Karnataka HC Quashes Auction Of Athani Shops, Requiring Former Licensees To Pay Rent Within 2 Weeks And Be Evicted Before Re-Auction

The petitioners occupied shops in municipal commercial complexes under leases or licences that had expired in 2010. They continued in possession and claimed to have paid rent; their separate civil suits seeking protection from dispossession without due process were pending, without interim orders.

The Town Municipal Council issued an auction notification dated 6 October 2026, published on 9 October 2026, proposing to auction the shops on 29 and 30 October 2026. The petitioners challenged the notification and sought continuation of their leases, contending that they could not be removed without proceedings under the Public Premises Act.

The Council maintained that the lease periods had expired, that municipal property was required to be allotted by public auction, and that the petitioners could participate in the auction.

The Court relied on the Public Premises (Eviction of Unauthorised Occupants) Act, 1971, as referred to in the judgment, and on the Transfer of Property Act as alternative routes for lawful eviction; it also referred to the Karnataka Municipalities Act, 1964, in connection with auctioning municipal shops after eviction.

Drawing on K.T. Suresh v. State of Karnataka and D. Rajshekar v. State of Karnataka, the Court applied the rule that expiry of a lease or licence does not permit a municipality to forcibly dispossess the occupant; it must pursue the prescribed legal procedure.

It also relied on K. Manjunath v. Bangalore Development Authority and the authorities discussed there for the broader principle that even a person in settled possession cannot be dispossessed by executive action outside due process.

The petitioners’ leases or licences had expired, and the judgment did not determine that they had a continuing right to occupy the shops. Nevertheless, the Council had issued the auction notification without first taking eviction proceedings under the Public Premises Act or otherwise following due process.

Applying the cited precedents, the Court held that the Council could not use the auction process to bypass lawful eviction. It therefore set aside the notification insofar as it concerned the petitioners’ shops, while preserving the Council’s liberty to evict them lawfully and then proceed to auction.

The Council was permitted to follow the procedure under the Public Premises Act and, after eviction in due process, take appropriate steps to auction the shops under the Karnataka Municipalities Act, 1964.

The petitioners were directed to pay current rent and any arrears within two weeks; failure to do so would automatically recall the order in favour of the concerned petitioner.

The Court did not order continuation of the leases; all other contentions remained open.