An inapplicable 20% ceiling cannot indirectly restrict rent enhancement for pre-2015 godown tenancies.

The petitioner owned two private godowns in District Pratapgarh, inducted by the Food and Civil Supplies Department on rent in 2003 and 2006 respectively for storage under the Public Distribution System.

Their rent was subsequently fixed at ₹300 per 100 bags for the period from 1 April 2012 to 31 March 2017.

After expiry of that period, the District Magistrate, following reports of increased circle rates, issued a justification certificate dated 27 December 2017 recommending rent of ₹1,200 per 100 bags for the period from 1 April 2017 to 31 March 2022.

The authorities did not execute fresh agreements at the enhanced rate and continued paying rent at ₹300 per 100 bags.

In an earlier writ petition, the High Court directed the authorities to first determine whether Clause 14 applied to godowns taken on rent before 14 July 2015.

Despite recording that Clause 14 was inapplicable to the petitioner’s pre-2015 tenancies, the Regional Food Controller relied on fresh justification certificates issued on 26 June 2023 and fixed rent at ₹350 per 100 bags with effect from 1 April 2017.

During the proceedings, possession of both godowns was returned to the petitioner with effect from 31 March 2024.

1. Whether Clause 14 of the Government Order dated 2 May 2018, imposing a 20% ceiling on rent enhancement, could be applied to godowns inducted on rent in 2003 and 2006?

2. Whether the respondents could recall or supersede the justification certificate dated 27 December 2017 without demonstrating jurisdictional or factual infirmity and without providing adequate reasons or a fair hearing?

3. Whether the orders fixing rent at ₹350 per 100 bags were legally sustainable despite relying, directly or indirectly, on Clause 14 and without furnishing a reasoned basis for rejecting the 2017 determination?

4. Whether the petitioner’s claim of discriminatory treatment vis-à-vis similarly situated godowns required examination under Article 14 of the Constitution?

Clause 14 of the Government Order dated 2 May 2018, on its proper construction, applies to godowns taken on rent with effect from 14 July 2015 and could not automatically govern pre-2015 tenancies; the earlier judgment in the petitioner’s case required the authority to determine this question before fixing rent.

The principle that what cannot be done directly cannot be achieved indirectly, relied upon from State of T.N. v. K. Shyam Sunder, (2011) 8 SCC 737, and Jagir Singh v. Ranbir Singh, (1979) 1 SCC 560, prohibits an authority from formally holding a provision inapplicable while achieving the same result through another mechanism.

Withdrawal of a previously issued administrative benefit or certificate requires demonstrated cause, compliance with natural justice, and cogent reasons, as recognised in State of Kerala v. K.G. Madhavan Pillai, (1988) 4 SCC 669, and Navjyoti Co-operative Group Housing Society v. Union of India, (1992) 4 SCC 477.

Administrative orders must be reasoned and speaking orders under S.N. Mukherjee v. Union of India, (1990) 4 SCC 594, Siemens Engineering & Manufacturing Co. of India Ltd. v. Union of India, (1976) 2 SCC 981, and Kranti Associates (P) Ltd. v. Masood Ahmed Khan, (2010) 9 SCC 496; under Mohinder Singh Gill v. Chief Election Commissioner, (1978) 1 SCC 405, an order must stand or fall on the reasons recorded in it.

Exercise of statutory power for an unauthorised or concealed purpose constitutes legal malice or colourable exercise of power, as explained in State of Punjab v. Gurdial Singh, (1980) 2 SCC 471.

Article 14 prohibits arbitrary and discriminatory State action and requires similarly situated persons to be treated alike, subject to rational justification, as recognised in E.P. Royappa v. State of Tamil Nadu, Ramana Dayaram Shetty v. International Airport Authority of India, and Ajay Hasia v. Khalid Mujib Sehravardi.

The Court held that the respondents themselves acknowledged that Clause 14 did not apply because the godowns had been taken on rent in 2003 and 2006.

However, the fresh justification certificates fixing rent at ₹350 were substantially based on the restriction contained in that very clause.

This amounted to achieving indirectly what the authority had accepted could not be done directly and rendered the decision internally contradictory.

The 2017 certificate had resulted from a structured inquiry involving the Tehsildar, the Sub-Divisional Magistrate, increased circle rates, and the District Magistrate’s determination.

Its recall was not supported by any demonstrated jurisdictional or factual error, adequate reasons, or fair hearing; the mere assertion that the recommended rent exceeded an inapplicable ceiling was insufficient.

Further, the fixation of ₹350 lacked comparative rental data, current market analysis, or an explanation for rejecting the earlier finding that circle rates had increased substantially.

It was therefore a non-speaking and arbitrary determination.

The Court also found that the petitioner’s allegation that comparable godowns had received higher enhancements was sufficiently specific to require a reasoned examination under Article 14.

Nevertheless, because rent fixation involved administrative assessment of local rates and comparable rentals, the Court declined to determine the rent itself at ₹1,200.

The Court quashed Office Order Nos. 671 and 669 dated 3 July 2023 and Letters Nos. 756 and 757 dated 26 June 2023, including the recall of the 27 December 2017 justification certificate.

The matter was remitted to the competent authority to determine the revised rent afresh, independently of Clause 14 of the Government Order dated 2 May 2018; to consider the 2017 justification certificate, the circle-rate report, and other relevant material; to record specific reasons if the 2017 certificate was to be superseded; and to examine the petitioner’s claim of discriminatory treatment vis-à-vis other godowns.

A reasoned order was directed to be passed within twelve weeks of production of the certified judgment.

The Court did not itself fix rent at ₹1,200, and left the petitioner’s claims concerning GST and interest on arrears open for determination by the competent authority.