all mentioned in the auction notice. The procedure adopted by 1st respondent in this case is illegal and contrary to the public auction procedure. No doubt, there is a provision in the terms and conditions of auction that the municipality has got the power to reject the highest offer or to postpone the auction, without assigning any reasons. But, there is no provision for entering into private negotiations with third parties who have not even participated in the original auction. If at all the first respondent felt that the offer given by the petitioner is not acceptable to him, he ought to have taken steps to put the leasehold rights to re- auction after giving due publicity in the local newspapers. ( 19 ) THE conduct of the petitioner is also speculative one. When specific notices were sent to her to participate in the private negotiations, she did not choose to participate in the same. She had even refused to receive the notices. If really the petitioner is interested to take the lease, she should have participated in the private negotiations. Belatedly, after the 2nd respondent has given his offer at rs. 71, 100/-, petitioner came to this Court and offered to pay Rs. 1,00,000/- for the leasehold rights, for the first time. Moreover, by the time of passing the interim order by this Court on 23-5-2000, the 2nd respondent was already put in possession of the land in question on 1-5-2000 by the 1st respondent. The conduct of the petitioner is not bona fide. ( 20 ) IN view of the above peculiar facts and circumstances of the case, I feel that it is proper to direct the 1st respondent to conduct reauction of the leasehold rights of the land in question after giving wide publicity, at least in two local newspapers. If the petitioner and the 2nd respondent so desire, they would be at liberty to participate in the reauction. If the petitioner and the 2nd respondent so desire, they would be at liberty to participate in the reauction. ( 21 ) HAVING perused the record, keeping in view the public interest, the principles of natural justice and equity, and having regard to the peculiar fact-situation obtaining in this case, this Court is satisfied that it is a fit case for interference under article 226 of the Constitution. ( 22 ) IN the result/ the writ petition is disposed of with the following directions:- (1) If the petitioner deposits a sum of rs. 1,05,000/-, (including the demand draft amount of Rs. 1,00,000/- said to have been deposited by her with the first respondent), within three days from today, i. e. , on or before 21-7-2000, the first respondent shall conduct reauction of the leasehold rights of the land in question for the year 2000-2001 (for a period of one year), within one week from 21-7-2000, fixing the minimum bid amount as Rs. 1,00,000/ -. (2) the first respondent shall give wide publicity about the reauction of leasehold rights of the land in question, at least in two local newspapers and also by public announcement; (3) if the lease is knocked down for more than one lakh rupees in the reauction (a) the bidder who bids for more than one lakh rupees shall be entitled to have the leasehold rights of the land in question for the year 2000-2001 for a period of one year; (b) the petitioner will be entitled to refund of only Rs. 1,00,000/- and she is not entitled to claim refund of the other sum of Rs. 5,000/ under any circumstances; (c) the second respondent, in the event of his vacating the land as a result of the reauction, will be entitled to claim refund of Rs. 71,100/- from the 1st respondent, and he will also be entitled to a sum of Rs. 2,000/- towards cultivation expenses and also a further sum of Rs. 3,000/- towards compensation, from out of the sum of Rs. 71,100/- from the 1st respondent, and he will also be entitled to a sum of Rs. 2,000/- towards cultivation expenses and also a further sum of Rs. 3,000/- towards compensation, from out of the sum of Rs. 1,05,000/- now directed to be deposited by the petitioner; (4) In the reauction if no bidder comes forward to take the lease for rupees one lakh, the petitioner is bound to take the leasehold rights for rupees one lakh, and she cannot go back to take the leasehold rights for rupees one lakh; (5) If, for any reason, the lease is knocked down for more than one lakh rupees by the petitioner herself or by the 2nd respondent or any other third party, the sum of Rs. 5,000/- (out of Rs. 1,05,000/ directed to be deposited now by the petitioner) shall be confiscated to the 1st respondent-Municipality. (6) If ultimately the petitioner knocks down the lease, the 1st respondent shall give due credit to the sum of rupees one lakh, if deposited already by the petitioner by way of demand draft, while computing the lease amount. ( 23 ) SUBJECT to the above directions, this writ petition is disposed of. No costs.