No Jail for Guntur Municipal Commissioner: AP High Court Allows Rent-Tax Adjustment in Contempt Case

Andhra Pradesh High Court overturned a contempt conviction against the Commissioner of the Guntur Municipal Corporation (GMC), originally imposed for failure to comply with a court order regarding rent payments for a school building. The High Court set aside the contempt order, giving the Municipal Corporation six weeks to resolve the outstanding rent issue, either by adjusting it against tax dues or by paying in cash. The ruling provided a pathway for the GMC to avoid further contempt proceedings if the dispute remained unresolved.

The issue arose from a dispute over rent payments for a municipal high school operated by the GMC on land owned by a private trust (Satram). The original case, filed by the Satram, alleged that the GMC had not paid rent for the land. On April 12, 2022, a single-judge bench of the High Court ordered the GMC to pay ₹25,01,400 in back rent and to calculate future rent at ₹2 per square foot, correcting an earlier error that had calculated rent at ₹2 per square yard.

Despite partial payment, the trust claimed that the GMC had not fully complied with the revised court order, leading to a contempt petition.

In December 2023, the Single Judge ruled that the GMC had violated the court's earlier order by calculating rent based on the incorrect square yard rate and not paying the full amount owed under the ₹2 per square foot calculation. The Commissioner of the GMC was convicted of contempt of court and sentenced to one month of simple imprisonment, along with a fine of ₹2,000.

On appeal, the GMC argued that it had made the payments based on an earlier calculation agreed upon in communications with the Endowments Department. The GMC also contended that the Satram owed the Municipal Corporation over ₹63 lakh in municipal taxes, which it sought to offset against the rent due. The Corporation insisted that this approach was a reasonable attempt to conserve public funds, as the rents would be adjusted against the outstanding taxes.

The Andhra Pradesh High Court held that the Single Judge had not fully considered the GMC's argument regarding the adjustment of the rent against tax dues. The Court concluded that, while the GMC had not yet fully complied with the court order, the attempt to settle the dues by adjusting taxes was reasonable and did not amount to wilful disobedience of the court's directives.

However, the High Court emphasized that the GMC could not indefinitely delay compliance. The court gave the GMC six weeks to either finalize the adjustment of rents or make the necessary payments in cash. Failure to do so would allow the Satram to file fresh contempt proceedings against the Municipal Corporation.

The contempt appeal was allowed, and the one-month prison sentence and fine imposed on the GMC Commissioner were set aside. The court granted the GMC time to resolve the dispute, warning that further contempt proceedings could be initiated if the issue remained unresolved after six weeks.

Date of Decision: October 3, 2024

Smt. Kirthi Chekuri v. Kappagantu Jankiram Sarma & Ors.