Statutory Rules Override Executive Circulars and Future Allotments Must Adhere to Prescribed Competitive Procedures

The case involves two linked matters: CRL.MC No. 1116 of 2025 (filed by Accused Nos. 2, 3, 4, 5, and 7 to quash a Vigilance Final Report) and WP(C) No. 38420 of 2024 (filed by a member of the SC community challenging the allotment of Room No. 10).

Room No. 10 in the Rajiv Gandhi Shopping Complex, owned by the Kottayam Municipality, was reserved for the SC/ST community.

In 1995, the room was allotted to V. Vijayan (A3) via competitive bidding rather than "draw of lots" as prescribed by then-applicable government circulars.

Subsequently, the room was transferred through several parties (A4, A5, and A7) and was allegedly integrated into "Josco Jewellery" (A6), involving unauthorized structural alterations and subletting.

A Vigilance inquiry culminated in CC No. 2/2017, alleging criminal conspiracy and corruption.

1. Whether the initial allotment of the SC/ST reserved room in 1995 followed the prescribed legal procedure and if its subsequent renewals are valid.

2. Whether the criminal proceedings against the petitioners (A2, A3, A4, A5, and A7) should be quashed following the quashment of the case against A6.

3. Whether the government circulars (Exts. P1(a)-(c)) regarding SC/ST reservation survived the amendment of the Kerala Municipality Act and the introduction of the 2000 Rules.

The court primarily applied Section 215 of the Kerala Municipality Act, 1994 (as amended in 1999), which governs the power of Municipalities to dispose of property.

It further relied on Rules 10 and 11 of the Kerala Municipality Rules, 2000; Rule 10 mandates a 10% reservation for SC/ST categories in shop allotments, while Rule 11 stipulates that such transfers (except renewals) must occur through public auction or tender.

The court also considered Section 575 (Repeal and Saving) of the Act regarding the survival of pre-existing circulars.

The court found that the initial 1995 allotment to V. Vijayan was illegal because it utilized competitive bidding instead of the "draw of lots" method mandated by the then-operative Ext. P1 series circulars.

While the 1999 amendment and the 2000 Rules superseded the specific procedural aspects of the circulars (replacing "lots" with tenders under Rule 11), the court held that an illegality at the inception vitiates subsequent renewals.

Regarding the criminal petition, the court declined to extend the benefit of the quashment granted to A6 to the other accused, noting that the prosecution records prima facie showed that the petitioners facilitated a "pecuniary advantage" for a private party (the jewellery owner) at the expense of the SC/ST reservation quota.

The physical alteration and integration of the room into the jewellery shop supported the allegation of conspiracy.

In WP(C) No. 38420/2024, the Court directed the Kottayam Municipality to re-allot Room No. 10 to a member of the SC/ST community via the Rule 11 procedure upon the expiry of the current agreement.

The Municipality was further ordered to restore the room to its original structural position and ensure its exclusive use by the reserved category beneficiary within one month of the agreement's expiry.