Facts of the Case

The petitioner, P.R. Venkatraman, was the lessee of Shop No.5 situated at Covai Road, Karur. The shop had been taken through auction and was being used for a small business. According to the petitioner, the premises measured 144 sq. ft. with RCC roofing and 60 sq. ft. with AC sheet roofing. The petitioner stated that the shop had a separate tax assessment and that rent had periodically been increased in accordance with G.O.Ms.No.92 dated 03.07.2007. He further asserted that tax, rent and GST were being paid periodically.

The dispute arose when the respondent Municipality issued notice dated 04.07.2017 re-fixing the monthly lease rent from ₹4,150 to ₹12,000 with effect from July 2016. The petitioner contended that the enhancement was based on the alleged prevailing market value without prior notice to the lessees or an enquiry and was therefore unilateral and contrary to law.

The rent enhancement generated several rounds of litigation. In earlier writ proceedings, including W.P.(MD) No.4448 of 2018 and connected matters, the High Court dealt with the constitution of a Rent Re-fixation Committee and permitted lessees to place their objections before the Committee. The Court’s earlier directions contemplated consideration of the prevailing situation and re-fixation of lease rent after hearing objections.

Thereafter, notice was issued for an enquiry before the Committee, and the petitioner submitted a representation dated 08.05.2019. However, according to the petitioner, a subsequent rent-fixation order dated 02.12.2019 was passed without complying with the earlier judicial directions. This led to further proceedings, including W.P.(MD) No.26305 of 2019 and connected writ petitions.

In those proceedings, the High Court directed that the Rent Re-fixation Committee consider objections, afford an opportunity of personal hearing, and re-fix rent in accordance with applicable norms. The Committee subsequently submitted its report dated 18.01.2020. The report and rent statement were taken on record in subsequent proceedings, with directions for payment of rent as fixed by the Committee. Liberty to challenge the report was made subject to payment of arrears and continued payment of the re-fixed rent.

The petitioner further relied upon subsequent proceedings concerning notices for arrears, GST and deposit amounts. In W.P.(MD) Nos.7895 to 7906 of 2020, the Court directed disposal of the appeals and ordered continuation of status quo until a decision was taken, meaning that the writ petitioners were not to be dispossessed merely on the ground of non-clearance of rental arrears during that period.

Thereafter, the Commissionerate of Municipal Administration rejected appeals on the ground that there was no statutory provision available for re-fixation of rent. This resulted in W.P.(MD) Nos.17518 of 2020 and connected matters. By orders dated 04.12.2020 and 22.12.2020 in the relevant batches, the High Court quashed the impugned administrative action and remanded the matter for fresh consideration after sufficient opportunity of personal hearing.

The petitioner alleged that, notwithstanding the earlier judicial directions, the authorities neither properly conducted an enquiry nor issued the required notice and continued to insist upon payment based on disputed rent fixation. He also alleged threats to lock and seal the premises. Consequently, he approached the High Court under Article 226 seeking a writ of mandamus restraining interference with his peaceful possession and enjoyment of Shop No.5 until implementation of the earlier final order dated 04.12.2020, by considering his representation dated 26.03.2022.

The respondent, however, stated that the petitioner was in rental arrears exceeding ₹10 lakh and that the shop had been sealed and locked on 10.10.2022 after following due process. The petitioner then offered, as a demonstration of bona fides, to deposit ₹2.50 lakh as part-payment towards arrears and sought removal of the lock and seal.

Issues Involved

The principal issues before the High Court were:

  1. Whether the petitioner was entitled to protection against interference with his possession of the municipal shop pending lawful re-fixation of rent.
  2. Whether rent for the municipal/corporation shop could be re-fixed without a proper hearing and consideration of the lessee’s objections.
  3. Whether the statutory committee of the Karur Corporation was required to undertake the exercise of rent re-fixation after the Municipality had been upgraded into a Corporation.
  4. Whether the petitioner could secure removal of the lock and seal by making a bona fide part-payment towards the alleged rental arrears.
  5. What consequences would follow if the petitioner failed to pay the arrears after rent was lawfully re-fixed.
  6. Whether eviction or dispossession could be undertaken without following due procedure of law.

Petitioner’s Arguments

The petitioner contended that the enhancement of monthly rent from ₹4,150 to ₹12,000 with retrospective effect from July 2016 was unilateral, unsupported by a proper enquiry, and imposed without prior notice to the affected lessees.

It was argued that several earlier orders of the High Court had required rent re-fixation through a duly constituted committee, consideration of objections and an opportunity of personal hearing. According to the petitioner, subsequent actions of the authorities failed to comply with these directions.

The petitioner further relied upon the earlier orders by which administrative decisions were quashed for arbitrariness and violation of principles of natural justice and the matters were remanded for fresh consideration.

It was also contended that the authorities continued to insist upon disputed arrears and threatened coercive action despite the unresolved controversy regarding lawful rent re-fixation.

During the hearing, the petitioner offered to deposit ₹2,50,000 as part-payment towards arrears to demonstrate bona fides and requested a direction to remove the lock and seal from Shop No.5.

Respondent’s Arguments

The learned Standing Counsel for the Commissioner, Karur Corporation, submitted that multiple litigations were pending between the parties.

The respondent asserted that the petitioner was in rental arrears exceeding ₹10,00,000 and that, on 10.10.2022, the petitioner’s shop had been sealed and locked after following due process of law.

The respondent denied that threats had been made to the shop owners and submitted that the petitioner would not be dispossessed improperly.

It was further submitted that, pursuant to earlier High Court orders, a Committee had already been formed for re-fixation of rent.

Court Order / Findings

The Madras High Court took note of the history of litigation, the competing submissions, the petitioner’s offer to make a substantial part-payment, and the changed administrative status of Karur.

A significant finding was that during the earlier litigation Karur was a Municipality, but it was subsequently upgraded as a Corporation, for which there existed a statutory committee for fixation of rent.

The Court issued the following operative directions:

  1. The petitioner was directed to pay ₹2,50,000 to the respondent within two weeks from the date of receipt of a copy of the order.
  2. Upon receipt of that payment, the respondent was directed to remove the lock and seal of Shop No.5, Covai Road, Karur.
  3. The Statutory Committee of the respondent Corporation was directed to conduct a meeting regarding re-fixation of rent for the shops concerned.
  4. The rent re-fixation exercise was required to be conducted on merits and in accordance with law.
  5. The Committee was required to afford an opportunity of hearing to all parties concerned.
  6. After rent was re-fixed, the petitioner was directed to pay the arrears calculated on the basis of the re-fixed rent, after deducting amounts already paid.
  7. Such arrears were required to be paid within the time limit prescribed by the respondent.
  8. In case of failure to pay the arrears as re-fixed, the respondent was permitted to vacate the petitioner from the shop by following due procedure of law.
  9. The entire exercise was directed to be completed within eight weeks from receipt of a copy of the order.
  10. The respondent was directed to issue notice to the petitioner by Registered Post with Acknowledgment Due.
  11. The petitioner was directed to appear before the authorities on the date specified in the notice and place his grievances concerning re-fixation of rent.

With these directions, the writ petition was disposed of without costs, and the connected miscellaneous petition was closed.

Important Clarification

The judgment does not hold that a municipal or corporation lessee can permanently avoid payment of rent or arrears merely because the rent fixation is disputed. The Court adopted a structured approach: the petitioner was required to make an immediate part-payment of ₹2.50 lakh; the lock and seal were to be removed upon such payment; the statutory committee was required to lawfully re-fix rent after hearing the affected parties; and thereafter the petitioner had to clear the re-computed arrears after adjustment of amounts already paid.

The order also makes clear that continued occupation is not unconditional. If the petitioner fails to pay the arrears after lawful re-fixation within the time prescribed by the Corporation, the respondent may vacate him from the shop, but only by following due procedure of law.

A further important clarification is that the Court recognised the institutional change from Karur Municipality to Karur Corporation and specifically directed the statutory committee of the Corporation to undertake the rent re-fixation exercise.

Sections / Legal Provisions / Government Orders Involved

Article 226 of the Constitution of India — Constitutional writ jurisdiction of the High Court; the petition sought issuance of a writ of mandamus.

Principles of Natural Justice — Particularly the requirement of notice, consideration of objections and meaningful opportunity of personal hearing before adverse rent re-fixation decisions.

G.O.Ms.No.92 dated 03.07.2007 — Referred to in relation to periodic enhancement of rent.

G.O.Ms.No.147, Municipal Administration and Water Supplies Department, dated 30.12.2000 — Referred to in the earlier connected proceedings regarding the methodology for fixation of fair rent for municipal shops.

Statutory Committee mechanism after upgradation of Karur Municipality into Karur Corporation — Central to the final direction for lawful re-fixation of rent.

Link to download the order –https://www.mytaxexpert.co.in/uploads/1783320646_1256compressed.pdf

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