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2010 DIGILAW 672 (KAR)

Srinivasa Enterprises v. Bangalore Municipal Corporation & Ors

2010-05-31

ANAND BYRAREDDY

body2010
ORDER 1. Heard Counsel for the petitioner and the learned Counsel for the respondents. 2. The facts leading up to this writ petition are as follows:- The first respondent, now known as Bruhat Bangalore Mahanagara Palike (hereinafter referred to as the BBMP for brevity), had called for tenders in respect of a Guest house situated at Tank Bund Road, Gandhinagar, Bangalore, as per the Public Notice dated 29.8.1993. The petitioner was the successful tenderer who had offered a monthly rent of Rs.72,350/- and also undertook to invest a sum of Rs.50 lakh for improving the said building. His offer having been accepted by an endorsement dated 16.7.1994, a deed of licence was duly executed on 10.8.1994. The term of licence was for a period of three years with an option for renewal reserved by the BBMP while enhancing the licence fee. The petitioner claims to have invested a large amount of money exceeding Rs.50 lakh which was undertaken to be invested in the renovation of the premises. Before the expiry of the term, the petitioner by his representation dated 30.5.1997, sought for renewal of the licence for a further period of five years. There was no response from the first respondent. The request was renewed as on 14.7.1997. It was only by an endorsement dated 27.8.1997 that it was indicated by the BBMP that it proposed to renew the lease on the condition that the rent was enhanced by 50% and that there be an annual enhancement of 15% in the rentals. The petitioner however contended that the proposal was highly unconscionable and requested for a lenient consideration. There was no reply to the same. However, by an endorsement produced as Annexure-J, which does not bear a date, the petitioner was informed that where the rental in respect of the premises belonging to the BBMP is above Rs.100/-, the rental is normally enhanced by 25% and in the instant case, the rental would at least be Rs.90,438/-. The petitioner made a further appeal to the first respondent more particularly, the Town Planning and Development Committee. The said committee taking into account the peculiar circumstances of the petitioner—s case, by its resolution dated 5.8.1988 is said to have recommended the renewal of licence in favour of the petitioner without the enhancement of the rental. A copy of the resolution in this regard is at Annexure-K to the writ petition. The said committee taking into account the peculiar circumstances of the petitioner—s case, by its resolution dated 5.8.1988 is said to have recommended the renewal of licence in favour of the petitioner without the enhancement of the rental. A copy of the resolution in this regard is at Annexure-K to the writ petition. However, the first respondent issued a notice dated 5.1.1999, stating that the Taxation and Finance Committee of the first respondent has decided to enhance the rental to Rs.2 lakh per month by its resolution said to have been passed on 17.11.1998 and 28.11.1998 retrospectively making a demand for the arrears that had accrued. The petitioner was taken unaware by this demand as he had no knowledge of the rent being enhanced as he was not placed on notice nor afforded an hearing by the Taxation and Finance Committee in enhancing the rent, in variation with the resolution dated 5.8.1998 of the Town Planning and Development Committee. The petitioner therefore requested for a certified copy of the resolution passed by the committee which was denied to the petitioner by the BBMP by its endorsement dated 29.1.1999. The petitioner, therefore, asserted that in view of the earlier resolution by the Town Planning and Development Committee dated 5.8.1998, the petitioner was not liable to pay the enhanced rent which was sought to be demanded under the notice dated 5.1.1999. However, the petitioner thereafter received a notice on 8.9.1999, demanding a sum of Rs.31,50,340/-, which was based on the resolution of the Taxation and Finance Committee dated 5.1.1999 referred to hereinabove. The first respondent followed through by entering the licensed premises and locking 19 rooms. It is at this point of time that the petitioner approached this Court by way of writ petition in WP 35273/1999. This Court, after hearing the writ petition, by its order dated 11.3.2002, disposed of the petition with the following observations:- ' Hence I deem it proper to direct the parties to treat the Annexures-A as a notice to the petitioner. The Petitioner is directed to submit reply/objections within six weeks from the date of receipt of copy of this order. It is open to the petitioner to raise all contentions raised in this Writ Petition in the proposed objections to be submitted by the Petitioner in terms of this order. The Petitioner is directed to submit reply/objections within six weeks from the date of receipt of copy of this order. It is open to the petitioner to raise all contentions raised in this Writ Petition in the proposed objections to be submitted by the Petitioner in terms of this order. I also deem it proper that the matter requires to be decided by the Commissioner or his nominee within six weeks after receipt of this objection. Be is directed to consider all aspects of the matter and pass a reasoned order in accordance with law and in the light of various facts to be mentioned in the proposed objections to be submitted by the petitioner in terms of this order. I also deem it proper to direct the petitioner to pay at the rate of 1,00,000/- from 1.9.99 till 1.4.2002. The Petitioner is already paying an enhanced payment in terms of the interim order. The remaining balance in terms of the order after adjustment of the payment already made by the petitioner is payable within eight weeks from the receipt of copy of this order. It is made clear that in the event of the petitioner failing to make payment in terms of this order, the Corporation is at liberty to proceed against the petitioner in accordance with law. 7. It is made clear that if the petitioner is failing to submit his representation/objection in terms of this order, the Corporation is at liberty to confirm the order and proceed against the petitioner in accordance with the law. The respondents are directed to complete the proceedings within 8 weeks from the receipt of objection. The amount paid in terms of the interim order is to be kept in suspense and it would depend upon the final order to be passed by the Commissioner. Ordered accordingly. No costs.' The petitioner thereafter filed his representation before the Commissioner in consonance with the above order on 15.6.2002. The petitioner was heard by the Commissioner on 29.8.2002. Thereafter, he received a letter dated 28.4.2003 as to the Commissioner having passed an order, which was accompanied by a Demand Notice for Rs.1,36,13,601/- which was purportedly the arrears of rent payable by the petitioner. The petitioner was heard by the Commissioner on 29.8.2002. Thereafter, he received a letter dated 28.4.2003 as to the Commissioner having passed an order, which was accompanied by a Demand Notice for Rs.1,36,13,601/- which was purportedly the arrears of rent payable by the petitioner. The petitioner filed a petition under Section 471 of the Karnataka Municipal Corporations Act, 1976, before the City Civil Court, Bangalore, in Miscellaneous Application No.58/2003, the petitioner has challenged the above demand on the ground that the enhancement tantamounts to a 200% enhancement of the rent that was fixed and is wholly contrary to the Town Planning Committees resolution dated 5.8.1998 and is contrary to its general resolution in respect of enhancement of licence fee in respect of its other commercial premises by 25%. It is in this background that the petition is filed. 3. In the first instance, the petitioner filed an application for amendment to include an additional prayer which was allowed and thereafter an interim order was passed at the instance of the petitioner dated 25.8.2003, whereby the petitioner was directed to deposit a sum of Rs.25 lakh within two weeks from that date and Rs.25 lakh within 6 weeks from that date and upon initial deposit of Rs.25 lakh, the respondent-Corporation which had by then taken possession of the subject premises was to hand over possession to the petitioner and thereafter the petitioner was directed to pay the licence fee of Rs.2 lakh per month without default and the matter stood adjourned. Apparently, the petitioner had not complied with the direction to make the aforesaid deposits, which entailed the respondents in filing I.A.II/2003, which was allowed by this Court by order dated 10.12.2003, which recorded non-compliance of the order by the petitioner and vacated the interim order granted earlier. The petitioner complained to this Court of the petitioner—s moveables on the premises being shifted to an unknown destination. This Court directed maintenance of status-quo till 18.5.2005. The matter being listed on 17.5.2005, the order of status-quo stood vacated. 4. The respondent has not chosen to file any statement of objections. The fact remains that possession of the subject premises has been taken over by the respondents. This Court directed maintenance of status-quo till 18.5.2005. The matter being listed on 17.5.2005, the order of status-quo stood vacated. 4. The respondent has not chosen to file any statement of objections. The fact remains that possession of the subject premises has been taken over by the respondents. At the time of final hearing, one other event which has transpired is brought to the attention of the Court, namely, that the amount which is claimed as arrears of rent, is sought to be recovered from the petitioner, by recourse to a civil suit by the respondent-Corporation before the City Civil Court, Bangalore in O.S.17748/2005. 5. The learned Counsel for the petitioner would take this Court through the record to demonstrate that from the sequence of events, it is not clear as to the exact date from which the licence was renewed and the basis for the enhancement by over 200% by purported resolutions dated 17.11.1998 and 28.11.1998, in the face of an earlier resolution by the Town Planning and Development Committee dated 5.8.1998 and would further submit that in any event, this disputed question of fact amongst other disputed issues, is now the subject-matter of a suit for recovery of the very amounts that are demonstrated by the impugned order and therefore, the impugned order be quashed and the respondent, which has sought to make an illegal demand and claim and has sought to recover the same through a civil suit, may be allowed to run its course though it causes great inconvenience and hardship to the petitioner to contest the untenable suit. He would seek to emphasize that in the absence of a clear notice to the petitioner of renewal of the licence and enhancement of rent and in the presence of ambiguity as to different endorsements issued by two committees of the first respondent, the same would be resolved ultimately in the suit and therefore, seeks that the petition be allowed. 6. 6. While the learned Counsel for the respondents notwithstanding that the statement of objections has not been filed on behalf of the respondents, would vehemently contend that the very writ petition is not maintainable since it relates to a contractual relationship and the petitioner who was permitted to occupy the premises in terms of the deed of licence, which affords the respondent-BBMP, the option of renewing the licence on the enhanced rent and such rent having been enhanced, with effect from 28.11.1998 by the Standing Committee for Taxation and Finance, the petitioner who had continued to occupy the premises was bound to pay the said enhanced rent and the petitioner had failed to do so, while continuing to occupy the premises without paying any rent. It was only by virtue of the directions by this Court that nominal amounts were paid and subsequently, the petitioner not being able to comply with further directions by this Court, has lost possession of the premises. Therefore, the very basis for the writ petition is absent in the face of the nature of the dispute and the conduct of the petitioner. The demand made on the petitioner by the impugned order is in respect of its legitimate arrears. If the same is set at naught by this Court, the very basis of the suit for recovery which is pending before the Civil Court would be rendered a nullity and therefore, the writ petition, may be dismissed while enabling the respondent-BBMP, which is a public body to recover the legitimate dues to it, in the manner known to law. 7. In the above facts and circumstances, the question as regards the maintainability of the writ petition is squarely answered by the Supreme Court in the decision in ABL International Limited and another v. Export Credit Guarantee Corporation of India Limited and others, (2004) 3 SCC 553 . From a plain reading of the deed of licence, it is clear that Clause-11 of the licence provides that after the expiry of the initial period of 3 years of the term, the same could be renewed by enhancing the licence fee as decided by the Corporation. According to Clause-13 on the expiry of the licence period, the licensee was required to put the licensor in possession of the Guest House, failing which the licensor was entitled to re-enter and take possession thereof in accordance with law. According to Clause-13 on the expiry of the licence period, the licensee was required to put the licensor in possession of the Guest House, failing which the licensor was entitled to re-enter and take possession thereof in accordance with law. Further, at Clause-14, it is provided that in the event of licensee committing default in the payment of licence fee, the licensor shall be entitled to recover the arrears out of the Bank Guarantee furnished by the licensee and to take steps to terminate the licence and evict the licensee. 8. From the sequence of events that are demonstrated with reference to the record, the deed of licence being dated 10.8.1994, the licence would have expired on 9.8.1997. Therefore, it was for the respondent-BBMP to either have re-entered the premises in accordance with law, or to have extended the licence and placed the petitioner on notice of the same immediately thereafter and in the event of default by the petitioner, to have sought his eviction in accordance with law. But, from the sequence of events, there is no clear indication of the respondent-BBMP having followed the procedure that is contemplated under the deed of licence. In any event, this is only a prima facie observation in order to dispose of the present writ petition. Suffice it to say that since the respondent-BBMP has chosen to file a civil suit for recovery of the purported arrears of rent for a determinate period, it would be for them to establish that it is so entitled for the claimed arrears or in the alternative, to seek damages that the petitioner would be liable to pay for the unauthorised use and occupation of the premises, if the licence was not duly renewed or belatedly renewed, resulting in the petitioner being not certain about the rate of rent and not being in a position to pay the same. In any event, these are issues which shall be the subject-matter of a full-fledged trial before the civil Court and the above observations are only tentative opinion which need not be binding either on the parties or on the Civil Court, before which the suit for recovery is said to be pending. 9. In any event, these are issues which shall be the subject-matter of a full-fledged trial before the civil Court and the above observations are only tentative opinion which need not be binding either on the parties or on the Civil Court, before which the suit for recovery is said to be pending. 9. In any event, given the above facts and circumstances, the demand made by the BBMP under the impugned order could only be subject to the result of the civil suit which is said to be pending and therefore, there is no scope for any punitive action or other mode of recovery against the petitioner in respect of that demand. This would also be the case insofar as the demand which is under challenge in a pending case in MA 58/2003 on the file of the City Civil Court, instituted by the petitioner. Therefore, the present writ petition and the pending case are both rendered infructuous in view of the pending civil suit instituted by the BBMP and by that act of the BBMP, the civil suit now instituted has to be allowed to run its course and the BBMP is precluded from bringing any other kind of action against the petitioner, including the enforcement of the impugned order by which a demand is sought to be raised on the petitioner. 10. Accordingly, the writ petition is disposed of with the observation that the demand sought to be raised is very much subject to the result of the civil suit that is instituted in O.S.No.17748/2005, pending on the file of the City Civil Judge, Bangalore. 11. Order accordingly.