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Issues: (i) whether the lease of 100 acres including lake-bed and submerged land for the tourism project, and the connected leave and licence arrangement, were valid; (ii) whether the project could proceed without prior environmental clearance from the competent authority and in the face of Wetlands restrictions; (iii) whether the disposal of municipal and development authority land complied with the governing statutes and rules; and (iv) whether the tender process and revision of the project were vitiated by illegality, arbitrariness and breach of public trust.
Issue (i): whether the lease of 100 acres including lake-bed and submerged land for the tourism project, and the connected leave and licence arrangement, were valid.
Analysis: The record showed that part of the demised premises was recorded as Gairmumkin Talab and that a substantial submerged area had been handed over with permission to reclaim it. The project documents also disclosed that the lake level was reduced to carve out development land and that construction, filling and compaction were undertaken from lake soil itself. Public water bodies and lake beds are held by the State and local bodies in trust for the public, and they cannot be alienated for private commercial exploitation in a manner that destroys or diminishes the water body.
Conclusion: The lease and the connected leave and licence arrangement were invalid and void insofar as they included lake-bed and submerged lake area, and the challenge succeeded in favour of the petitioner.
Issue (ii): whether the project could proceed without prior environmental clearance from the competent authority and in the face of Wetlands restrictions.
Analysis: The project area lay within the specified proximity of a protected wildlife sanctuary, attracting the higher category requiring prior clearance from the Central Ministry. The sanction granted for conservation and management of Mansagar Lake under the lake conservation plan did not amount to approval for the tourism project spread over the larger precinct area. The Wetlands Rules prohibited reclamation and restricted permanent construction and other harmful activities in wetlands and their influence zones. No competent clearance for the project as executed was shown.
Conclusion: The project proceeded without the requisite environmental clearance and in breach of wetland restrictions, and the challenge succeeded in favour of the petitioner.
Issue (iii): whether the disposal of municipal and development authority land complied with the governing statutes and rules.
Analysis: The applicable municipal and tourism disposal rules required reserve price fixation, determination of land value, and observance of prescribed procedures before a long-term disposal amounting to a sale of leasehold rights. The development authority statute also required lawful disposal under controlled conditions. The materials did not show compliance with the mandatory valuation and procedural requirements, and valuable public land was transferred on terms that did not reflect statutory discipline.
Conclusion: The disposal of the land was contrary to the governing statutory framework and was unsustainable in law.
Issue (iv): whether the tender process and revision of the project were vitiated by illegality, arbitrariness and breach of public trust.
Analysis: The eligibility condition requiring a private or public limited company was relaxed to accommodate an otherwise ineligible bidder, and the project was later substantially revised to enlarge commercial exploitation. The Court found that the State and its instrumentalities acted arbitrarily, ignored public trust obligations, and failed to protect ecology, heritage and public property. In judicial review, even in contractual matters, interference is warranted where the action is illegal, irrational or in breach of statutory duty and public trust.
Conclusion: The tender relaxation and project revision were unlawful and arbitrary, and the challenge succeeded in favour of the petitioner.
Final Conclusion: The project, as implemented through the impugned lease and licence structure, could not stand because it unlawfully included lake-bed land, lacked the required environmental approval, violated wetland and disposal rules, and breached the State's public trust obligations. The writ petitions therefore resulted in quashing of the impugned arrangements and consequential restoration directions.
Ratio Decidendi: Public water bodies, lake beds and ecologically sensitive lands held by the State and local bodies in trust cannot be converted into private commercial projects in violation of mandatory environmental clearances, wetland restrictions and statutory disposal procedures, and such illegalities remain amenable to judicial review despite a contractual form.
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