Full Judgment Text
R
W.P.26755/2012
& W.P.40708/2012
1
IN THE HIGH COURT OF KARNATAKA, BENGALURU
th
DATED THIS THE 28 DAY OF JANUARY, 2015
BEFORE
THE HON'BLE MR.JUSTICE RAM MOHAN REDDY
WRIT PETITION N OS . 26755 OF 2012 &
40708 OF 2012 ( GM - CPC )
IN WP. NO. 26755 OF 2012
BETWEEN:
THE CHIEF OFFICER
TOWN PANCHAYATH,
T .NARASIPURA,
REPRESENTED BY SRI.V.T. WILSON
AGED ABOUT 46 YEARS
... PETITIONER
(By Sri. NITYANAND V. NAYAK, ADV., FOR
SRI.G.F HUNASIKATTIMATH, ADV.,)
AND
1. SMT. GUNASUNDARAMMANNI
W/O LATE RAMARAJE URS,
AGED 53 YEARS
INDIRA COLONY, T NARASIPURA.
2. SWAMY
S/O CHINNASWAMY,
AGED 33 YEARS
SRI RAMPURA BEEDI, T NARASIPURA
3. S GIRISHA
S/O LATE SIDDANARAYANA,
AGED 38 YEARS
SRI RAMPURA BEEDI, T NARASIPURA
W.P.26755/2012
& W.P.40708/2012
2
4. SHASHIKALA
W/O PRAKASHA,
AGED 38 YEARS
SRI RAMPURA BEEDI, T NARASIPURA
5. SMT. PREMA
W/O SHIVASWAMY,
AGED 63 YEARS, T NARASIPURA
6. K KUMARA
S/O KALANAYAKA,
AGED 38 YEARS
NAYAKARA BEEDI, T NARASIPURA
7. M MAHADEVA
S/O NARASALINGAIAH,
AGED 38 YEARS
INDIRA COLONY, T. NARASIPURA
8. SHIVANNA
S/O LATE PUTTAMADASHETTY,
MAJOR,
HELAVARA BEEDI, HELAVARAHUNDI,
T.NARASIPURA
9. BHAGYAMMA
W/O LATE MAHADEVA,
AGED 55 YEARS
INDIRA COLONY, T.NARASIPURA
10. KRISHNA
S/O LATE KULLAIAH,
AGED 48 YEARS
INDIRA COLONY, T.NARASIPURA
11. B PUTTARAJU
S/O LATE BASAVANNA,
AGED 53 YEARS
NANJANAGUDU ROAD, T.NARASIPURA
12. M NAGARAJU
S/O MARINAYAKA,
AGED 48 YEARS
NAYAKARA BEEDI, T.NARASIPURA
W.P.26755/2012
& W.P.40708/2012
3
13. MAHADEVAMMA
W/O LATE PUTTASWAMY,
MAJOR
VINAYAKA COLONY, T.NARASIPURA
14. SMT. SAKAMMA
C/O APPALAIAH,
MAJOR,
VINAYAKA COLONY, T.NARASIPURA
15. SMT. NINGASHETTY
S/O SIDDASHETTY, VINAYAKA COLONY,
MAJOR, T.NARASIPURA
16. SMT. SHARADAMMA
W/O LATE PUTTASWAMY
MAJOR
INDIRA COLONY, T.NARASIPURA
17. GOWRAMMANNI
W/O LATE SANJEEVARAJE URS,
MAJOR,
INDIRA COLONY, T.NARASIPURA
18. PRESIDENT
TOWN PANCHAYATH, T.NARASIPURA
... RESPONDENTS
(By Sri. N MANOHAR, ADV., FOR R1, R3, R7, R9, R10, R13 TO
R17; SRI. SANDHYA JAMADAGNI ADV., FOR R2, R4, R5, R6, R8
AND R12; R18 SERVED AND UNREPRESENTED)
THIS WRIT PETITION IS FILED UNDER ARTICLES 226 &
227 OF CONSTITUTION OF INDIA PRAYING TO CALL FOR THE
RECORDS, IN EX.CASE NO.15/12 ON THE FILE OF CIVIL
JUDGE [SR.DN] & JMFC, AT T.NARASIPURA. QUASH THE
ENTIRE PROCEEDIGNS IN EX.CASE NO.15/12 IN THE FILE OF
THE CIVIL JUDGE [SR.DN] T.NARASIPURA VIDE ANNX-E & ETC.,
W.P.26755/2012
& W.P.40708/2012
4
IN WP. 40708 OF 2012
BETWEEN:
THE CHIEF OFFICER
TOWN PANCHAYATH,
T.NARASIPURA – 571 124,
REPRESENTED BY
SRI V.T.WILSON,
AGED ABOUT 46 YEARS
... PETITIONER
(By Sri. NITYANANDA V NAYAK, ADV.,)
AND
1. PUTTARAJU P
S/O LATE PUTTASWAMY,
THRIVENI NAGARA,
T.NARASIPURA – 571 124.
2. V.MADAPPA,
S/O LATE VENKATAIAH,
AGED ABOUT 51 YEARS,
CSF COLONY,
T.NARASIPURA- 571 124.
3. BASAVARAJU
S/O LATE APPAIAH SHETTY,
T.NARASIPURA,
TRIVENINAGARA-571124.
4. D.PANDURANGA SHETTY
S/O LATE SMT.RAJAMMA,
REDDY COLONY,
T.NARASIPURA -571 124.
5. PRESIDENT
TOWN PANCHAYATH,
T.NARASIPURA – 571 124.
... RESPONDENTS
(By Sri. N MANOHAR, ADV., FOR R1-R4;
R5 – SERVED & UNREPRESENTED)
W.P.26755/2012
& W.P.40708/2012
5
THIS WRIT PETITION IS FILED UNDER ARTICLES 226 &
227 OF CONSTITUTION OF INDIA PRAYING TO CALL FOR THE
RECORDS, IN EX.CASE NO.25/12, ON THE FILE OF THE CIVIL
JUDGE [SR.DN] & JMFC, AT T.NARASIPURA. QUASH THE
ENTIRE PROCEEDINGS IN EX.CASE NO.25/12 ON THE FILE OF
THE CIVIL JUDGE [SR.DN] T.NARASIPURA, VIDE ANNX-C &
ETC.,
THESE WRIT PETITIONS COMING ON FOR PRL.HEARING
IN ‘B’ GROUP THIS DAY, THE COURT MADE THE FOLLOWING:
O R D E R
Facts briefly stated are:
a) Respondents 1 to 17 in W.P.26755/2012 and
respondents 1 to 4 in W.P. 40708/2012 jointly
instituted O.S.14/2009 on the file of the
Sr.Civil Judge and JMFC, T.Narasipur for a
declaration that they are entitled to be put in
possession of the newly constructed
commercial complex being a public premises
belonging to the petitioner, on monthly rentals,
in terms of the agreement entered into between
themselves and the petitioner-Town Municipal
Counsel, arraigned as defendant, on terms and
W.P.26755/2012
& W.P.40708/2012
6
conditions mentioned therein. In that suit,
parties having reduced the terms of
compromise into writing, placed it in
Mediation, which, when accepted the suit was
allowed by Judgment and Decree dated
25.11.2011;
b) Thereafterwards, respondents 1 to 17 in
W.P.26755/2012 filed Execution Petition
15/2012 to execute the said decree while
respondents 1 to 4 in W.P.40708/2012 filed
Execution Petition 25/2012 before the very
same Court for the very same relief. The
Executing Court by order dated 26.7.2012 in
Execution Petition 15/2012 directed delivery of
possession of the properties to respondents 1
to 17 in W.P.26755/2012, while by order dated
27.3.2012 in Execution Petition 25/2012
directed delivery of possession to respondents 1
W.P.26755/2012
& W.P.40708/2012
7
to 4 in W.P. 40708/2012 and by a further
order dated 7.8.2012 directed breaking open of
the lock with police protection and delivery of
possession to respondents 1 to 4 therein;
c) It appears that the order dated 26.7.2012 in
Execution Petition 15/2012 to deliver
possession of the premises to respondents 1 to
l7 was stayed by this Court in
W.P.26755/2012, while respondents 1 to 4 in
W.P.40708/2012 were successful in executing
the order dated 7.8.2012 by breaking open the
lock with police protection and were put in
possession of the said properties;
d) Respondents 1 to 4 in W.P.40708/2012,
according to the learned counsel, have
deposited monthly rentals in the Bank Account
of the petitioner-TMC;
e) Hence these petitions;
W.P.26755/2012
& W.P.40708/2012
8
i) to declare the compromise decree dated
25.11.2011 in O.S.14/2009 on the file
of the Sr. Civil Judge and JMFC,
T.Narasipur as unenforceable and
illegal;
ii) to declare the agreement dated
14.3.2005 between the TMC and the
plaintiffs in O.S.14/2009 as
unenforceable, illegal and not
conferring right in the plaintiffs of
allotment of the public premises; and
iii) to quash the proceedings in Ex.Petition
Nos.15/2012 and 25/2012.
2. Petitions are opposed by filing statement of
objections interalia not denying the facts supra.
However respondents assert that their right to be put in
possession of the public properties is on the basis of
tenancy rights in terms of the agreement dated
W.P.26755/2012
& W.P.40708/2012
9
14.3.2005 entered into between the Chief Officer of the
TMC and themselves.
3. In the admitted facts there is no dispute that the
immovable properties being shops in a commercial
complex constructed by the TMC with financial
assistance from the State Financial Institutions, to be
refunded with interest were required to disposed of,
more appropriately the privilege to use the said shops
by way of leasehold rights, in a manner known to law
i.e. under Section 72 of the Karnataka Municipalities
Act, 1964, for short ‘Act’ r/w Rule 39 of the Karnataka
Municipalities (Guidance of Officers, Grant of Copies,
Miscellaneous Provisions) Rules, 1966, for short ‘Rules’,
by public auction, since the said provisions relate to
competence of Municipal Council to sell, lease or
contract or otherwise transfer any immovable property
belonging to it and, the procedure in respect thereof by
auction and none other.
W.P.26755/2012
& W.P.40708/2012
10
4. The declaration of law by a Division Bench of
this Court in MOHAN P. SONU vs. STATE OF
1
KARNATAKA & OTHERS in the circumstances applies
on all its fours. The Law Lords held that the object of
giving due publicity to the proposal to dispose of rights
in respect of the property belonging to a local authority
before it is so disposed of is quite obvious requiring
publication in order to realise the highest possible
income and to prevent persons in-charge of the
Municipal Council from disposing of the rights in
favour of persons in whom they are interested, and
further that ‘ Disobedience of the provisions’ of Rule
39 cannot be overlooked. In addition it was noticed that
Section 72 of the Act, and Rule 39 of the Rules were
mandatory intended to protect public revenue which
cannot be dealt with arbitrarily and in the secrecy of an
office. It was further observed that the aforesaid
1
1992 (2) KLJ 245
W.P.26755/2012
& W.P.40708/2012
11
provisions would attract offers from persons interested
in acquiring such rights and these offers would enable
the State Government to decide whether sanction has to
be given or otherwise as contemplated by Section 72
and therefore, Rule 39 and Section 72 are
complementary and operate together.
(Emphasis Supplied)
5. Admittedly the Chief Officer, is said to be
placed under suspension by the Deputy Commissioner
after the agreement and compromise were entered into.
The agreement dated 14.3.2005 to dispose of public
properties more appropriately the leasehold rights for a
period of 12 years in favor of the respondents is
contrary to the Act and Rules supra. Rights
invested/created or extinguished in favour of the
respondents in the writ petitions so as to claim privilege
for use of the public properties as leasehold rights
by way of a private negotiation with the then
W.P.26755/2012
& W.P.40708/2012
12
Chief Officer, other than by way of public auction, is
illegal and imperils Rule of law.
6. The agreement dated 14.3.2005 between the
Chief Officer of the TMC and the respondents exfacie
suffers from illegality and borders around fraud on
power. The provisions of the Act and Rules being
mandatory, the Chief Officer, TMC had no jurisdiction
or authority in law to enter into the agreement, to do
away with public premises, in utter disregard to rule of
law. Moreover, the allotment of public premises must
confine to the mandate of Article 14 of the Constitution
of India. Suffice it to observe that the agreement dated
14.3.2005 entered into by the then Chief Officer with
the respondents in the petitions provides for illegal
allotment founded upon ultra vires and illegal act of the
Chief Officer.
W.P.26755/2012
& W.P.40708/2012
13
7. Sequentially the compromise petition filed in
Mediation, following which O.S.14/2009 was decreed in
terms thereof, is perpetuating an illegality, hence the
compromise decree being an illegal decree cannot be
legalized. The Chief Officer, TMC and respondents
perpetuated a fraud with the full knowledge of the law
as applicable in the disposal of public properties, in
other words abused judicial process to perpetuate
illegality by paving way for a compromise decree.
8. The Apex Court in S.Pratap Singh –v- State of
2
Punjab stated thus:
“For the purposes of the present
controversy the functionary who took action
and on whose instructions the action was
taken against the appellant was undoubtedly
the Chief Minister and if that functionary was
actuated by mala fides in taking that action it
is clear that such action would be vitiated. In
this context it is necessary to add that though
the learned Attorney-General at first hinted
2
AIR 1964 SC 733
W.P.26755/2012
& W.P.40708/2012
14
that he would raise a legal contention, that
even if mala fides were established against the
Chief Minister still the impugned orders could
not be set aside, he did not further pursue the
matter, but proceeded, if we may say so
rightly, to persuade us that mala fides was
not made out by the evidence on record. Such
an argument, if right, would mean that even
fraud or corruption, leaving aside mala fides,
would not be examinable by a Court and
would not vitiate administrative orders. As
Lord Denning said in Lazarus Estates, Ltd. v.
Beasley(1) "No judgment of a court, no order
of a Minister, can be allowed to stand if it has
been obtained by fraud.”
(emphasis supplied)
9. In Express Newspapers Pvt. Ltd. & Others -
3
vs -Union Of India & Others at paragraphs 118 and
119 the Apex Court observed thus:
“118. Fraud on power voids the order if it is
not exercised bona fide for the end design.
There is a distinction between exercise of power
3
AIR 1986 SC 872
W.P.26755/2012
& W.P.40708/2012
15
in good faith and misuse in bad faith. The
former arises when an authority misuses its
power in breach of law, say, by taking into
account bonafide, and with best of intentions,
some extraneous matters or by ignoring
relevant matters. That would render the
impugned act or order ultra vires. It would be
a case of fraud on powers. The misuse in bad
faith arises when the power is exercised for an
improper motive, say, to satisfy a private or
personal grudge or for wreaking vengeance of a
Minister as in S.Prattap Singh v. State of
Punjab, (1964) 4 SCR 733; (AIR 1964 SC 733).
A power is exercised maliciously if its repository
is motivated by personal animosity towards
those who are directly affected by its exercise.
Xxxxxx”
“ It was said by Warrington, C.J. in Short v. Poole
Corporation, (1926) 1 Ch 66 that:
‘No public body can be regarded as having
statutory authority to act in bad faith or from
corrupt motives, and any action purporting to
be of that body, but proved to be committed in
W.P.26755/2012
& W.P.40708/2012
16
bad faith or from corrupt motives, would
certainly be held to be inoperative.’
In Lazarus case at page 722 per Lord Parker, CJ :
‘Fraud’ vitiates all transactions known to the
law of however high a degree of solemnity.’
10. If regard is had to the aforesaid observations
and applying the same to the facts of these petitions,
undoubtedly it is beyond cavil of doubt that the
agreement dated 14.3.2005 Annexure-A entered into
between the then Chief Officer of the TMC and
respondents suffers from ‘fraud on power’ and must
stand negated. Sequentially it goes without saying that
the compromise decree dated 25.11.2011 based upon
the terms and conditions of the agreement, is also
vitiated and cannot be allowed to stand.
11. Learned counsel for the respondents 2, 4, 5, 6
and 12 in W.P.26755/2012, at this juncture, submits
that the respondents are legally entitled to possession of
W.P.26755/2012
& W.P.40708/2012
17
the properties since the said agreement states that they
are entitled to possession of the commercial complex
strictly in accordance with law. This submission of the
learned counsel requires, evidently consideration on two
aspects. In the first place the agreement did not confer
and could not have conferred any right to the privilege
of use of the commercial complex, being a public
premises, by respondents since neither Section 72 of
the Act nor Rule 39 of the Rules provide for such an
agreement by way of a private negotiation. In the
second place since the agreement specifically records
that respondents will be put in possession of the public
premises, strictly in accordance with law, then
respondents could not have enforced the decree, in
execution, other than by way of public auction, hence
the taking of possession of the public premises by
breaking open the locks, is illegal and unsustainable.
Looking at it from any angle, respondents could not
have claimed a better right than to participate in a
W.P.26755/2012
& W.P.40708/2012
18
public auction of the privilege to use the public
premises, by way of lease, and therefore, the submission
of the learned counsel for the respondents 2, 4, 5, 6 and
12 is a specious plea. If truly the said respondents did
want to secure possession of the said public premises
strictly in accordance with law, would have had to await
issue of a notification for auction of the privilege to use
the terms by the petitioner as required by law.
12. Learned counsel for the respondents submit
that in terms of the circular dated 26.10.2009
Annexure-F of the State Government the Town
Municipal Council was permitted to give on lease the
public premises to the respondents. If regard is had to
the law declared by the Division Bench in Mohan
P.Sonu’s case (supra), it is needless to state that the
Circular instructions contrary to Section 72 of the Act
and Rule 39 of the Rules, are inoperative, illegal and
unenforceable. Even otherwise the Circular when not
W.P.26755/2012
& W.P.40708/2012
19
supported by statute has no force of law. Suffice it to
notice that in State of Madhya Pradesh –v- G.S.Dall
4
and Flour Mills , the Apex Court held that executive
instructions can supplement a statute, cover areas to
which statute does not extend but they cannot run
contrary to statutory provisions or whittle down their
effect. In Kerala Finance Corporation –v-
5
Commissioner of Income Tax following the opinion of
Mukharji, J. at the end of para 42 in State Bank Of
6
Travancore vs Commissioner Of Income Tax , held
that “Circulars cannot detract from the Act”. The Apex
Court held that Circulars of the Board under Section
119 cannot override or detract from the provisions of
the Act, is concerned, inasmuch as what Section 119
has empowered is to issue orders, instructions or
directions for the "proper administration" of the Act or
for such other purposes specified in Sub-section (2) of
4
AIR 1991 SC 772
5
AIR 1994 SC 2416
6
AIR 1986 SC 757
W.P.26755/2012
& W.P.40708/2012
20
the section. Such an order, instruction or direction
cannot override the provisions of the Act; that would be
destructive of all the known principles of law as the
same would really amount to giving power to a
delegated authority to even amend the provision of law
enacted by Parliament.
13. Thus, the Circular dated 26.10.2009 of the
Urban Development Department, of the State, issuing
instructions and directions to the Authorities of the
local boards, being executive in nature, though,
required to be issued in aid of functioning of the Act and
with the object that the provisions of the Act are
properly administered, however, in the light of the
ambiguity noticed supra, has no force of law. That
circular insofar as it runs contrary to the Act & Rules,
creating rights and obligations of the statute do not
supplement the law.
W.P.26755/2012
& W.P.40708/2012
21
14. Respondents in W.P.40708/2012 it is
submitted executed the order dated 7.8.2012 in
Execution 25/2012 by breaking open the locks on the
premises and took possession of the said shops and are
paying rents at the rate of Rs.1500/- per month by
depositing the same in Bank Account of the petitioner.
In the view taken supra, Respondents 1 to 4 in
W.P.40708/2012 must necessarily be directed to
redeliver possession of the said shop premises,
forthwith, since there is without authority of law, and
cannot continue to occupy the premises.
15. It must be observed that the then Chief
Officer of the TMC having acted contrary to law, which
is a fraud on power requires drastic action which the
State, it is hoped, would do so in accordance with law.
16. In the result, these petitions are allowed.
Reliefs sought are accordingly ordered. The agreement
W.P.26755/2012
& W.P.40708/2012
22
dated 14.3.2005 Annexure-A is declared illegal; the
compromise decree dated 25.11.2011 in O.S.14/2009 is
quashed; O.S. 14/2009 is dismissed with cost;
Sequentially Execution 15/2012 and 25/2012 on the
file of the Sr.Civil Judge and JMFC, T.Narasipur and
orders passed thereon quashed and; Execution
petitions are dismissed.
16. Respondents in W.P.40708/2012 are directed
to redeliver possession of the shop premises in the very
same condition when put in possession on 9.8.2012, to
the petitioner-TMC by day after tomorrow. It is open to
the petitioner and the State Government to lodge
criminal prosecution against everybody involved in this
fiasco and ensure its continuity until arriving at a
logical end. Petitioner on taking possession of the
public premises is directed to put up for public auction
the privilege to use the premises, by way of lease,
strictly in accordance with law.
W.P.26755/2012
& W.P.40708/2012
23
Cost quantified at Rs.10,000/- in each petition,
payable by the contesting respondents to the petitioner
Town Municipal Council.
Sd/-
JUDGE
ln.
W.P.26755/2012
& W.P.40708/2012
1
IN THE HIGH COURT OF KARNATAKA, BENGALURU
th
DATED THIS THE 28 DAY OF JANUARY, 2015
BEFORE
THE HON'BLE MR.JUSTICE RAM MOHAN REDDY
WRIT PETITION N OS . 26755 OF 2012 &
40708 OF 2012 ( GM - CPC )
IN WP. NO. 26755 OF 2012
BETWEEN:
THE CHIEF OFFICER
TOWN PANCHAYATH,
T .NARASIPURA,
REPRESENTED BY SRI.V.T. WILSON
AGED ABOUT 46 YEARS
... PETITIONER
(By Sri. NITYANAND V. NAYAK, ADV., FOR
SRI.G.F HUNASIKATTIMATH, ADV.,)
AND
1. SMT. GUNASUNDARAMMANNI
W/O LATE RAMARAJE URS,
AGED 53 YEARS
INDIRA COLONY, T NARASIPURA.
2. SWAMY
S/O CHINNASWAMY,
AGED 33 YEARS
SRI RAMPURA BEEDI, T NARASIPURA
3. S GIRISHA
S/O LATE SIDDANARAYANA,
AGED 38 YEARS
SRI RAMPURA BEEDI, T NARASIPURA
W.P.26755/2012
& W.P.40708/2012
2
4. SHASHIKALA
W/O PRAKASHA,
AGED 38 YEARS
SRI RAMPURA BEEDI, T NARASIPURA
5. SMT. PREMA
W/O SHIVASWAMY,
AGED 63 YEARS, T NARASIPURA
6. K KUMARA
S/O KALANAYAKA,
AGED 38 YEARS
NAYAKARA BEEDI, T NARASIPURA
7. M MAHADEVA
S/O NARASALINGAIAH,
AGED 38 YEARS
INDIRA COLONY, T. NARASIPURA
8. SHIVANNA
S/O LATE PUTTAMADASHETTY,
MAJOR,
HELAVARA BEEDI, HELAVARAHUNDI,
T.NARASIPURA
9. BHAGYAMMA
W/O LATE MAHADEVA,
AGED 55 YEARS
INDIRA COLONY, T.NARASIPURA
10. KRISHNA
S/O LATE KULLAIAH,
AGED 48 YEARS
INDIRA COLONY, T.NARASIPURA
11. B PUTTARAJU
S/O LATE BASAVANNA,
AGED 53 YEARS
NANJANAGUDU ROAD, T.NARASIPURA
12. M NAGARAJU
S/O MARINAYAKA,
AGED 48 YEARS
NAYAKARA BEEDI, T.NARASIPURA
W.P.26755/2012
& W.P.40708/2012
3
13. MAHADEVAMMA
W/O LATE PUTTASWAMY,
MAJOR
VINAYAKA COLONY, T.NARASIPURA
14. SMT. SAKAMMA
C/O APPALAIAH,
MAJOR,
VINAYAKA COLONY, T.NARASIPURA
15. SMT. NINGASHETTY
S/O SIDDASHETTY, VINAYAKA COLONY,
MAJOR, T.NARASIPURA
16. SMT. SHARADAMMA
W/O LATE PUTTASWAMY
MAJOR
INDIRA COLONY, T.NARASIPURA
17. GOWRAMMANNI
W/O LATE SANJEEVARAJE URS,
MAJOR,
INDIRA COLONY, T.NARASIPURA
18. PRESIDENT
TOWN PANCHAYATH, T.NARASIPURA
... RESPONDENTS
(By Sri. N MANOHAR, ADV., FOR R1, R3, R7, R9, R10, R13 TO
R17; SRI. SANDHYA JAMADAGNI ADV., FOR R2, R4, R5, R6, R8
AND R12; R18 SERVED AND UNREPRESENTED)
THIS WRIT PETITION IS FILED UNDER ARTICLES 226 &
227 OF CONSTITUTION OF INDIA PRAYING TO CALL FOR THE
RECORDS, IN EX.CASE NO.15/12 ON THE FILE OF CIVIL
JUDGE [SR.DN] & JMFC, AT T.NARASIPURA. QUASH THE
ENTIRE PROCEEDIGNS IN EX.CASE NO.15/12 IN THE FILE OF
THE CIVIL JUDGE [SR.DN] T.NARASIPURA VIDE ANNX-E & ETC.,
W.P.26755/2012
& W.P.40708/2012
4
IN WP. 40708 OF 2012
BETWEEN:
THE CHIEF OFFICER
TOWN PANCHAYATH,
T.NARASIPURA – 571 124,
REPRESENTED BY
SRI V.T.WILSON,
AGED ABOUT 46 YEARS
... PETITIONER
(By Sri. NITYANANDA V NAYAK, ADV.,)
AND
1. PUTTARAJU P
S/O LATE PUTTASWAMY,
THRIVENI NAGARA,
T.NARASIPURA – 571 124.
2. V.MADAPPA,
S/O LATE VENKATAIAH,
AGED ABOUT 51 YEARS,
CSF COLONY,
T.NARASIPURA- 571 124.
3. BASAVARAJU
S/O LATE APPAIAH SHETTY,
T.NARASIPURA,
TRIVENINAGARA-571124.
4. D.PANDURANGA SHETTY
S/O LATE SMT.RAJAMMA,
REDDY COLONY,
T.NARASIPURA -571 124.
5. PRESIDENT
TOWN PANCHAYATH,
T.NARASIPURA – 571 124.
... RESPONDENTS
(By Sri. N MANOHAR, ADV., FOR R1-R4;
R5 – SERVED & UNREPRESENTED)
W.P.26755/2012
& W.P.40708/2012
5
THIS WRIT PETITION IS FILED UNDER ARTICLES 226 &
227 OF CONSTITUTION OF INDIA PRAYING TO CALL FOR THE
RECORDS, IN EX.CASE NO.25/12, ON THE FILE OF THE CIVIL
JUDGE [SR.DN] & JMFC, AT T.NARASIPURA. QUASH THE
ENTIRE PROCEEDINGS IN EX.CASE NO.25/12 ON THE FILE OF
THE CIVIL JUDGE [SR.DN] T.NARASIPURA, VIDE ANNX-C &
ETC.,
THESE WRIT PETITIONS COMING ON FOR PRL.HEARING
IN ‘B’ GROUP THIS DAY, THE COURT MADE THE FOLLOWING:
O R D E R
Facts briefly stated are:
a) Respondents 1 to 17 in W.P.26755/2012 and
respondents 1 to 4 in W.P. 40708/2012 jointly
instituted O.S.14/2009 on the file of the
Sr.Civil Judge and JMFC, T.Narasipur for a
declaration that they are entitled to be put in
possession of the newly constructed
commercial complex being a public premises
belonging to the petitioner, on monthly rentals,
in terms of the agreement entered into between
themselves and the petitioner-Town Municipal
Counsel, arraigned as defendant, on terms and
W.P.26755/2012
& W.P.40708/2012
6
conditions mentioned therein. In that suit,
parties having reduced the terms of
compromise into writing, placed it in
Mediation, which, when accepted the suit was
allowed by Judgment and Decree dated
25.11.2011;
b) Thereafterwards, respondents 1 to 17 in
W.P.26755/2012 filed Execution Petition
15/2012 to execute the said decree while
respondents 1 to 4 in W.P.40708/2012 filed
Execution Petition 25/2012 before the very
same Court for the very same relief. The
Executing Court by order dated 26.7.2012 in
Execution Petition 15/2012 directed delivery of
possession of the properties to respondents 1
to 17 in W.P.26755/2012, while by order dated
27.3.2012 in Execution Petition 25/2012
directed delivery of possession to respondents 1
W.P.26755/2012
& W.P.40708/2012
7
to 4 in W.P. 40708/2012 and by a further
order dated 7.8.2012 directed breaking open of
the lock with police protection and delivery of
possession to respondents 1 to 4 therein;
c) It appears that the order dated 26.7.2012 in
Execution Petition 15/2012 to deliver
possession of the premises to respondents 1 to
l7 was stayed by this Court in
W.P.26755/2012, while respondents 1 to 4 in
W.P.40708/2012 were successful in executing
the order dated 7.8.2012 by breaking open the
lock with police protection and were put in
possession of the said properties;
d) Respondents 1 to 4 in W.P.40708/2012,
according to the learned counsel, have
deposited monthly rentals in the Bank Account
of the petitioner-TMC;
e) Hence these petitions;
W.P.26755/2012
& W.P.40708/2012
8
i) to declare the compromise decree dated
25.11.2011 in O.S.14/2009 on the file
of the Sr. Civil Judge and JMFC,
T.Narasipur as unenforceable and
illegal;
ii) to declare the agreement dated
14.3.2005 between the TMC and the
plaintiffs in O.S.14/2009 as
unenforceable, illegal and not
conferring right in the plaintiffs of
allotment of the public premises; and
iii) to quash the proceedings in Ex.Petition
Nos.15/2012 and 25/2012.
2. Petitions are opposed by filing statement of
objections interalia not denying the facts supra.
However respondents assert that their right to be put in
possession of the public properties is on the basis of
tenancy rights in terms of the agreement dated
W.P.26755/2012
& W.P.40708/2012
9
14.3.2005 entered into between the Chief Officer of the
TMC and themselves.
3. In the admitted facts there is no dispute that the
immovable properties being shops in a commercial
complex constructed by the TMC with financial
assistance from the State Financial Institutions, to be
refunded with interest were required to disposed of,
more appropriately the privilege to use the said shops
by way of leasehold rights, in a manner known to law
i.e. under Section 72 of the Karnataka Municipalities
Act, 1964, for short ‘Act’ r/w Rule 39 of the Karnataka
Municipalities (Guidance of Officers, Grant of Copies,
Miscellaneous Provisions) Rules, 1966, for short ‘Rules’,
by public auction, since the said provisions relate to
competence of Municipal Council to sell, lease or
contract or otherwise transfer any immovable property
belonging to it and, the procedure in respect thereof by
auction and none other.
W.P.26755/2012
& W.P.40708/2012
10
4. The declaration of law by a Division Bench of
this Court in MOHAN P. SONU vs. STATE OF
1
KARNATAKA & OTHERS in the circumstances applies
on all its fours. The Law Lords held that the object of
giving due publicity to the proposal to dispose of rights
in respect of the property belonging to a local authority
before it is so disposed of is quite obvious requiring
publication in order to realise the highest possible
income and to prevent persons in-charge of the
Municipal Council from disposing of the rights in
favour of persons in whom they are interested, and
further that ‘ Disobedience of the provisions’ of Rule
39 cannot be overlooked. In addition it was noticed that
Section 72 of the Act, and Rule 39 of the Rules were
mandatory intended to protect public revenue which
cannot be dealt with arbitrarily and in the secrecy of an
office. It was further observed that the aforesaid
1
1992 (2) KLJ 245
W.P.26755/2012
& W.P.40708/2012
11
provisions would attract offers from persons interested
in acquiring such rights and these offers would enable
the State Government to decide whether sanction has to
be given or otherwise as contemplated by Section 72
and therefore, Rule 39 and Section 72 are
complementary and operate together.
(Emphasis Supplied)
5. Admittedly the Chief Officer, is said to be
placed under suspension by the Deputy Commissioner
after the agreement and compromise were entered into.
The agreement dated 14.3.2005 to dispose of public
properties more appropriately the leasehold rights for a
period of 12 years in favor of the respondents is
contrary to the Act and Rules supra. Rights
invested/created or extinguished in favour of the
respondents in the writ petitions so as to claim privilege
for use of the public properties as leasehold rights
by way of a private negotiation with the then
W.P.26755/2012
& W.P.40708/2012
12
Chief Officer, other than by way of public auction, is
illegal and imperils Rule of law.
6. The agreement dated 14.3.2005 between the
Chief Officer of the TMC and the respondents exfacie
suffers from illegality and borders around fraud on
power. The provisions of the Act and Rules being
mandatory, the Chief Officer, TMC had no jurisdiction
or authority in law to enter into the agreement, to do
away with public premises, in utter disregard to rule of
law. Moreover, the allotment of public premises must
confine to the mandate of Article 14 of the Constitution
of India. Suffice it to observe that the agreement dated
14.3.2005 entered into by the then Chief Officer with
the respondents in the petitions provides for illegal
allotment founded upon ultra vires and illegal act of the
Chief Officer.
W.P.26755/2012
& W.P.40708/2012
13
7. Sequentially the compromise petition filed in
Mediation, following which O.S.14/2009 was decreed in
terms thereof, is perpetuating an illegality, hence the
compromise decree being an illegal decree cannot be
legalized. The Chief Officer, TMC and respondents
perpetuated a fraud with the full knowledge of the law
as applicable in the disposal of public properties, in
other words abused judicial process to perpetuate
illegality by paving way for a compromise decree.
8. The Apex Court in S.Pratap Singh –v- State of
2
Punjab stated thus:
“For the purposes of the present
controversy the functionary who took action
and on whose instructions the action was
taken against the appellant was undoubtedly
the Chief Minister and if that functionary was
actuated by mala fides in taking that action it
is clear that such action would be vitiated. In
this context it is necessary to add that though
the learned Attorney-General at first hinted
2
AIR 1964 SC 733
W.P.26755/2012
& W.P.40708/2012
14
that he would raise a legal contention, that
even if mala fides were established against the
Chief Minister still the impugned orders could
not be set aside, he did not further pursue the
matter, but proceeded, if we may say so
rightly, to persuade us that mala fides was
not made out by the evidence on record. Such
an argument, if right, would mean that even
fraud or corruption, leaving aside mala fides,
would not be examinable by a Court and
would not vitiate administrative orders. As
Lord Denning said in Lazarus Estates, Ltd. v.
Beasley(1) "No judgment of a court, no order
of a Minister, can be allowed to stand if it has
been obtained by fraud.”
(emphasis supplied)
9. In Express Newspapers Pvt. Ltd. & Others -
3
vs -Union Of India & Others at paragraphs 118 and
119 the Apex Court observed thus:
“118. Fraud on power voids the order if it is
not exercised bona fide for the end design.
There is a distinction between exercise of power
3
AIR 1986 SC 872
W.P.26755/2012
& W.P.40708/2012
15
in good faith and misuse in bad faith. The
former arises when an authority misuses its
power in breach of law, say, by taking into
account bonafide, and with best of intentions,
some extraneous matters or by ignoring
relevant matters. That would render the
impugned act or order ultra vires. It would be
a case of fraud on powers. The misuse in bad
faith arises when the power is exercised for an
improper motive, say, to satisfy a private or
personal grudge or for wreaking vengeance of a
Minister as in S.Prattap Singh v. State of
Punjab, (1964) 4 SCR 733; (AIR 1964 SC 733).
A power is exercised maliciously if its repository
is motivated by personal animosity towards
those who are directly affected by its exercise.
Xxxxxx”
“ It was said by Warrington, C.J. in Short v. Poole
Corporation, (1926) 1 Ch 66 that:
‘No public body can be regarded as having
statutory authority to act in bad faith or from
corrupt motives, and any action purporting to
be of that body, but proved to be committed in
W.P.26755/2012
& W.P.40708/2012
16
bad faith or from corrupt motives, would
certainly be held to be inoperative.’
In Lazarus case at page 722 per Lord Parker, CJ :
‘Fraud’ vitiates all transactions known to the
law of however high a degree of solemnity.’
10. If regard is had to the aforesaid observations
and applying the same to the facts of these petitions,
undoubtedly it is beyond cavil of doubt that the
agreement dated 14.3.2005 Annexure-A entered into
between the then Chief Officer of the TMC and
respondents suffers from ‘fraud on power’ and must
stand negated. Sequentially it goes without saying that
the compromise decree dated 25.11.2011 based upon
the terms and conditions of the agreement, is also
vitiated and cannot be allowed to stand.
11. Learned counsel for the respondents 2, 4, 5, 6
and 12 in W.P.26755/2012, at this juncture, submits
that the respondents are legally entitled to possession of
W.P.26755/2012
& W.P.40708/2012
17
the properties since the said agreement states that they
are entitled to possession of the commercial complex
strictly in accordance with law. This submission of the
learned counsel requires, evidently consideration on two
aspects. In the first place the agreement did not confer
and could not have conferred any right to the privilege
of use of the commercial complex, being a public
premises, by respondents since neither Section 72 of
the Act nor Rule 39 of the Rules provide for such an
agreement by way of a private negotiation. In the
second place since the agreement specifically records
that respondents will be put in possession of the public
premises, strictly in accordance with law, then
respondents could not have enforced the decree, in
execution, other than by way of public auction, hence
the taking of possession of the public premises by
breaking open the locks, is illegal and unsustainable.
Looking at it from any angle, respondents could not
have claimed a better right than to participate in a
W.P.26755/2012
& W.P.40708/2012
18
public auction of the privilege to use the public
premises, by way of lease, and therefore, the submission
of the learned counsel for the respondents 2, 4, 5, 6 and
12 is a specious plea. If truly the said respondents did
want to secure possession of the said public premises
strictly in accordance with law, would have had to await
issue of a notification for auction of the privilege to use
the terms by the petitioner as required by law.
12. Learned counsel for the respondents submit
that in terms of the circular dated 26.10.2009
Annexure-F of the State Government the Town
Municipal Council was permitted to give on lease the
public premises to the respondents. If regard is had to
the law declared by the Division Bench in Mohan
P.Sonu’s case (supra), it is needless to state that the
Circular instructions contrary to Section 72 of the Act
and Rule 39 of the Rules, are inoperative, illegal and
unenforceable. Even otherwise the Circular when not
W.P.26755/2012
& W.P.40708/2012
19
supported by statute has no force of law. Suffice it to
notice that in State of Madhya Pradesh –v- G.S.Dall
4
and Flour Mills , the Apex Court held that executive
instructions can supplement a statute, cover areas to
which statute does not extend but they cannot run
contrary to statutory provisions or whittle down their
effect. In Kerala Finance Corporation –v-
5
Commissioner of Income Tax following the opinion of
Mukharji, J. at the end of para 42 in State Bank Of
6
Travancore vs Commissioner Of Income Tax , held
that “Circulars cannot detract from the Act”. The Apex
Court held that Circulars of the Board under Section
119 cannot override or detract from the provisions of
the Act, is concerned, inasmuch as what Section 119
has empowered is to issue orders, instructions or
directions for the "proper administration" of the Act or
for such other purposes specified in Sub-section (2) of
4
AIR 1991 SC 772
5
AIR 1994 SC 2416
6
AIR 1986 SC 757
W.P.26755/2012
& W.P.40708/2012
20
the section. Such an order, instruction or direction
cannot override the provisions of the Act; that would be
destructive of all the known principles of law as the
same would really amount to giving power to a
delegated authority to even amend the provision of law
enacted by Parliament.
13. Thus, the Circular dated 26.10.2009 of the
Urban Development Department, of the State, issuing
instructions and directions to the Authorities of the
local boards, being executive in nature, though,
required to be issued in aid of functioning of the Act and
with the object that the provisions of the Act are
properly administered, however, in the light of the
ambiguity noticed supra, has no force of law. That
circular insofar as it runs contrary to the Act & Rules,
creating rights and obligations of the statute do not
supplement the law.
W.P.26755/2012
& W.P.40708/2012
21
14. Respondents in W.P.40708/2012 it is
submitted executed the order dated 7.8.2012 in
Execution 25/2012 by breaking open the locks on the
premises and took possession of the said shops and are
paying rents at the rate of Rs.1500/- per month by
depositing the same in Bank Account of the petitioner.
In the view taken supra, Respondents 1 to 4 in
W.P.40708/2012 must necessarily be directed to
redeliver possession of the said shop premises,
forthwith, since there is without authority of law, and
cannot continue to occupy the premises.
15. It must be observed that the then Chief
Officer of the TMC having acted contrary to law, which
is a fraud on power requires drastic action which the
State, it is hoped, would do so in accordance with law.
16. In the result, these petitions are allowed.
Reliefs sought are accordingly ordered. The agreement
W.P.26755/2012
& W.P.40708/2012
22
dated 14.3.2005 Annexure-A is declared illegal; the
compromise decree dated 25.11.2011 in O.S.14/2009 is
quashed; O.S. 14/2009 is dismissed with cost;
Sequentially Execution 15/2012 and 25/2012 on the
file of the Sr.Civil Judge and JMFC, T.Narasipur and
orders passed thereon quashed and; Execution
petitions are dismissed.
16. Respondents in W.P.40708/2012 are directed
to redeliver possession of the shop premises in the very
same condition when put in possession on 9.8.2012, to
the petitioner-TMC by day after tomorrow. It is open to
the petitioner and the State Government to lodge
criminal prosecution against everybody involved in this
fiasco and ensure its continuity until arriving at a
logical end. Petitioner on taking possession of the
public premises is directed to put up for public auction
the privilege to use the premises, by way of lease,
strictly in accordance with law.
W.P.26755/2012
& W.P.40708/2012
23
Cost quantified at Rs.10,000/- in each petition,
payable by the contesting respondents to the petitioner
Town Municipal Council.
Sd/-
JUDGE
ln.