Sri Thaneman vs. State Of Karnataka
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The petitioner, Sri Thaneman, was the existing lessee of shop No. 8. The Town Municipal Council, Belur (R-2), sought to auction the shop for 12 years. Following a circular dated 19.07.2019, the petitioner was afforded a right of first refusal. He exercised this right by submitting a representation on 21.12.2024, indicating his intention to participate in the auction. The auction was conducted on 02.01.2025. The Municipal Council issued a notice on 03.02.2025, requiring the petitioner to deposit six months' rent along with GST within three days, failing which the bid would be allotted to the highest bidder. The petitioner claims he received this notice on 11.02.2025 and responded with another representation on 12.02.2025, reiterating his request to continue in the shop. The Municipal Council did not accede to this.
Held
The Court held that Clause 13 of the Circular dated 19.07.2019, which deals with the right of first refusal, does not specify any time frame within which the existing lessee must exercise their option or deposit the required sums after the auction. The Court noted that the Municipal Council issued a notice dated 03.02.2025 granting the petitioner only three days to deposit the rent and GST. However, the petitioner contended, and the Court found it plausible, that he received this notice only on 11.02.2025 and responded immediately on 12.02.2025. Given the inadequate time granted and the delay in the petitioner receiving the notice, the Court directed the Municipal Council to accept the right of first refusal exercised by the petitioner vide Annexure-D and to receive the sums due from him within two weeks from the date of receipt of the order. Upon the petitioner depositing the required sums, the Municipal Council is to extend the lease in his favour. The ratio decidendi is that a right of first refusal, when exercised, should be given effect to, provided the conditions are met within a reasonable time, especially when the notice period is insufficient and there's a delay in communication.
Key Issues
1. Whether the Municipal Council was justified in issuing a notice dated 03.02.2025 to the petitioner, requiring him to deposit six months' rent along with GST within three days, despite the petitioner having exercised his right of first refusal on 21.12.2024? (Question of law and fact, turning on Clause 13 of the Circular dated 19.07.2019 and principles of natural justice). Petitioner's contentions: The petitioner argued that Clause 13 of the Circular dated 19.07.2019 does not specify a time frame for the existing lessee to exercise their option or deposit sums after the auction. He contended that he received the notice dated 03.02.2025 late, on 11.02.2025, and responded promptly on 12.02.2025. He asserted that the three-day notice period was inadequate, especially given the delay in receipt. Respondents' contentions: The Municipal Council contended that they had issued a notice on 03.02.2025 calling upon the petitioner to deposit the required amounts within three days, as per their understanding of the procedure.
Sections Cited
Section 13 (of Circular dated 19.07.2019)
AI-generated summary — verify with the full judgment below
Cause title — parties, addresses and appearances
ORAL ORDER
The petitioner is seeking a direction to the 2nd respondent to consider his representation dated 21.12.2024 by which he had exercised his right of first refusal and also the representation dated 12.02.2025, copies of which are produced at Annexures-D and F respectively.
It is not in dispute that the petitioner was the existing lessee in respect of shop No.8 and this shop was sought to be auctioned for a period of 12 years and as required under the Circular dated 19.07.2019, the petitioner was afforded a right of first refusal. The clause which relates to award of right of first refusal is in the following terms: NC: 2025:KHC:8388 “13. ¸ÀAzÀ¨sÀð-03gÀ£ÀéAiÀÄ ¸ÁªÀðd¤PÀ §»gÀAUÀ ºÀgÁdÄ ªÀÄÆ®PÀ CAUÀr ªÀĽUÉUÀ¼À£ÀÄß «¯ÉêÁj ªÀiÁqÀĪÁUÀ ºÁ° EgÀĪÀ ªÁtÂdå ¸ÀAQÃtðzÀ ¨ÁrUÉzÁgÀgÀÄ ªÉÆzÀ®Ä ¸ÁªÀiÁ£Àå §»gÀAUÀ ºÀgÁdÄ ¥ÀæQæAiÉÄAiÀÄ°è ¨sÁUÀªÀ»¸ÀĪÀ CxÀªÁ Right of First Refusal £ÀÄß DAiÉÄÌ ªÀiÁrPÉƼÀÄîªÀ ¸ÀA§AzsÀ AiÀiÁªÀÅzÁzÀgÀÄ MAzÀ£ÀÄß DAiÉÄÌ ªÀiÁrPÉÆAqÀÄ F §UÉÎ °TvÀªÁV £ÀUÀgÀ ¸ÀܽÃAiÀÄ ¸ÀA¸ÉÜUÉ ºÀgÁdÄ ¢£ÁAPÀPÉÌ MAzÀÄ ªÁgÀ ªÀÄÄAavÀªÁV w½AiÀÄ¥Àr¸ÀvÀPÀÌzÀÄÝ. ¤UÀ¢üvÀ ¢£ÁAPÀzÉƼÀUÉ °TvÀªÁV w½¸À¢zÀÝ°è CAvÀºÀ ¨ÁrUÉzÁgÀgÀÄ Right of First Refusal £ÀÄß DAiÉÄÌ ªÀiÁrPÉƼÀî®Ä CªÀPÁ±À«gÀĪÀÅ¢®è ºÁUÀÆ CAvÀºÀ ¨ÁrUÉzÁgÀgÀÄ ¸ÁªÀiÁ£Àå §»gÀAUÀ ºÀgÁdÄ ¥ÀæQæAiÉÄAiÀÄ°è ¨sÁUÀªÀ»¸ÀÄvÁÛgÉAzÀÄ ¥ÀjUÀt¸À¯ÁUÀĪÀÅzÀÄ. MAzÀÄ ªÉÃ¼É ºÁ° EgÀĪÀ ªÁtÂdå ¸ÀAQÃtðzÀ ¨ÁrUÉzÁgÀgÀÄ Right of First Refusal £ÀÄß DAiÉÄÌ ªÀiÁrPÉÆAqÀ°è ¸ÀAzÀ¨sÀð-03gÀ£ÀéAiÀÄ ¸ÁªÀðd¤PÀ §»gÀAUÀ ºÀgÁdÄ ªÀÄÆ®PÀ «¯ÉêÁj ªÀiÁqÀĪÁUÀ CAvÀºÀ ¨ÁrUÉzÁgÀjUÉ ¸ÁªÀiÁ£Àå ºÀgÁdÄ ¥ÀæQæAiÉÄAiÀÄ°è CAwªÀÄ ©qï ªÉÆvÀÛPÉÌ Right of First Refusal gÀAvÉ ±ÉÃ.5 gÀµÀÄÖ ºÉaÑUÉ ¤UÀ¢ü¥Àr¹ ªÀĽUÉ ¨ÁrUÉUÉ ¥ÀqÉAiÀÄ®Ä CªÀPÁ±À PÀ°à¹PÉÆqÀĪÀÅzÀÄ. ¸ÀzÀj ©qï ªÉÆvÀÛPÉÌ ±ÉÃ.5 gÀµÀÄÖ ºÉaÑUÉ ¤UÀ¢ü¥Àr¹zÀ ©qï ªÉÆvÀÛªÀ£ÀÄß ¥ÁªÀw¹ CAUÀr ¨ÁrUÉ ¥ÀqÉAiÀÄ®Ä ºÁ° EgÀĪÀ ªÁtÂdå ¸ÀAQÃtðzÀ ¨ÁrUÉzÁgÀgÀÄ M¥Àà¢zÀÝ°è ¸ÁªÀiÁ£Àå ºÀgÁdÄ ¥ÀæQæAiÉÄAiÀÄ°è ¨sÁUÀªÀ»¹ AiÀıÀ¹éAiÀiÁzÀ CAwªÀÄ ©qÁÝgÀjUÉ ªÀĽUÉAiÀÄ£ÀÄß ¨ÁrUÉUÉ ¤ÃqÀĪÀÅzÀÄ.”
The petitioner exercised his option of right of first refusal and submitted the representation to the Municipal Council on 21.12.2024 vide Annexure-D. In this representation, he categorically stated that he was exercising his right of first refusal in respect of shop No.8 and was intending to participate in the NC: 2025:KHC:8388 auction. This representation was also acknowledged by the Municipal Council, Belur, on the said day. The auction was thereafter conducted on 02.01.2025. 4. The Municipal Council contends that it had issued a notice 03.02.2025 to the petitioner calling upon him to deposit six months’ rent along with GST within 3 days, failing which the bid would be allotted to the highest bidder.
It is the case of the petitioner that although he has given a representation on 21.12.2024 exercising his option of right of first refusal, the moment he received the notice dated 03.02.2025 on 11.02.2025, he once again reiterated his request to permit him to continue to run his business in shop No.8, by submitting another representation dated 12.02.2025 vide Annexure-F, but the Municipal Council did not accede to the same and continued to consider the bid of the highest bidder. NC: 2025:KHC:8388
As already noticed above, Clause 13 of the Circular dated 19.07.2019 relates to right of first refusal. This clause does not indicate any time frame within which the existing lessee will have to exercise his option and deposit the sum after the auction. In this case, the Municipal Council issued a notice dated 03.02.2025 granting the petitioner only three days time.
It is, however, the case of the petitioner that the notice dated 03.02.2025 was received by him only on 11.02.2025 and the petitioner responded to it immediately on 12.02.2025 as per Annexure-F. In my view, since the petitioner was not granted adequate time and given the fact that the petitioner received the notice dated 03.02.2025 only on 11.02.2025, it would be appropriate to direct the Municipal Council to accept the right of first refusal exercised by the petitioner vide Annexure-D and also receive the sums due from the petitioner in order to NC: 2025:KHC:8388 grant him the benefit of right of first refusal within a period of two weeks from the date of receipt of a copy of this order.
On the petitioner depositing the sums as required under the Circular pursuant to exercising the option of right of first refusal, the Municipal Council shall extend the lease in favour of the petitioner.
The writ petition is accordingly disposed of. (N S SANJAY GOWDA) JUDGE
PKS List No.: 1 Sl No.: 12
Reproduced from the public record of the Karnataka High Court. Verify against the court's own copy before relying on it. Income tax judgments are on bharattax.net.