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Uttarakhand High Court directs State Government to examine issue of loss and misuse of Municipal funds

The Uttarakhand High Court directed the State Government to examine the issue of loss or damage caused to the property of the Municipality, and misappropriation & misuse of municipal funds by the Chairman of the Nagar Palika Parishad, Nainital, under Section 48 of the Uttarakhand Municipalities Act, 1916, and to take appropriate action, as may be called for.

The Division Bench of Chief Justice  Vipin Sanghi and Justice  Rakesh Thapliyal  heard a Suo Moto Public Interest Litigation (PIL) registered while hearing a Petition of 2023 preferred against the Nagar Palika Parishad and others, including two competitors/ bidders, being aggrieved by the illegal exclusion of the petitioner in that Petition, from participation in the tendering process for erecting swings during the Nanda Devi Festival, on the basis of a patently erroneous interpretation of a particular tender condition.

During the course of hearing of that Petition, it was brought to the notice of the Court by  counsel for the petitioner –  Piyush Garg, that respondent no. 4 (Firm through its proprietor) had twice been made allotment of substantially large areas on the Flats by the Nagar Palika Parishad, on the basis of a mere application for exploiting the same commercially, by setting up a book fair, swings etc. It was brought to the notice of the Court by respondent no. 4 in that Petition himself, that he was initially made an allotment on 03.05.2023 of an area admeasuring 300 Ft. X 175 Ft. i.e. 52500 Sq. Ft., on payment of Rs. 6,75,000/-, subject to certain terms and conditions. However, the said allotment did not fructify, and he again applied on 10.07.2023, and he was again made an allotment by the Nagar Palika Parishad on 03.08.2023 of an area admeasuring 120 Ft. X 300 Ft. i.e. 36,000 Sq. Ft., on certain terms and conditions. Both these allotment letters were placed on record by respondent no.  4  along with his affidavit filed in  Petition of 2023.

Taking note of the patently arbitrary and discriminatory manner in which the Nagar Palika Parishad had proceeded to make the allotments, the Court directed registration of the PIL suo motu. Notice was issued to the Chairman of the Nagar Palika Parishad, as also the Executive Officer, and they were required to respond to the same.   

An affidavit has been filed by  the Executive Officer of the Nagar Palika Parishad, Nainital. A perusal of his affidavit shows that he has merely narrated the history, about how these allotments were made. He points out that, after the first allotment   did not fructify, which was made on 03.05.2023,  respondent no. 4   had filed several  Petitions before the Court, and thereafter again applied on 10.07.2023 for allotment, on which the allotment letter dated 03.08.2023 was issued by the Executive Officer, Nagar Palika Parishad, Nainital. However, a perusal of the affidavit does not disclose, as to how this out of turn allotment was made in a, prima facie, clandestine manner, in favour of  respondent no. 4 , without inviting tenders or bids from all those, who may be interested in making their offer for allotment of the said area for the purpose, for which the allotment was made. In his affidavit, he has relied on Section 293 of the Uttar Pradesh Municipalities Act, 1916, which reads as follows :

“293. Fees for use, otherwise than under a lease of municipal property. – (1) The Board may charge fees to be fixed by bye-law or by public auction or by agreement, for the use or occupation (otherwise than under a lease) of any immovable property vested in, or entrusted to the management of the Board, including any public street or place of which it allows the use or occupation whether by allowing a projection thereon or otherwise. (2) Such fees may either be levied along with the fee charged under Section 294 for the sanction, licence or permission or may be recovered in the manner provided by Chapter VI.”   

On perusal of the aforesaid provision , the Bench noted that the Board is empowered to charge fee to be fixed by byelaws, or by public auction, or by agreement, for the use  or occupation, otherwise than under a lease, of any immovable property vested in, or entrusted to the management of the Board, including any public street, or place, of which it allows the use or occupation – whether by allowing a projection thereon, or otherwise. In fact, the said provision shows that the Board can act either under the bye-laws, by public auction, or by agreement. This clearly rules out the grant of a State largesse by the Nagar Palika Parishad, Nainital privately and secretly in favour of any one party. The State has formulated the Procurement Rules, 2017, which lay down the procedure to be followed in the matter of procurement of goods or services. Even they have not been followed.  

The properties owned, or controlled by the Nagar Palika Parishad, are not the private properties either of the Chairman, or any other member of the Nagar Palika Parishad, or the Executive Officer. They cannot treat such properties as their personal fiefdom, and deal with the same in the manner they desire. Every action of theirs has to be fair and transparent. The purpose of granting licenses, or leases in respect of the properties of the Nagar Palika Parishad, can only be to maximize the revenues, which they derive to discharge   their statutory functions, unless the purpose, for which the licenses or leases are granted, is to serve the public purpose, such as setting up of a school or a hospital. The purpose, for which  respondent no. 4 had applied for grant of permission, was to hold a book fair; set up swings and amusement parks, which was a purely commercial purpose.

“The fact that such permissions were granted in the past cannot be an excuse, as repeated illegalities, which may have been committed in the past, cannot be offered as a justification for repeating the same once again”, the Bench observed.

Prima facie , the Bench noted that the Chairman and the Executive Officer of the Nagar Palika Parishad, Naintal have both acted hand in glove to dole out an asset of the Nagar Palika Parishad in favour of Ramesh Singh Sajwan, while sacrificing the financial interest of not only the Nagar Palika Parishad, but also the interest of the citizens and residents of the town of Nainital. Prima facie, their conduct shows a complete breach of public trust, which they were bound to discharge, only – and only, in public interest. “Prima facie, the whole matter smacks of favoritism and possible corruption.”

The Court directed the State to constitute an Inquiry Committee to examine the conduct of the Chairman, as well as the Executive Officer of the Nagar Palika Parishad, Nainital. The Committee shall be headed by Mr. Justice Irshad Hussain, Retired Judge of the Court. He shall be provided all secretarial and other assistance by the Nagar Palika Parishad, to be able to function.   

Matter is listed on  22.11.2023 for further hearing.

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