Public land lease renewal and freehold conversion require public-interest fairness; prior registered sale deed holders received limited protection.

A public authority holding land in trust cannot renew a lease or convert it to freehold for private commercial exploitation unless the decision is consistent with the original grant, public interest, and Article 14 fairness. The renewal here was based on a misreading of an earlier judgment and failed to consider the purpose of the grant, alleged lease breaches, and the duty to secure the best value for public land, so the renewal and freehold conversion were invalid. The Court also balanced illegality against equity by protecting bona fide third-party purchasers with prior registered sale deeds, while directing restitution, including refund with interest, for other transferees.

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Issues: (i) whether the renewal of the lease in favour of the appellant and the consequent conversion of the land into freehold were legally sustainable; and (ii) whether third-party purchasers who had obtained registered sale deeds were entitled to protection while the impugned transaction was set aside.

Issue (i): whether the renewal of the lease in favour of the appellant and the consequent conversion of the land into freehold were legally sustainable.

Analysis: The original lease and the governing statutory rules did not confer an absolute or indefeasible right of renewal. The lessor retained discretion, which had to be exercised fairly and in public interest, consistent with Article 14. The land had originally been granted for a specific public purpose, but the appellant was a private developer seeking commercial exploitation. The renewal was granted on a misreading of the earlier judgment and without properly considering the purpose of the original grant, the alleged breach of lease conditions, the market value of the land, and the obligation of a public authority to secure the best price for disposal of public land. The conversion to freehold depended on the validity of the renewed thirty-year lease and could not survive once the renewal itself was found to be flawed.

Conclusion: The renewal of lease and the consequential conversion to freehold were invalid and unsustainable, against the appellant.

Issue (ii): whether third-party purchasers who had obtained registered sale deeds were entitled to protection while the impugned transaction was set aside.

Analysis: The purchasers were not parties before the High Court, but the record showed that a substantial number had acquired plots through registered sale deeds for consideration, some through transactions entered into during the pendency of the proceedings. The Court balanced the illegality in the underlying transaction with the equities of innocent purchasers who had acquired title by registered conveyances. Using its power to do complete justice, the Court protected those purchasers whose registered sale deeds had been executed before the High Court judgment and directed verification of their claims. For other purchasers without registered sale deeds, restitution was ordered through refund with interest.

Conclusion: Registered sale deed purchasers were protected to the limited extent directed, while other transferees were not entitled to retain the benefit of the impugned transaction, against the appellant.

Final Conclusion: The impugned renewal and freehold conversion were upheld as invalid, but the relief was moulded to preserve genuine third-party rights created by prior registered sale deeds and to secure restitution in other cases.

Ratio Decidendi: A public authority holding land in trust cannot renew or convert a lease for commercial benefit without applying public-interest considerations and Article 14 fairness, and a renewal founded on an erroneous assumption of compulsion cannot validate a subsequent freehold conversion.

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