TaxTMI 
TaxTMI 
2011 (4) TMI 1291
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....filed against the order of the Madhya Pradesh High Court dismissing the Writ Petition filed by the appellant. 3. That facts necessary for deciding the aforementioned questions have been culled out from the pleadings of the parties and the records produced by the learned counsel for the State. The same are enumerated below: (i) On 18.6.2004, Shri Kailash Joshi made a written request to the Principal Secretary, Housing Department, Government of Madhya Pradesh (for short, "the Principal Secretary, Housing") by describing himself as a Convenor of the Memorial Trust for reservation of 30 acres land comprised in Khasra Nos.83, 85/1 and 85/2 of village Bawadiya Kalan, in favour of the Memorial Trust to enable it to establish an All India Training Institute in the memory of late Shri Kushabhau Thakre. (ii) Although, letter dated 18.6.2004 was addressed to the Principal Secretary, the same was actually handed over to Shri Babu Lal Gaur, the then Minister, Housing and Environment, Madhya Pradesh. He forwarded the same to the Principal Secretary for immediate action. The latter directed that steps be taken for placing the matter before the reservation committee. Simultaneously, letters wer....
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....2/1 and 83 of village Bawadiya Kalan in favour of respondent No.5. (viii) By letter dated 20.9.2004, respondent No. 3 informed the Secretary, Housing and Environment Department (respondent No.2) that 4665 acres land of villages Bawadiya Kalan and Salaiya had already been notified in Madhya Pradesh Gazette dated 2.5.2003 for town development scheme at Misrod. He also indicated that land in Khasra Nos.82 and 83 is included in the Scheme and notice to this effect had already been published under Section 50 of the 1973 Act. (ix) After some time, respondent No.3 sent letter dated 3.9.2004 to the Principal Secretary, Housing and pointed out that in the Bhopal Development Plan, 2005, land comprised in Khasra No.82 of Bawadiya Kalan village is earmarked for public and semi-public (health) purpose and land comprised in Khasra No.83 is earmarked for residential purpose. He also indicated that out of the total area of Khasra No.83 i.e. 11.96 acres, 24 metre wide road is proposed and 33 metres land adjacent to the bank of Kaliasot river is included in the green belt and out of 6 acres land for residential purpose, 2 acres had been reserved for office of the Madhya Pradesh Sanskrit Board and ....
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....enue Department respectively and assured that the premium will be deposited immediately after the allotment of land. (xiv) After about 8 months of the submission of proposal for allotment of 30 acres land to the Memorial Trust, Shri Kailash Joshi sent letter dated 16.5.2005 to respondent No. 4 mentioning therein that the institute would require only 20 acres land. Thereupon, Nazul Officer, Capital Project, Bhopal sent letter dated 24.6.2005 to Shri Kailash Joshi and informed him that the premium of 20 acres land would be Rs. 5,22,72,000/- and 10 per cent thereof i.e. Rs. 52,27,200/- should be deposited as earnest money. However, the needful was not done and only Rs. 25,00,000/- were deposited on behalf of respondent No. 5. (xv) For next about seven months, the matter remained under correspondence between different departments of the State Government. During the interregnum, Shri Babu Lal Gaur became Chief Minister of the State. On 24.10.2005, he directed that matter relating to allotment of land to respondent No.5 be put up in the next meeting of the Cabinet scheduled to be held on 26.10.2005. On the same day, Secretary, Revenue Department submitted a detailed note and suggested ....
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....ctions/suggestions. The notification was published in the Official Gazette and two newspapers, namely, "Dainik Bhaskar" and "Sandhya Prakash" dated 9th and 10th June, 2008. Five persons representing Bawadiya Uthaan Samiti, "Sangwari" - Society for the Resource Companion, Koshish Society, Neeraj Housing Society, Satpura Vigyan Sabha and Swadesh Developers and Colonizers filed their objections against the proposed change of land use. They were given opportunity of hearing by Deputy Secretary, Housing and Environment Department, who opined that the objections were untenable. Her recommendation was approved by the Secretary, Housing and Environment Department and the concerned Minister. Thereafter, final notification dated 5.9.2008 was issued under Section 23-A(2) of the Act. 4. The appellant, who is engaged in public welfare activities in general and consumers welfare in particular and claims to have received awards for good and meritorious performance including Swami Vivekananda Award challenged the allotment of land to respondent No.5 in Writ Petition No.10617 of 2007, on the grounds of violation of Article 14 of the Constitution and arbitrary exercise of power. The Division Bench ....
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....he objectors; v) Note-sheets dated 01.09.2009 and 02.09.2009 of the Housing and Environment Department; vi) Letter dated 13.09.2006 sent by respondent No.4 to the Principal Secretary, Housing, letter dated 06.10.2006 issued by the State Government for amending memo dated 25.09.2004 and letter dated 02.11.2006 sent by the State Government to respondent No.4 for amendment of orders dated 27.01.2006 and 19.06.2006. Learned counsel for the appellants also placed on record xerox copy of the cover page of Writ Petition No. 933 of 2005 filed by the appellant by way of public interest litigation challenging the allotment of land, which was reserved for park, lawn, parking and open spaces by Madhya Pradesh Housing Board to Punjabi Samaj, Bhopal as also copy of the interim order passed by the High Court whereby the allottee was restrained from raising further construction. Arguments: 6. Shri Raju Ramchandran, learned senior counsel for the appellant, criticized the impugned order and argued that the High Court committed serious error by summarily dismissing the writ petition without examining and adjudicating the important questions of law relating to violation of Article 14 of the Cons....
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....s arbitrary or vitiated due to violation of Article 14 because the State Government has a long standing policy of allotting land to social, cultural, religious, educational and other similar organizations/institutions without issuing advertisement or inviting applications from the public. In support of this argument, learned senior counsel referred to the list of the allottees annexed with affidavit dated 10.1.2011 of Shri Umashankar Bhargav. Learned senior counsel relied upon the judgments of this Court in Ugar Sugar Works Ltd. v. Delhi Administration (2001) 3 SCC 635, State of U.P. v. Chaudhary Ram Beer Singh (2005) 8 SCC 550, State of Orissa v. Gopinath Dash (2005) 13 SCC 495 and Meerut Development Authority v. Association of Management Studies (2009) 6 SCC 171 and argued that the Court cannot exercise the power of judicial review to nullify the policy framed by the State Government to allot Nazul land without advertisement. Shri Ravi Shanker Prasad referred to paragraph 26 of the RBC and argued that the State Government is possessed with the power to make allotment without charging premium or waive the same. Learned senior counsel then relied upon a passage from Chapter IV of t....
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....our of other organizations/institutions. Learned senior counsel also relied upon the judgment of this Court in Harsh Dhingra v. State of Haryana (2001) 9 SCC 550 and argued that the impugned allotment may not be quashed and the law which may be laid down by this Court should govern the allotments, which may be made in future. 9. We have considered the respective submissions. For deciding the questions arising in the appeal, it will be useful to notice the relevant provisions of the Act, the Rules and the RBC. 10. The Act was enacted to make provisions for planning and development and use of land; to make better provisions for the preparation of development plans and zoning plans with a view to ensure that town planning schemes are made in a proper manner and they are effectively executed. The Act also provides for constitution of Town and Development Authority for proper implementation of Town and Country Development Plan and for the development and administration of special areas through Special Area Development Authority and also to make provisions for the compulsory acquisition of land required for the purpose of the development plans and for achieving the objects of the Act. ....
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.... 18 provides for publication of the draft development plan for inviting objections and suggestions from public. The objections and suggestions, if any, received are required to be placed before the Committee constituted under Section 17-A(1) which shall, after giving opportunity of hearing to the affected persons, suggest appropriate modifications in the draft development plan. After receiving the report of the Committee, the Director is required to submit the development plan for approval of the Government. Section 19 provides for approval of the development plan with or without modifications by the State Government. In a given case the State Government can return the development plan with a direction that fresh development plan be prepared. Where the State Government approves the development plan with modification, a notice is required to be published in the Gazette inviting objections and suggestions in respect of such modification and final plan is to be published after considering the objections and suggestions, if any, received and giving opportunity of hearing to those desirous of being heard. In terms of sub-section (5) of Section 19 the development plan comes into operatio....
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....s and servants. Section 49 specifies the factors which may be included in a town development scheme. Section 50 regulates preparation of a town development scheme and publication thereof in the Gazette etc. Section 58 empowers the authority to make regulation for disposal of developed lands, houses, buildings and other structures. This is subject to the rules which may be made by the State Government in this behalf. Section 85, which finds place in Chapter XI, confers power upon the State Government to make rules for carrying out the purposes of the Acts. For the sake of reference, Sections 14(a), (b), 15, 17(a), (b), 23-A, 25(1), 26 and 58 of the Act are reproduced below: "14. Director to prepare development plans. --Subject to the provisions of this Act and the rules made thereunder, the Director shall, -- (a) prepare an existing land use map; (b) prepare a development plan; 15. Existing land use maps - (1) The Director shall carry out the survey and prepare an existing land use map indicating the natural hazard prone areas] and, forthwith publish the same in such manner as may be prescribed together with public notice of the preparation of the map an....
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.... the purpose of undertaking an activity or scheme which is considered by the State Government or the Director, on the advice of the Committee constituted by the State Government for this purpose, to be beneficial to the society, make such modification in the development plan or zoning plan as may be deemed necessary in the circumstances of the case and the modification so made in the development plan or zoning plan shall be an integral part of the revised development plan or zoning plan. (2) The State Government shall publish the draft of modified plan together with a notice of the preparation of the draft modified plan and the place or places where the copies may be inspected, continuously for two days in such two daily newspapers which are in the approved list of Government for advertisement purpose having circulation in the area to which it relates and a copy thereof shall be affixed in a conspicuous place in the office of the Collector, inviting objections and suggestions in writing from any person with respect thereto within fifteen days from the date of publication of such notice. After considering all the objections and suggestions as may be received within the period spec....
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....iven by such authority as may be provided in the said rules.] 58. Disposal of land, buildings and other development works.- Subject to such rules as may be made by the State Government in this behalf, the Town and Country Development Authority shall, by regulation, determine the procedure for the disposal of developed lands, houses, buildings and other structures." 11. In exercise of the powers conferred upon it under Section 58 read with Section 85, the State Government framed the Rules. Rule 3 declares that no Government land vested in or managed by the Authority shall be transferred except with the general or special sanction of the State Government. Rule 4 lays down that all other land i.e. "the Authority Land" shall be transferred in accordance with the following rules. Rule 5 prescribes four modes of transfer of the Authority land. These are: (a)By direct negotiations with the party; or (b)By public auction; or (c)By inviting tenders; or (d)Under Concessional terms." Rules 5-A to 27 enumerate the steps required to be taken for transfer of land by different modes. Rule 28 lays down that transfer of the Authority land under Rule 27 shall be made on such terms and conditi....
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....8 lays down that a petition can be submitted to the higher authority against any order which may be passed by an officer subordinate to the State Government. Paragraph 19 lays down that every application for permanent lease of Nazul land should be made to the District Collector along with the relevant documents, maps etc. Under paragraph 20, the Collector is empowered to reject the application by recording reasons. If the application is not rejected then the Collector has to adopt the procedure specified in clauses (a), (b), (c), (d), (e) and (f) of this paragraph. If the plot of land is to be sold by auction then the same is required to be advertised or publicized by a recognized method. Paragraph 21 prescribes the mode of auction of lease rights. Any persons, desirous of participating in the auction is required to deposit 10 per cent of the premium. Once the bid is approved by the competent authority, the bidder has to deposit the balance amount within 30 days. This paragraph also provides for forfeiture of the premium and recovery of the amount from the defaulter. Paragraph 23 specifies the minimum premium for different categories of plots. Paragraph 24 lays down the procedure t....
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....lum dwellers. 14. We shall now consider whether the State Government could allot 20 acres of land to respondent No.5 without issuing an advertisement or adopting a procedure consistent with the doctrine of equality so as to enable other similar organizations/institutions to participate in the process of allotment. 15. The concept of `State' has changed in recent years. In all democratic dispensations the State has assumed the role of a regulator and provider of different kinds of services and benefits to the people like jobs, contracts, licences, plots of land, mineral rights and social security benefits. In his work "The Modern State" MacIver (1964 Paperback Edition) advocated that the State should be viewed mainly as a service corporation. He highlighted difference in perception about the theory of State in the following words: "To some people State is essentially a class-structure, "an organization of one class dominating over the other classes"; others regard it as an organisation that transcends all classes and stands for the whole community. They regard it as a power- system. Some view it entirely as a legal structure, either in the old Austinian sense which made it a ....
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....Government in a welfare State, is the regulator and dispenser of special services and provider of a large number of benefits, including jobs, contracts, licences, quotas, mineral rights, etc. The Government pours forth wealth, money, benefits, services, contracts, quotas and licences. The valuables dispensed by Government take many forms, but they all share one characteristic. They are steadily taking the place of traditional forms of wealth. These valuables which derive from relationships to Government are of many kinds. They comprise social security benefits, cash grants for political sufferers and the whole scheme of State and local welfare. Then again, thousands of people are employed in the State and the Central Governments and local authorities. Licences are required before one can engage in many kinds of businesses or work. The power of giving licences means power to withhold them and this gives control to the Government or to the agents of Government on the lives of many people. Many individuals and many more businesses enjoy largesse in the form of Government contracts. These contracts often resemble subsidies. It is virtually impossible to lose money on them and many ente....
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....39;s lawyers have argued in numerous cases that unrestricted permissive language confers unfettered discretion, the truth is that, in a system based on the rule of law, unfettered governmental discretion is a contradiction in terms." Prof. Wade went on to say: "...... The whole conception of unfettered discretion is inappropriate to a public authority, which possesses powers solely in order that it may use them for the public good. There is nothing paradoxical in the imposition of such legal limits. It would indeed be paradoxical if they were not imposed. Nor is this principle an oddity of British or American law; it is equally prominent in French law. Nor is it a special restriction which fetters only local authorities: it applies no less to ministers of the Crown. Nor is it confined to the sphere of administration: it operates wherever discretion is given for some public purpose, for example where a judge has a discretion to order jury trial. It is only where powers are given for the personal benefit of the person empowered that the discretion is absolute. Plainly this can have no application in public law. For the same reasons there should in principle be no such thing as unr....
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....n Laker Airways Ltd. v. Department of Trade 1977 QB 643, Lord Denning discussed prerogative of the Minister to give directions to Civil Aviation Authorities overruling the specific provisions in the statute in the time of war and said: "Seeing that prerogative is a discretion power to be exercised for the public good, it follows that its exercise can be examined by the Courts just as in other discretionary power which is vested in the executive." 23. This Court has long ago discarded the theory of unfettered discretion. In S.G. Jaisinghani v. Union of India AIR 1967 SC 1427, Ramaswami, J. emphasised that absence of arbitrary power is the foundation of a system governed by rule of law and observed: "In this context it is important to emphasize that the absence of arbitrary power is the first essential of the rule of law upon which our whole constitutional system is based. In a system governed by rule of law, discretion, when conferred upon executive authorities, must be confined within clearly defined limits. The rule of law from this point of view means that decisions should be made by the application of known principles and rules and, in general, such decisions should be predic....
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....jobs or entering into contracts or issuing quotas or licences or granting other forms of largesse, the Government cannot act arbitrarily at its sweet will and, like a private individual, deal with any person it pleases, but its action must be in conformity with standard or norms which is not arbitrary, irrational or irrelevant. The power or discretion of the Government in the matter of grant of largesse including award of jobs, contracts, quotas, licences, etc. must be confined and structured by rational, relevant and non-discriminatory standard or norm and if the Government departs from such standard or norm in any particular case or cases, the action of the Government would be liable to be struck down, unless it can be shown by the Government that the departure was not arbitrary, but was based on some valid principle which in itself was not irrational, unreasonable or discriminatory." (emphasis supplied) 25. In Kasturi Lal Lakshmi Reddy v. State of J And K (1980) 4 SCC 1, Bhagwati J. speaking for the Court observed: "Where any governmental action fails to satisfy the test of reasonableness and public interest discussed above and is found to be wanting in the quality of reasona....
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....it is so satisfied, it would be the plainest duty of the court under the Constitution to invalidate the governmental action. This is one of the most important functions of the court and also one of the most essential for preservation of the rule of law. It is imperative in a democracy governed by the rule of law that governmental action must be kept within the limits of the law and if there is any transgression, the court must be ready to condemn it. It is a matter of historical experience that there is a tendency in every Government to assume more and more powers and since it is not an uncommon phenomenon in some countries that the legislative check is getting diluted, it is left to the court as the only other reviewing authority under the Constitution to be increasingly vigilant to ensure observance with the rule of law and in this task, the court must not flinch or falter. It may be pointed out that this ground of invalidity, namely, that the governmental action is unreasonable or lacking in the quality of public interest, is different from that of mala fides though it may, in a given case, furnish evidence of mala fides." (emphasis supplied) 26. In Common Cause, A Registered ....
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....rative authorities and immunity of their action from judicial review and observed: ".... We have no doubt that the Constitution does not envisage or permit unfairness or unreasonableness in State actions in any sphere of its activity contrary to the professed ideals in the Preamble. In our opinion, it would be alien to the Constitutional Scheme to accept the argument of exclusion of Article 14 in contractual matters. The scope and permissible grounds of judicial review in such matters and the relief which may be available are different matters but that does not justify the view of its total exclusion. This is more so when the modern trend is also to examine the unreasonableness of a term in such contracts where the bargaining power is unequal so that these are not negotiated contracts but standard form contracts between unequals............................. Even assuming that it is necessary to import the concept of presence of some public element in a State action to attract Article 14 and permit judicial review, we have no hesitation in saying that the ultimate impact of all actions of the State or a public body being undoubtedly on public interest, the requisite public element....
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....mitations in their actions as private citizens, similicitor, do in the field of private law. Its actions must be based on some rational and relevant principles. It must not be guided by traditional or irrelevant considerations............. This Court has rejected the contention of an instrumentality or the State that its action is in the private law field and would be immune from satisfying the tests laid under Article 14. The dichotomy between public law and private law rights and remedies, though may not be obliterated by any straight jacket formula, it would depend upon the factual matrix. The adjudication of the dispute arising out of a contract would, therefore, depend upon facts and circumstances in a given case. The distinction between public law remedy and private law filed cannot be demarcated with precision. Each case will be examined on its facts and circumstances to find out the nature of the activity, scope and nature of the controversy. The distinction between public law and private law remedy has now become too thin and practicably obliterated....... In the sphere of contractual relations the State, its instrumentality, public authorities or those whose acts bear i....
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....on according to the sweet will and whims of the political entities and/or officers of the State. Every action/decision of the State and/or its agencies/instrumentalities to give largesse or confer benefit must be founded on a sound, transparent, discernible and well defined policy, which shall be made known to the public by publication in the Official Gazette and other recognized modes of publicity and such policy must be implemented/executed by adopting a non- discriminatory and non-arbitrary method irrespective of the class or category of persons proposed to be benefitted by the policy. The distribution of largesse like allotment of land, grant of quota, permit licence etc. by the State and its agencies/instrumentalities should always be done in a fair and equitable manner and the element of favoritism or nepotism shall not influence the exercise of discretion, if any, conferred upon the particular functionary or officer of the State. 32. We may add that there cannot be any policy, much less, a rational policy of allotting land on the basis of applications made by individuals, bodies, organizations or institutions de hors an invitation or advertisement by the State or its agency....
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....red as a public trust. During the course of hearing also no such document was produced before the Court. It is also not in dispute that respondent No. 5 was registered as a public trust only on 6.10.2004 i.e. after the order for reservation of land in favour of the Memorial Trust was passed. The allotment was also initially made in the name of trust, but, later on, the name of respondent No. 5 was substituted in place of the Memorial Trust. The exercise for reservation of 30 acres land and allotment of 20 acres was not preceded by any advertisement in the newspaper or by any other recognized mode of publicity inviting applications from organizations/institutions like the Memorial Trust or respondent No.5 for allotment of land and everything was done by the political and non-political functionaries of the State as if they were under a legal obligation to allot land to the Memorial Trust and/or respondent No.5. The advertisements issued by the State functionaries were only for inviting objections against the proposed reservation and/or allotment of land in favour of the Memorial Trust and not for participation in the process of allotment. Therefore, it is not possible to accept the a....
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....y for allotment of land. The RBC also does not contain any policy for allotment of land without issuing any advertisement and without following a procedure in which all similarly situated persons can stake their claim for allotment. Part IV of the RBC contains the definition of Nazul land and provides for allotment of land at market price or concessional price. The authorities competent to allot land for different purposes have also been identified and provisions have been made for scrutiny of applications at different levels. However, these provisions have been misinterpreted by the functionaries of the State for several years as if the same empowered the concerned authorities to allot Nazul land without following any discernible criteria and in complete disregard to their obligation to act in accordance with the constitutional norms. Unfortunately, the Division Bench of the High Court overlooked that the entire process of reservation of land and allotment thereof was fraught with grave illegality and was nothing but a blatant act of favoritism on the part of functionaries of the State and summarily dismissed the writ petition. 40. The next question which needs consideration is w....
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.... beneficial to the society. This is subject to the condition that the modification so made shall be an integral part of the revised development plan. Section 23-A(2) provides for issue of public notice inviting objections against the proposed modification of the plan. Such notice is required to be published along with the modified plan continuously for two days in two daily newspapers which are on the list of the Government and which have circulation in the area. A copy of the notice is also required to be affixed in a conspicuous place in the office of the Collector. After considering the objections and suggestions, if any received, and giving reasonable opportunity of hearing to the affected persons, the State Government can confirm the modification. 41. It is not in dispute that in the Bhopal Development plan, the use of land which was reserved and allotted to respondent No.5 was shown as public and semi public (health). The State Government modified the plan by invoking Section 23-A(1)(a) of the Act for the purpose of facilitating establishment of an institute by respondent No. 5 and not for any proposed project of the Government of India or the State Government and its enterp....