Jaganath Shetty Vs State of Karnataka — Writ and Judicial Review | Karnataka HC (2025)

Jaganath Shetty Vs State of Karnataka — Writ and Judicial Review | Karnataka HC (2025)

What the court decided

AI extract

Outcome

Both writ petitions disposed with directions: an auction notification to be issued in terms of the Circular dated 19.07.2019 within 12 weeks; petitioners permitted to participate in the auction in respect of the shops in their possession (success entitles continuance of possession per the auction terms) or, alternatively, to exercise the right of first refusal by paying 5% over and above the auction amount to continue in possession and lease; failing both, respondents at liberty to initiate lawful proceedings for recovery of possession.

Issue for consideration

Whether the auction notice dated 12.07.2016 issued by respondent No.4 could lawfully have been issued during the currency of the 12-year extension of tenancy granted under the Circular dated 20.10.2009. +1 more

Court's answer

The benefit of the Circular dated 20.10.2009 is no longer available to the petitioners, as the 12-year period contemplated therein expired on 19.10.2021 and the petitioners have continued in possession beyond that term; the Circular dated 19.07.2019 issued by the Urban Development Department now holds the field and must be complied with.

Ratio / Principle

An auction notification is to be issued in terms of the Circular dated 19.07.2019 within a period of 12 weeks; the petitioners are permitted to participate in that auction in respect of the shops in their possession, and if they succeed, they would be entitled to continue in possession of those shops as per the terms of the auction notification.

Key takeaways

The protection permitting participation in the auction enures only in respect of the shops in the petitioners' possession and not as regards any other shops they may bid for, since those other shops do not come within the purview of the Circular dated 19.07.2019.ratio¶86
In the event of the petitioners not participating in the auction, they are entitled to exercise their right of first refusal in terms of the Circular dated 19.07.2019; upon making payment of the rental amount of 5% over and above the auction amount, they would be entitled to continue in possession and lease of the premises they occupy.ratio¶89

Detailed headnote1 paragraphs

Writ Petitions (GM-RES / LB-RES) — Municipal shop tenancy — Petitioners, tenants of shops of City Municipal Council, Mandya, challenged auction notification dated 12.07.2016 issued during the 12-year extension of tenancy granted by Circular dated 20.10.2009 (rentals enhanced by 30%) — HELD: benefit of the 2009 Circular stood exhausted on 19.10.2021, petitioners having continued in possession beyond its term; the Circular dated 19.07.2019 of the Urban Development Department now holds the field — Respondents directed to issue auction notification thereunder within 12 weeks — Petitioners permitted to participate in the auction only for shops in their possession, success conferring continuance per auction terms; alternatively, they may exercise a right of first refusal by paying 5% over and above the auction amount to continue in possession and lease — Right to participate in auction and right of first refusal are independent and mutually exclusive — Protection and first-refusal right confined to shops in petitioners' possession — On non-participation/non-success/non-exercise, respondents free to initiate proceedings for recovery of possession — Petitions disposed (Suraj Govindaraj J.).

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IN THE HIGH COURT OF KARNATAKA AT BENGALURU

DATED THIS THE 3^RD DAY OF JUNE, 2025

BEFORE

THE HON'BLE MR JUSTICE SURAJ GOVINDARAJ

WRIT PETITION NO.40646 OF 2016 (GM-RES)

C/W

WRIT PETITION NO. 65570 OF 2016 (LB-RES)

IN WP No. 40646/2016

BETWEEN:

JAGANATH SHETTY

S/O. SUNDER SHETTY, AGED ABOUT 50 YEARS, R/O. SHOP NO.5 AND 6, CMC COMPLEX, MAHAVEERA CIRCLE V.V.ROAD, MANDYA-571 401

Digitally signed by SHWETHA RAGHAVENDRA Location: HIGH COURT OF KARNATAKA

B.T.NARAYANA S/O. K.THIMMAIAHA AGE 59 YEARS, SHOP NO.4, SRINIVASA MEDICALS, CMC COMPLEX, MAHAVEERA CIRCLE, V.V.ROAD, MANDYA-571401

M.T.SOMASUNDARA S/O. LATE K.T.THIMMAIAHA AGED ABOUT 60 YEARS, R/O. DHANALAKSHMI DARSHINI SHOP NO.1, CMC COMPLEX, MAHAVEERA CIRCLE, V.V.ROAD, MANDYA-571 401

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HARIHARAPUTRA IYER S/O. LATE NARASIMHA AGED ABOUT 70 YEARS, R/O. SURYAFOOTWEAR SHOP NO.2, CMC COMPLEX MAHAVEERA CIRCLE V.V.ROAD, MANDYA-571 401

…PETITIONERS

(BY SRI. DEVI PRASAD SHETTY., ADVOCATE)

AND:

STATE OF KARNATAKA DEPARTMENT OF URBAN DEVELOPMENT, VIKASA SOUDHA, BANGALORE-560 001 BY ITS SECRETARY

THE DEPUTY COMMISSIONER MANDYA

MANDYA DISTRICT-571 428

THE CITY MUNICIPAL COUNCIL MANDYA

MANDYA DISTRICT-571 428 BY ITS COMMISSIONER

THE CITY MUNICIPAL COUNCIL MANDYA

MANDYA DISTRICT-571 428 BY ITS PRESIDENT

…RESPONDENTS

(BY SRI. M.SRINIVAS KUMAR, HCGP FOR R1 AND R2 SRI. G.M. ANANDA, ADVOCATE FOR R3 AND R4)

THIS WP IS FILED UNDER ARTICLES 226 AND 227 OF

THE CONSTITUTION OF INDIA PRAYING TO (a) QUASH ANNEX-

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N, DATED 28/30-01-2016 ISSUED BY R-2 AND TO QUASH ANNEX-P, DATED 14.08.2015 ISSUED BY R-1 AND ETC.,

IN WP NO. 65570/2016

BETWEEN:

JAGANATH SHETTY S/O. SUNDER SHETTY, AGED ABOUT 50 YEARS, R/O. SHOP NO.5 AND 6, CMC COMPLEX, MAHAVEERA CIRCLE, V.V.ROAD, MANDYA-571401

...PETITIONER

(BY SRI. DEVI PRASAD SHETTY., ADVOCATE)

AND:

STATE OF KARNATAKA DEPARTMENT OF URBAN DEVELOPMENT, VIKASA SOUDHA, BANGALORE-560001 BY ITS SECRETARY

THE DEPUTY COMMISSIONER MANDYA,

MANDYA DISTRICT-571428

THE CITY MUNICIPAL COUNCIL MANDYA, MANDYA DISTRICT-571428 BY ITS COMMISSIONER

THE CITY MUNICIPAL COUNCIL MANDYA, MANDYA DISTRICT-571428 BY ITS PRESIDENT

...RESPONDENTS

(BY SRI. M.SRINIVAS KUMAR, HCGP FOR R1 AND R2;

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SRI. G.M.ANANDA, ADVOCATE FOR R3 AND R4

THIS WP FILED UNDER ARTICLES 226 AND 227 OF THE CONSTITUTION OF INDIA PRAYING TO QUASH ANNEXK DATED 28.01.2016 ISSUED BY R-2 AND TO QUASH ANNEX-L DATED 14.08.2015 ISSUED BY R-1 AND TO QUASH ANNEX-N, DATED 28.11.2016 ISSUED BY R-3 AND ETC .,

THESE PETITIONS, COMING ON FOR PRELIMINARY HEARING IN 'B' GROUP, THIS DAY, ORDER WAS MADE THEREIN AS UNDER:

CORAM: HON'BLE MR JUSTICE SURAJ GOVINDARAJ

ORAL ORDER

Petitioners in both the matters are before this Court

seeking for the following reliefs:

In W.P.No.40646/2016:

a) Issue a writ in the nature of certiorari quashing Annexure-N, dated 28/30-01-2016 in No.MUN(2)345/2012-13 issued by Respondent No.2.

b) Issue a writ in the nature of certiorari quashing Annexure-P dated 14-08-2015 in No.NAE 509 JEL 2014 issued by the respondent No.1.

c) Issue a writ in the nature of certiorari quashing Annexure-Q, dated 12-07-2016 in No.NASAM:WA:MA:CR2:2016-17 issued by Respondent No.3.

d) To Issue a writ in the nature of mandamus directing the respondents to give effect to the circular dated 20-10-2009 issued by the respondent No.1 as per Annexure- C passed by the respondent No.1 and direct the respondent no.3 to execute the lease agreement.

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e) Pass such other writ, order or direction that this Hon'ble Court deems fit to pass in the circumstances of the case.

In W.P.No.65570/2016:

a) Issue a writ in the nature of certiorari quashing Annexure-K, dated 28-01-2016 in No.MUN(2)345/2012-13 issued by Respondent No.2.

b) Issue a writ in the nature of certiorari quashing Annexure-L dated 14-08-2015 in No.NAE 509 JEL 2014 issued by the respondent No.1.

c) Issue a writ in the nature of certiorari quashing Annexure-N, dated 28-11-2016 in No.NASAM:WA:MA:CR;02:2016-17 issued by Respondent No.3.

d) To Issue a writ in the nature of mandamus directing the respondents to give effect to the circular dated 26-10-2009 issued by the respondent No.1 as per Annexure- A passed by the respondent No.1 and direct the respondent no.3 to execute the lease agreement.

e) Pass such other writ, order or direction that this Hon'ble Court deems fit to pass in the circumstances of the case.

The petitioners in both the writ petitions claimed that

they are the tenants of certain shops owned by the respondent No.4. They being in continuous occupation of the said shops for a long period of time, have been making payment of due rentals to respondent No.4 as and when the said amount fell due. By way of a Circular dated 20.10.2009, it had been decided to continue the tenancy of the petitioners for the

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further period of 12 years with the increase in the rentals by 30%.

The petitioners contend that they are ready and willing to make payment of the said amount and have in fact been making payment of the said amounts. It is on that basis they contend that the auction notice which has been issued by the respondent No.4 on 12.07.2016 within the said period of 12 years of extension as contemplated in the Circular dated 20.10.2009 is invalid and no such notification could have been issued.

Though, the above petitions were filed in the year 2016 challenging the auction notification dated 12.07.2016, the matters are now being taken up today, i.e., on 03.06.2025. The period of 12 years which had been contemplated under the Circular dated 20.10.2009 also expired on 19.10.2021. Thus, the benefit of the Circular dated 20.10.2009 would no longer be available to the petitioners who in fact have continued to be in possession beyond the term contemplated under the aforesaid Circular. As on today, it is the Circular dated 19.07.2019 which has been issued by the Urban Development Department which

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will hold the final and it would be required for the petitioners and the respondent No.5 to comply with the same. In view of the said Circular, learned Counsel for respondent No.4 would submit that an auction notification would be issued in terms of the circular dated 19.07.2019 within a period of 12 weeks from today. If such an auction notification is issued, the petitioners are permitted to participate in the said auction proceedings as per the Circular dated 19.07.2019 in respect of the shops that they are in possession of. In the event of the petitioners succeeding in the said auction, as regards the shops that they are in possession of, then they would be entitled to be continued in possession of the said shops as per the terms of the auction notification.

Needless to say that the said protection would only be available to the petitioners as regards the shops that they are in possession of and will not enure to their benefit, as regards any other shops that they may participate in the auction for, since those shops will not come within the purview of the Circular dated 19.07.2019.

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In the event of the petitioners not participating in the auction, the petitioners would be entitled to exercise their right for first refusal in terms of the Circular dated 19.07.2019 and if the petitioners were to make payment of rental amount of 5% over and above the auction amount, then the petitioners would be entitled to continue in the possession and lease of the premises that they are in possession. The right to participate in the auction, the right of the petitioners to exercise the right for first refusal are independent of each other and both of them cannot be exercised by the petitioners in terms of Circular dated 19.07.2019.

Again, needless to say, the right to first refusal will only enure to the benefit of the petitioners as regards the shops that they are in possession of and not as regards any other shops.

With the above observations the petitions stand disposed off .

Needless to say, in the event, the petitioners not participating in the auction, not exercising their right to first refusal and/or not participating in the auction or failing in the

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auction, as also if the petitioners were not to exercise right to first refusal, the respondents would be at liberty to initiate such proceedings as may be permissible under law for recovery of

possession or the premises in possession of the petitioners.

SD/(SURAJ GOVINDARAJ) JUDGE

HJ

List No.: 1 Sl No.: 35