M/S. Index Advertising vs. The Commissioner

Facts

The petitioner, M/s. Index Advertising, sought permission from Madurai Corporation to erect advertisement panels on central medians. Permission was granted by the Deputy Commissioner on March 1, 2024, after the petitioner made the required payments, including Rs. 45,441/- as GST. Subsequently, on March 16, 2024, the permission was cancelled by the Deputy Commissioner, and the petitioner was asked to take back the amount paid. The petitioner challenged this cancellation order, arguing it was issued without a show cause notice or justification. The petitioner also filed a related writ petition challenging permission granted to another entity, Nyle Ads, on the same day.

Held

The Court held that the cancellation order dated 16.03.2024 was unsustainable on the ground that it breached the principles of natural justice, as no show cause notice was issued to the petitioner before cancellation. The Court referenced Section 117-N of the Tamil Nadu Urban Local Bodies Act, 1998, and Rule 329 of the Tamil Nadu Urban Local Bodies Rules, 2023, both of which mandate giving the licensee an opportunity to make a representation before cancellation. Regarding the grant of licenses, the Court was of the view that the provisions of the Tamil Nadu Transparency in Tenders Act, 1998, should be read into Rule 328 of the Tamil Nadu Urban Local Bodies Rules, 2023, to prevent arbitrariness. This implies that licenses should ideally be granted through a tender process to the highest bidder after issuing notifications on the Corporation's website with at least 15 days' notice. However, the primary relief granted was to set aside the cancellation order due to the procedural lapse. The Court directed that it is open to the Commissioner to re-visit the issue of granting the license, ensuring that the petitioner does not suffer any loss due to the Corporation's actions. The writ petition was allowed on these terms.

Key Issues

1. Whether the cancellation of the license granted to the petitioner for erecting advertisement panels on municipal properties, vide proceedings dated 16.03.2024, is sustainable in light of the principles of natural justice, specifically the requirement of a show cause notice, as mandated by Section 117-N of the Tamil Nadu Urban Local Bodies Act, 1998 and Rule 329 of the Tamil Nadu Urban Local Bodies Rules, 2023? 2. Whether the grant of licenses for displaying advertisements on municipal properties, as contemplated under Rule 328 of the Tamil Nadu Urban Local Bodies Rules, 2023, must be preceded by a tender process or auction to prevent arbitrariness, in accordance with the principles of the Tamil Nadu Transparency in Tenders Act, 1998? Petitioner's contentions: The cancellation order dated 16.03.2024 is illegal as it was passed without issuing a show cause notice, violating the principles of natural justice as enshrined in Section 117-N of the Act and Rule 329 of the Rules. The petitioner had complied with all conditions and made payments, including GST. Respondents' contentions: The learned Standing Counsel for Madurai Corporation, along with counsel for Nyle Ads, endeavoured to sustain the impugned communication (cancellation order). No specific arguments were recorded regarding the necessity of a tender process for granting licenses under Rule 328.