- 1 - NC: 2025:KHC:10242 WP No. 35867 of 2024 IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 11TH DAY OF MARCH, 2025 BEFORE THE HON'BLE MR JUSTICE S SUNIL DUTT YADAV WRIT PETITION NO. 35867 OF 2024 (LB-RES) BETWEEN: 1. ABHISHEK B G S/O LATE B N GOVINDAPPA, AGED ABOUT 35 YEARS, R/AT CHOUDLA VILLAGE, SOMWARPET, KODAGU DIST - 571 236. 2. YASHODA R SHETTY W/O LATE B RAJANNA SHETTY, AGED ABOUT 72 YEARS, R/AT NAGARURU VILLAGE, BELAGUNDA POST SOMWARPET KODAGU DIST - 571 236. … PETITIONERS (BY SRI. KALYAN R., ADVOCATE) AND: 1. THE STATE OF KARNATAKA DEPARTMENT OF URBAN DEVELOPMENT, VIKASA SOUDA, BANGALORE - 01 REP. BY ADDL. CHIEF SECRETARY Digitally signed by VIJAYA P Location: HIGH COURT OF KARNATAKA - 2 - NC: 2025:KHC:10242 WP No. 35867 of 2024 2. THE DIRECTORATE OF MUNICIPAL ADMINISTRATION 9TH AND 10TH FLOOR V.V.TOWERS, DR. AMBEDKAR VEDHI BANGALORE - 01 REP. BY ITS DIRECTOR. 3. DEPUTY COMMISSIONER KODAGU DISTRICT MADIKERI - 571 201. 4. SOMWARPET TOWN PANCHAYATH SOMWARPET KODAGU DIST - 571 236 REPT. BY ITS CHIEF OFFICER 5. THE CHIEF OFFICER SOMWARPET TOWN PANCHAYATH SOMWARPET, KODAGU DIST - 571 236. … RESPONDENTS (BY SRI. BOPANNA BELLIAPPA, AGA FOR R1 TO R3; SRI ACHAPPA P.B., ADVOCATE FOR R4 & R5) THIS W.P. IS FILED UNDER ARTICLES 226 AND 227 OF THE CONSTITUTION OF INDIA, PRAYING TO QUASH THE IMPUGNED RESOLUTION DTD 23.12.2024 PASSED BY THE R-4 IN SL NO. 10 AS PER ANNEXURE-A TO THE WRIT PETITION AND CONSEQUENTLY QUASH THE LIST OF SELECTED CANDIDATES AS PER THE OPEN AUCTION HELD ON 23.10.2024 AS PER ANNEXURE-A1 TO THE WRIT PETITION ISSUED BY THE R-4 AND ETC. - 3 - NC: 2025:KHC:10242 WP No. 35867 of 2024 THIS PETITION COMING ON FOR ORDERS THIS DAY, ORDER WAS MADE THEREIN AS UNDER: CORAM: HON'BLE MR JUSTICE S SUNIL DUTT YADAV ORAL ORDER Petitioners are in occupation of the shops belonging to the 4th respondent - Somwarpet Town Panchayath. Petitioners have called in question the validity of the resolution dated 23.12.2024 at Sl. No.10 of Annexure-A which is the resolution regarding acceptance of bids for occupancy rights with respect to 60 shops initiated by way of public auction. 2. By virtue of the said resolution, it was resolved to accept the bids in public auction stated to have been conducted in accordance with the Government Circulars. It is the case of the petitioners that petitioner No.1 had submitted an application for transfer of lease subsequent to the death of his father on 16.02.2017 and thereafter lease deed is stated to have been executed by respondent No.4 represented by its Chief Officer. Insofar as 2nd - 4 - NC: 2025:KHC:10242 WP No. 35867 of 2024 petitioner, it is submitted that pursuant to the resolution of the Town Panchayat, lease deed was executed in favour of 2nd petitioner on 10.02.2017. It is further submitted that it was resolved to grant occupancy rights to the shops by way of public auction by inviting bids from the general public and though the said public auction has been conducted, petitioners have sought for cancellation of the tender process due to large scale illegalities. 3. It is contended by the petitioners that the tender process is not in accordance with the provisions of the Karnataka Transparency in Public Procurements Act, 1999 (for short 'the KTPP Act'); that there were irregularities in the auction proceedings due to large scale involvement of middlemen in the bidding process which has resulted in corruption and illegalities; that the bid amount is meager and has caused loss to the Town Panchayat; that in the Council Meeting held on 13.12.2024, there was a proposal to cancel the tender process which for reasons not known has not been taken - 5 - NC: 2025:KHC:10242 WP No. 35867 of 2024 to a logical end. Learned counsel for the petitioners further submits that e-auction ought to have been conducted. 4. Learned counsel for the respondent - Town Panchayat would submit that the resolution ought not to be interfered at this stage and submits that on an earlier occasion, the resolution for public auction was called in question in W.P.No.98/2024 by 3 of the occupiers of shops, viz., Shadakshari K N, Sudarshan Koushik P and A. L. Chennaiah and the said writ petition having raised number of contentions was disposed off reiterating the contents of the Government Circular dated 19.07.2019. It is submitted that the Court has referred to rights of occupiers as regards their eligibility for re-allotment in the event they agree to pay rent equivalent to 5% above the highest bid amount received during the auction process. 5. It is submitted that once the similarly placed persons who are occupiers of shops have challenged the validity of tender process unsuccessfully and the Court has disposed off the writ petition on 16.10.2024, the present - 6 - NC: 2025:KHC:10242 WP No. 35867 of 2024 attack by similarly placed persons would be litigation in installments and ought not to be permitted. It is further submitted that transparency as provided under the KTPP Act has been adhered to and in terms of the Government Circular dated 19.07.2019, which clearly provides that the occupancy rights could be given away through e-auction / public auction and the said procedure is adhered to insofar as rights were sought to be given away through public auction. It is further pointed out that in terms of Rule 39 of the Karnataka Municipalities (Guidance of Officers, Grant Of Copies and Miscellaneous Provisions) Rules, 1966, provides for procedure in respect of lease and the same has been strictly adhered to insofar as the auction proceedings are advertised in the newspapers. Learned counsel denies the illegalities alleged to have been committed. 6. Heard both sides. 7. It is the settled position that the action of granting occupancy rights is in terms of the Government - 7 - NC: 2025:KHC:10242 WP No. 35867 of 2024 Circular dated 19.07.2019 vide No.NaAaEe/301/JEL/2017 produced at Annexure-R4. The validity of such circular was challenged in W.P.No.51834/2019 and connected matters and has been upheld by order dated 29.06.2022. It is not in dispute that on an earlier occasion, some of the other occupiers of shop, similarly situated as that of the petitioners had approached this Court and challenged the validity of the same auction proceedings in W.P.No.98/2024 which came to be disposed off on 16.10.2024. In terms of the said order, the Court has made certain observations at Paragraph Nos. 3 to 6 which are extracted below: "3. The petitioners contend that they were placed in possession of the subject shops under a lease agreement for a period of twelve years, which expired on 31.07.2023. They further assert that the Municipal Council passed a resolution on 26.12.2023, extending the lease in their favour for a period of one year. The petitioners argue that, during the currency of this extended lease period, the issuance of the impugned auction notice by the Administrator of the Municipal Council is legally untenable and lacks authority. - 8 - NC: 2025:KHC:10242 WP No. 35867 of 2024 4. It is noted that the alleged lease extension period of one year is due to expire on 25.12.2024. 5. The learned counsel for the respondent Municipal Council has referred to a judgment passed by this Court in W.P. No. 22212/2017 and connected petitions, wherein a reference is made to the Government Circular dated 19.07.2019. According to this Circular, existing lessees are eligible for re-allotment of their leased properties if they agree to pay rent equivalent to 5% above the highest bid received during the auction process. 6. In light of the above, the present petition stands disposed of, with liberty reserved to the petitioners to participate in the auction on the date notified by the respondent Municipal Council. If the petitioners are unsuccessful in the bidding process and fail to agree to pay rent that is 5% higher than the rent offered by the highest bidder, they shall vacate the subject premises on or before *31.12.2024." 8. In terms of the said observations, it is clear that the validity of the auction was not interfered with. The Court had reiterated rights flowing to the occupiers of shops for re-allotment by agreeing to pay rent equivalent - 9 - NC: 2025:KHC:10242 WP No. 35867 of 2024 to 5% above the highest bid. The said option admittedly has not been exercised. 9. The petitioners have now made their bid in terms of the notification with respect to shops other than those in which they are in possession and have been unsuccessful. It is also a matter of record that having been unsuccessful they have challenged the validity of the auction proceedings on the grounds as mentioned above. At the outset, it is to be noticed that public auction proceedings are not to be interfered with lightly in order to ensure that faith in public auction proceedings is maintained. 10. Though learned counsel for the petitioners submits that e-auction ought to be conducted, however, question that falls for consideration is whether the unsuccessful bidder at this stage when auction process is completed, could raise such contention. - 10 - NC: 2025:KHC:10242 WP No. 35867 of 2024 11. It must be noticed that the auction process is now completed and bids have been accepted and petitioners have participated and have been unsuccessful in the said process. Though there may be lapse in the process of auction but unless malafides are shown, the Court ought not to interfere with the auction proceedings. All allegations made regarding loss of public revenue etc. are matters of public interest and cannot be raised in a litigation at the instance of individual shop owners who are the participants in the auction proceedings. It is not as if petitioners were not granted any rights in terms of the Government Circular dated 19.07.2019 pursuant to which auction process was initiated. The petitioners have not taken the benefit of making an offer of 5% of excess rent than that of the highest bidder as was provided in the notification. 12. What remains is only the validity of the auction process. The notification dated 19.07.2019 which provided for auction provides for "e-auction / public auction." The - 11 - NC: 2025:KHC:10242 WP No. 35867 of 2024 advertisement provides for public auction. As already stated above, petitioners having participated in the auction process, cannot now contend that auction ought to have been conducted only by way of e-auction, if any. Even otherwise, it must be noticed that in terms of the existing Rules for auction of occupancy rights, the Governing Rules are Karnataka Municipalities (Guidance of Officers, Grant of Copies and Miscellaneous Provisions) Rules, 1966. Rule 39 of the said Rules provides for procedure in respect of lease, sale or auction. Rule 39 of the said Rules reads as hereunder: "39. Procedure in respect of lease, sale or auction :- Save as otherwise provided in the Act or rules, when the Municipal Council proposes to lease, sell or auction any moveable or immoveable property, it shall give notice of such lease, sale or auction by. (i) affixing copies thereof on the notice board of the Offices of the Municipal Council; (ii) exhibiting copies thereof in all municipal reading rooms and places considered by the Municipal Council to be conspicuous within the Municipality; - 12 - NC: 2025:KHC:10242 WP No. 35867 of 2024 (iii) publication in a daily newspaper having wide circulation within the Municipality; (iv) by beat of drum or circulation of notice in the locality." 13. It is not in dispute that there has been public advertisement of the auction process. Rule 39 specifically does not provide for any mode of action by way of e- auction. Taking note of the earlier round of litigation having rejected the claim of similarly placed shop neighbours in W.P.No.98/2024 and noticing that the documents produced by the petitioners are documents obtained through RTI at Annexures-A and B, which are the documents obtained by the petitioners in W.P.No.98/2024, it appears that present litigation is one in installment. If that were to be so, petitioners cannot be granted any equitable relief at the hands of this court, moreso having participated in the auction process. 14. Accordingly, petition is rejected. Needless to state the Deputy Commissioner is to take a final call and - 13 - NC: 2025:KHC:10242 WP No. 35867 of 2024 may examine in his discretion all aspects while accepting the tender process as is permissible under law. Sd/- (S SUNIL DUTT YADAV) JUDGE VP