Koyyi Gunavathi vs. State Of Andhra Pradesh

The petitioners were allotted shops under the IDSMT Scheme. The petitioners participated in the auction and were allotted shops situated within the municipal limits of Palasa–Kasibugga Municipality, in IDSMT shopping complex and the Mahatma Gandhi Rehabilitation Complex.

The learned counsel for the petitioners submits that the petitioners are challenging the final notices issued on various dates, i.e., 22.03.2019, 20.03.2019, 09.05.2019, 30.11.2023, calling upon the petitioners to pay the enhanced rent retrospectively from December 2016 to March 2019, apart from enhancing the rent by 400%. The grievance of the petitioners in all the writ petitions is same, as such; a common order is being passed.

It is submitted that the respondent cannot unilaterally enhance the rent at an abnormal rate contrary to the prevailing circumstances, market conditions, and the nature of the petitioners’ petty business. The respondent municipality has called upon the petitioners to pay the enhanced rent from December 2016 to March 2019 and has also calculated the dues payable at the enhanced rate for the said period, demanding the amount as arrears of rent. This Court had earlier granted interim directions suspending the final notices issued, subject to the petitioners paying 1/4th of the demanded amount.

The learned counsel appearing for the petitioners places reliance on the common order passed by the learned Single Judge of this Court in a batch of writ petitions, W.P.No.19228 of 2020 and batch, wherein the issue relating to enhancement of rent by 33 1/3% while renewing the lease was under challenge. In that case, two different rent hike proposals had been issued – one in July 2020 and another in October 2020. The learned Judge partly allowed the writ petitions by holding that the Municipality is entitled to enhance the rent by 33 1/3% along with applicable GST. The demands for enhanced rent retrospectively were set aside.

The leaned Single Judge further held that it is for the petitioners to consent to the extension of the lease, and the respondents were directed to calculate the rents afresh from the date of the order and make a demand for the enhanced rent as per G.O.Ms.No.56, dated 05.02.2011. The petitioners were directed to convey their willingness or refusal to continuing in the premises within two weeks, and if the petitioners do not agree/consent, the respondents were at liberty to take steps to evict them as per the law. The learned counsel for the petitioners submits that the case of the present petitioners is similarly placed and, therefore, similar orders may be passed directing the respondents to enhance the rent by 33 1/3 % and set aside the demand for arrears of rent at the enhanced rate.

The learned counsel for the petitioners submits that there are no separate rules governing the lease of properties constructed under the Rehabilitation Scheme and that the same is confirmed vide the communication addressed by the 2nd respondent to the 3rd respondent.

It is submitted that as per G.O.Ms.No.56, dated 05.02.2011, the respondents could have enhanced the rent by 33 1/3%, and the petitioners are agreeable for paying the rent at the enhanced rate of 33 1/3 %. It is further submitted that the petitioners are running petty businesses such as hair-cutting salons, mobile repair shops, mini stationary shops, kirana stores, and cycle repair shop etc. The enhancement of rent at the rate of 400% would severely impact the petitioners financially and deprive them of their livelihood.

The learned Standing counsel appearing for the 3rd respondent submits that G.O.Ms.No.56, dated 05.02.2011, prescribes that the manner of fixing the upset price and renewal of lease. It is submitted that the Municipality has the prerogative of fixing the rent and enhancing the rent by resorting to fixing the rent at 10% of the current market value of the property per annum, or 33 1/3% enhancement above the earlier rent, or the prevailing rent of similar properties in the vicinity, whichever is higher.

It is submitted that the enhancement of rent is completely in tune with G.O.Ms.No.56, dated 05.02.2011. 10. It is also submitted that the Council has taken a decision through its resolution to revise the rent by taking into consideration Clause 4(a) of G.O.Ms.No.56, dated 05.02.2011. 11. It is submitted that the petitioners have been in possession of the shops for the last several years and are paying partly rents. The area where the shops are located has transformed over a period of time, and as such, the petitioners cannot decide to pay rent as per their own presumptive just rents.

Heard the learned counsel for the petitioners and the learned Standing counsel for the 3rd respondent.

It is not in dispute that the petitioners are in possession of the shops which were leased to them. It is also not in dispute that the petitioners have been paying rents for the shops regularly. The only issue which is to be considered by this Court is whether the respondents are justified in levying rent by taking into account the market value into consideration and whether the 3rd respondent is justified in demanding enhanced rents with retrospective effect.

The respondents are empowered to fix up the rent in terms of G.O.Ms.No.56 dated 05.02.2011. As per the G.O., the 10% of the market value of the property is one of the criteria, apart from enhancing the rent by 33 1/3% of the previous rent. The G.O., also gives liberty to the 2nd respondent to choose the value whichever is higher.

The auction of levying rent at the rate in terms of G.O.Ms.No.56 is certainly with the 2nd respondent. The petitioners cannot, as a matter of right, expect the respondent authorities to levy the rent at their desired or convenient rate.

However, the respondents are not entitled to claim for enhanced rent with retrospective effect. As such, the demand of the respondents seeking enhanced rent for respective period would have to be set aside.

The respondents-Municipality is entitled to enhance the rent strictly by following G.O.Ms.no.56, dated 05.02.2011. 18. The respondent-Municipality cannot levy rent with retrospective effect, more so without the tenants consent. Hence, the demand for the period from December 2016 to March 2019 is therefore set aside.

If the petitioners consent to the extension of the lease, the respondent is directed to calculate the rents afresh from the date of this -8- order in this batch of cases and make a demand for the enhanced rent as per the G.O.Ms.No.56, referred to above. The petitioners are directed to convey their willingness or refusal to continue in the premises within two weeks of the date of receipt of this order. If the petitioners do not agree/consent, the respondents are at liberty to take steps to evict them in accordance with law.

Accordingly, these writ petitions are disposed off. There shall be no order as to costs.