2013 (10) TMI 1262 - SC - Indian Laws

Tenders for grant of leasehold rights - Held that - It is not in dispute that the open spaces available at Doraisamy Reddiar Market is public property. Therefore, the same cannot be disposed of by private negotiations and the members of the appellant, who have unauthorisedly occupied the open spaces cannot be allowed to retain those spaces. Respondent No.2, which is an institution of self- Government (Article 243P(e) read with Article 243Q of the Constitution), is required to undertake and execute several schemes i.e. water-supply, lighting, drainage, sewerage, laying and maintaining of public streets etc. for the benefit of the residents of the municipal area. For fulfilling its obligation under the 1920 Act and carrying out the duties and functions which may be entrusted to it under Schedule XII of the Constitution, respondent No.2 requires substantial fund. The contribution made by the State Government to municipal bodies, like, respondent No.2 is negligible. Therefore, they are required to augment the sources by grant of lease etc. of their properties by auction or by adopting appropriate mechanism consistent with the doctrine of equality and no fault can be found with the exercise undertaken by respondent No.2 to invite tenders for holding auction for the open spaces available in Doraisamy Reddiar Market - there cannot be any policy, much less, a rational policy of allotting land on the basis of applications made by individuals, bodies, organisations or institutions dehors an invitation or advertisement by the State or its agency / instrumentality. By entertaining applications made by individuals, organisations or institutions for allotment of land or for grant of any other type of largesse the State cannot exclude other eligible persons from lodging competing claim. Any allotment of land or grant of other form of largesse by the State or its agencies/instrumentalities by treating the exercise as a private venture is liable to be treated as arbitrary, discriminatory and an act of favouritism and/or nepotism violating the soul of the equality clause embodied in Article 14 of the Constitution - respondent No.2 did not commit any illegality by inviting sealed tenders for conducting open auction for grant of lease of the spaces occupied by members of the appellant - Decided against Appellant.

Summary

Issues:
1. Jurisdiction of respondent to auction open spaces.
2. Discrimination in auction process.
3. Legality of inviting tenders for lease by auction.
4. Validity of occupation rights of appellant members.
5. Doctrine of equality in granting leases.

Jurisdiction of respondent to auction open spaces:
The case involved a society formed to protect the interests of those occupying open spaces at a market in Chennai. The Government of Tamil Nadu had placed land at the disposal of the Municipality subject to conditions. The appellant challenged auction notices issued by the Municipality, arguing lack of jurisdiction under the Tamil Nadu District Municipalities Act, 1920. Respondent No.2 defended its actions, stating that the occupation of open spaces was unauthorized and that property tax payment did not confer any rights. The Single Judge and the Division Bench of the High Court held that the appellant members could not claim rights to the spaces and upheld the legality of the auction notices.

Discrimination in auction process:
The appellant alleged discrimination as their occupation was not regularized despite others' regularization. The courts noted that the owners of shops had constructed buildings before the transfer of land to the Municipality, distinguishing them from the appellant members. The courts emphasized that mere tax payment did not grant occupation rights. The Division Bench agreed that unauthorized occupation could not continue by paying fees or taxes, denying the appellant's claim to exclusivity in leasing rights.

Legality of inviting tenders for lease by auction:
The Supreme Court analyzed the legality of inviting tenders for lease by auction for the open spaces. It highlighted the public nature of the property and the Municipality's obligation to execute schemes for public benefit. The court emphasized the Municipality's need for funds and its right to lease properties through auctions to augment revenue. Citing relevant case law, the court held that the auction process was consistent with the doctrine of equality and rejected the appellant's challenge to the auction notices.

Validity of occupation rights of appellant members:
The courts examined the validity of the occupation rights claimed by the appellant members. They found that the open spaces were public property and could not be retained by unauthorized occupants. The courts emphasized the Municipality's duty to carry out various functions for public welfare and the need to generate revenue through property leases. The appellant members were deemed unauthorized occupants without exclusive rights to the spaces.

Doctrine of equality in granting leases:
The Supreme Court referred to a previous judgment emphasizing the need for transparent and non-discriminatory policies in granting land leases. It stressed the importance of publicizing policies and ensuring fair allocation of resources without favoritism. The court held that the Municipality's auction process was in line with the doctrine of equality, rejecting the appellant's challenge to the auction notices. The appeals were dismissed, and the interim order was vacated.