P.P.Lonappan vs. Annamanada Grama Panchayath

Petitioners are the lessees under the 1st respondent Panchayat with regard to the rooms occupied by them in a double storied building belonging to the 1st respondent Panchayat. They are conducting small trades like photo framing, cycle work, vegetable vending shop, stationery shops etc. etc. in order to eke out their livelihood. Petitioners are aggrieved by the enhancement of rent by 20% for the year 2018-19 without any justification. According to the petitioners, the area of the shop rooms are only 110 sq.ft. to 200 sq.ft. The rooms were let out to the petitioners on public auction. Ext.P1 bye-law provides for enhancement of rent on renewal only by a maximum of 5% every year. The rooms were let out proposing to start Panchayat Bus Stand in the adjacent property. But the Bus Stand is now constructed in a far away place. In the last two years, Government Offices like Sub Treasury, KSEB office etc. situated in the building in question were also shifted to Mala. In all respects, the business is substantially reduced in the area. Therefore, according to the petitioners, the action of respondents enhancing the rent by 20% have put the petitioners into various prejudices and inconveniences.

The respondents have filed a detailed counter affidavit, refuting the allegations and claims and demands raised by the petitioners. Among other contentions, it is stated that, the rent fixed is far below the PWD tariff rates. However, it is admitted that, as per Ext.P1 bye-law, enhancement only at the rate of 5% is permissible for renewing the lease every year. But, it is submitted, the provisions of the bye- law make it clear that, it is the discretion of the Panchayat Committee to decide about the renewal or to conduct fresh auction, which thus means, the tenants have no right to get renewal of lease as a matter of right. Therefore, it is submitted that, if the petitioners are not prepared to pay the rent, the Panchayat is at liberty to auction the shop rooms in question, since as per the present market rate, the rent applicable to similar rooms in the same locality is Rs.10,000/- to Rs.20,000/-. It was with the intention of helping the existing tenants, the Panchayat committee had decided to enhance the rent by 20% for the period 2018-19. Therefore, the sum and substance of the contention advanced by the respondents is that, the rent presently paid by the petitioners is far below the rates fixed by the Government.

A tabular statement showing the details of rent for the period 2017-18 and enhanced rate is provided in the counter affidavit, which is as follows: Sl. No. Room No. Name Rent for the period 2017- 18 Rs. Enhanced Rent. Rs. Area of each room (in m2) Rent as per Government rate. Rs. 1 4/554 Sajini Sirajudheen 1,021/- 1,225/- 11 7883 2 4/551 Babu Vettiyadan 1,021/- 1,225/- 11 7883 3 4/549 Prakasan 1,278/- 1,534/- 12 8599 4 4/548 George M.P. 1,405/- 1,686/- 12 8599 5 4/547 Thomas 1,405/- 1,686/- 12 8599 6 4/546 Priju E.A. 1,523/- 1,828/- 11 7883 7 4/545 Wilson 1,405/- 1,686/- 12 8599 8 4/543 Noushad 1,788/- 2,146/- 12 8599 9 4/543 Lonappan 2,382/- 2,858/- 11 7883 10 4/542 Sivadasan 2,809/- 3,371/- 12 8599 11 4/541 Jomon K.J. 7,020/- 8,424/- 12 8599 12 4/536 Tenny Antony 3,320/- 3,984/- 14 10032 4/535 Tenny Antony 3,320/- 3,984/- 12 8599 14 4/534 Gireesh 3,064/- 3,677/- 11 7883 15 4/533 V.J. George 3,310/- 3,792/- 12 8599 16 4/532 Sirajudheen 3,064/- 3,677/- 11 7883 17 4/531 Sirajudheen 3,320/- 3,984/- 12 8599 Therefore, it is submitted that the decision taken by the Panchayat committee to enhance the rent by 20% can never be said to be illegal or arbitrary.

A reply affidavit is filed by the petitioners, reiterating the stand adopted in the writ petition and also stating that the Panchayat is not expected to function as a profit making body and they will have to adhere to the stipulations contained under Article 243G of the Constitution of India, and therefore, the Panchayat or its committee cannot arbitrarily fix or enhance the existing rate of rent. Ext.P13 is also produced along with the reply affidavit, directing the occupants of the rooms to pay GST at the rate of 18% also.

I have heard learned counsel for the petitioners and the learned Standing Counsel appearing for the respondents and perused the pleadings and the documents on record.

The basic contention advanced by learned counsel for the petitioner is relying upon Ext.P1 bye- law constituted by the Panchayat dated 04.02.2016, and specifically to Clause 5, which deals with renewal of rent, in which it is stipulated that, the Panchayat committee is at liberty to renew the lease without conducting auction by enhancement of rent. However, it is peremptorily stipulated thereunder that the rent cannot be enhanced exceeding 5% from the existing rent. This is the paramount contention put forth by the petitioners to canvass the point that the enhancement of rent made by the Panchayat committee by 20% is illegal and arbitrary.

Learned counsel for the petitioners has also invited my attention to Article 243G of the Constitution of India, dealing with powers, authority and responsibilities of Panchayat. The contention put forth relying upon Article 243G is that, the Legislature of a State may, by law, endow the Panchayats with such powers and authority may be necessary to enable them to function as institutions of self-government and such law may contain provisions for the devolution of powers and responsibilities upon Panchayats, at the appropriate level, subject to such conditions as may be specified therein, with respect to (a) the preparation of plans for economic development and social justice; and (b) the implementation of schemes for economic development and social justice as may be entrusted to them including those in relation to the matters listed in the Eleventh Schedule. Learned counsel has invited my attention to the Eleventh Schedule and submitted that, the Panchayat is not expected to make huge profits, but it is duty bound to take into account the welfare and well-being of the people within its territorial limits, and therefore, the Panchayat cannot merely function as a body to make profit out of its activities.

On the other hand, learned Standing Counsel for the Panchayat submitted that, the rate fixed against the rooms occupied by the petitioners are very less and the Panchayat is expected to generate funds so as to carry on with its welfare and developmental activities, and there is nothing wrong or illegal in the Panchayat committee taking a decision to enhance the rent by 20%, and even then, according to the chart provided, it is much less than the PWD rates fixed by the State Government.

I have evaluated the rival submissions made across the Bar. As I have pointed out earlier, the predominant contention is on the basis of Ext.P1 bye- law, wherein it is specifically stipulated that the Panchayat committee is at liberty to renew the lease rents without conducting any auction, however, subject to enhancement of rent. But, it is equally important to note that, as per Clause 5, it is specifically stipulated that the enhancement shall not exceed 5%. Therefore, the contention advanced by learned Standing Counsel for the Panchayat that overlooking the said provision, the Panchayat committee is at liberty to take a decision, in my considered opinion, cannot be sustained under law. If the Panchayat is of the opinion that the rent fixed against the petitioners is meagre and less than the rent prevailing in the locality and also in accordance with the PWD rates, the Panchayat ought to have taken necessary steps to amend the bye-laws formulated by the Panchayat for managing its affairs.

So also, Sec.254 of the Kerala Panchayat Raj Act deals with power of the Government to make Rules, Bye-laws and penalties for their breach. Therefore, the Panchayat has framed the bye-laws, in accordance with the empowerment provided as per Sec.254 of Act, 1994. Thus, in effect, the bye-law is a creation of the statute itself and it has got all the statutory characteristics and features. Therefore, in my considered view, the enhancement of rent made by the Panchayat by 20%, overlooking the stipulations contained under the bye-laws cannot be sustained under law. So much so, as discussed above, Article 243G of the Constitution makes it clear that the laws are to be framed bearing in mind the social and economic justice to be provided to the citizens within the territorial limits of the Panchayat.

Taking into account all these aspects and assimilating the legal situations, I am of the considered opinion that, the enhancement of rent made by the Panchayat by 20% cannot be sustained under law, in view of the peremptory condition provided under Ext.P1 bye-laws, empowering the Panchayat to enhance the rent only by 5%. Moreover, it is not dependent upon any option provided to the Panchayat committee either to renew the lease or to conduct the auction. In that view of the matter, petitioners are entitled to succeed in this writ petition, accordingly, the demands raised so and under challenge are quashed, and there will be a direction to the Panchayat to collect the rent for the period 2018-19 at the enhanced rate of 5% alone.