 published on 23.12.2022 inviting proposals for commercial development of land admeasuring 7442.70 square meters situated in the vicinity of Nawathe Square, Amravati - Badnera Road, Amravati.){kind=link}
The Bombay High Court dismissed a Public Interest Litigation (PIL) with cost filed challenging the Request For Proposal (RFP) published on 23.12.2022 inviting proposals for commercial development of land admeasuring 7442.70 square meters situated in the vicinity of Nawathe Square, Amravati – Badnera Road, Amravati.
Principally, the petitioners contended that implementation of the aforesaid RFP would result in revenue loss to the Amravati Municipal Corporation (AMC) thus compromising its interest.
According to the AMC, land measuring 7442.70 square meters was sought to be commercially developed. On 29.06.2017 the General Body of the Municipal Corporation had passed Resolution Nos.8 and 9 by which it had been resolved that the AMC itself would construct a multiplex complex on the aforesaid land located at Nawathe Plots. The amount required to be spent was approximately Rs.100 Crores. On the expiry of the elective term of the AMC, the Municipal Commissioner was appointed to act as ‘Administrator’ thereof. Resolution No.33 came to be passed on 22.09.2022 after noting that it was not possible for the AMC to spend an amount of Rs.100 Crores coupled with the fact that the plot in question was lying vacant which could result in there being encroachment. It was thus resolved to adopt the Build Operate and Transfer Policy (BOT) by obtaining an amount of premium from the developer by leasing out the commercial complex for a period of thirty years. It was noted that if the expected amount of premium of Rs.10 Crores to 12 Crores would be deposited for a period thirty years in Fixed Deposit, the AMC would get revenue of Rs.100 Crores. On expiry of the period of thirty years, the complex would stand transferred to the AMC. Acting on the aforesaid Resolution passed by the Administrator, the RFP came to be published on 23.12.2022 inviting offers for grant of lease for such commercial development. The minimum reserve price was fixed at Rs.12 Crores and the lease was for a period of thirty years. The amount of bid security was Rs.75 Lakhs while the period of completion of the project was three years. On completion of the process of bidding, the work order came to be issued to the private respondent no.7. On 21.03.2023 the present proceedings came to be filed by the petitioners.
The Nagpur Division Bench of Justice A.S.Chandurkar and Justice Vrushali V. Joshi was satisfied that there is no case made out to interfere in public interest with the issuance of the RFP. Though initially it was resolved by the General Body of the AMC on 29.06.2017 vide Resolution Nos. 8 and 9 that the Municipal Corporation would itself construct the multiplex complex, the same could not be done on account of financial constraints. This was taken into consideration and hence the Administrator who was in-charge of the affairs of the Municipal Corporation cancelled the said Resolutions and further resolved on 22.09.2022 that the construction should be undertaken on BOT basis. For determining the amount of premium, the opinion of the government approved valuer and architect was obtained. After considering the amount of Rs.161.4 per square meter as the amount of rent, it was found that the total rent after thirty years would be Rs.64,38,46,680/-. After addition of the amount of operations and maintenance costs of Rs.52,50,00,000/- the total rent after thirty years was found to be Rs.11,88,46,680/-. It is on this basis that the reserve price of Rs.12 Crores came to be fixed. The bid of the respondent no.7 for an amount of Rs.12.37 Crores being the highest came to be accepted. There is no material on record to hold that by determining the minimum reserve price at Rs.12 Crores, the financial interests of the AMC have been compromised.
It has not been demonstrated that the said minimum reserved price would result in financial loss to the AMC. Since the petitioners have sought to invoke the jurisdiction of this Court in public interest, it was expected that they would place on record credible material to substantiate their claim and indicate the manner in which the minimum reserve price of Rs.12 Crores would cause financial loss and further that if the reserve price was determined in another manner, same would result in higher revenue to the AMC. That effort does not appear to have been taken by the petitioners. This was expected of the petitioners since they seek to contend that they are concerned with loss being caused to the AMC by virtue of the RFP.
With the clarification given on behalf of the AMC that the lease period is of thirty years and the reserve price of Rs.12 Crores is for the entire period, it becomes clear to the Court that at no point of time was the reserve price indicated to be Rs.12 Crores per year. An option given for renewal of the lease after expiry of thirty years would naturally be subject to fresh terms and conditions and the same cannot mean that the interest of the AMC has been compromised.
To the challenge raised to Resolution No.33 that has been passed by the Administrator/Municipal Commissioner on 22.09.2022 vide Civil Application of 2023, the Court referred to certain provisions of the Act of 1949 in this regard.
According to the petitioners the aforesaid Resolution passed by the Municipal Commissioner while acting as the Administrator was contrary to the provisions of the Act of 1949 which further resulted in causing loss to the AMC. The elective term of the Members of the Municipal Corporation came to an end in March, 2022 and therefore, the General Body of the AMC was dissolved on 08.03.2022. Under Section 452A(1) the State Government can appoint a Government officer or officers to exercise all powers and to perform functions and duties of the Corporation under the Act of 1949. By virtue of sub-section (1A) thereof, when the State Election Commission is unable to conduct general elections especially due to outbreak of COVID-2019 pandemic, the State Government can appoint a Government officer or officers and at the request of the State Election Commission also extend such period till 30.04.2021 to exercise all powers and perform all functions and duties of the Corporation. Under sub-section (1B) thereof, the period of appointment can be further extended at the request of the State Election Commission. It is in this capacity that the Administrator/Municipal Commissioner discharged duties and functions of the AMC. In the present situation, the provisions of Section 452 of the Act of 1949 are not attracted since it is not a case of dissolution of the Corporation as contemplated therein. The appointment of the Municipal Commissioner as Administrator is not under challenge and hence it is not necessary to dwell further in this regard.
Under Section 73 of the Act of 1949 the Commissioner is empowered to execute contracts on behalf of the Municipal Corporation. Section 79 thereof deals with the manner of disposal of municipal property. The Commissioner can act in accordance therewith and let out on hire or lease the property belonging to the Corporation with the sanction of the Corporation under Section 79(c). Under Section 79(d) the consideration for which any immovable property is leased should not be less than the current market value of such premium, rent or other consideration. As stated above there is no material produced by the petitioners to indicate that the current market value of the property leased is more than the consideration for which it was leased. The calculations submitted by the AMC for determining the amount of premium has also not been challenged. The further contention that the property leased belongs to the State Government is also not supported by any material inasmuch as the revenue records in the form of property card produced by the AMC indicates that the land belongs to the AMC. Reliance placed on the provisions of Section 43 of the Act of 1979 in the present proceedings is also misplaced for the reason that said provision would apply when the General Body, Standing Committee along with other Statutory Committees are in existence. As stated above, since the elective term of the Members of the General Body had come to an end, the Municipal Commissioner was appointed as the Administrator. It is also to be noted that by the order dated 09.01.2019 in Writ Petition No. 4178 of 2017 (Shriram Buildcons Private Limited vs. Amravati Municipal Corporation and others) liberty was granted to the AMC to invite fresh tenders for going ahead with the construction of the multiplex. It is pursuant to this liberty that further steps have been taken by the Administrator.
From the aforesaid, the Bench find that there is no material to hold that the provisions of the Act of 1949 have been violated while passing Resolution No.33 on 22.09.2022. The actions taken by the Administrator are in accordance with the provisions of the Act of 1949 pursuant to his appointment as such on 03.03.2022. We may note that even under the provisions of Section 451 of the Act of 1949 it was open for the petitioners to bring to the notice of the State Government their apprehension that by undertaking the activity of leasing out municipal land for construction of the multiplex, the same was likely to result in compromising the financial interest of the AMC or larger public interest. No such steps have been pointed out to have been taken by the petitioners.
Since the petitioners have sought to question the RFP published on 23.12.2022 by urging that the decision in that regard is likely to cause financial loss to the AMC, the said aspect of the matter has been examined. While doing so, the High Court have kept in mind the observations of the Honourable Supreme Court in Villianur Iyarkkai Padukappu Maiyam and Arun Kumar Agrawal (supra) and the High Court have restricted our consideration of the said issue only to the extent of examining whether the financial interest of the AMC has been compromised in any manner whatsoever.
Though the counsel for the petitioners sought to support his contentions by relying upon the decisions , the High Court do not find that the financial interest of the AMC has either been compromised or has been affected pursuant to the determination of the amount of premium as well as the Resolution dated 22.09.2022 passed by the AMC in the matter of development of the multiplex.