TaxTMI 
TaxTMI 
2010 (3) TMI 1076
X X X X Extracts X X X X
X X X X Extracts X X X X
....trial to residential is vitiated by arbitrariness and malafides are the questions which arise for determination in these appeals filed against orders dated 23.9.2005 and 28.7.2006 passed by the Division Bench of the Punjab and Haryana High Court. 3. The Corporation is a government company within the meaning of Section 617 of the Companies Act, 1956. It was created for developing infrastructure necessary for industrialization of the identified areas of the State. Between 1994 and 1996, the State Government acquired land in Phases VIII-A and VIII-B, Mohali and handed over the same to the Corporation. After carrying out necessary development, the Corporation allotted the plots to industrial entrepreneurs. As there was no provision in the extant industrial policy for earmarking some land in the focal points/growth centres developed by the Corporation, which could be allotted to the industrial entrepreneurs and the workers employed in the industries, the Corporation submitted a proposal to the State Government to allow it to earmark 20-30% area in the existing/coming up focal points/growth centres for Industrial Housing. After due deliberations, the State Government approved the prop....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... 6. Some of the industrial entrepreneurs to whom large plots were allotted in focal point, Mohali could not fully utilize the same and surrendered the surplus land. In Phase VIII-B, the demand for industrial plots was less than what was anticipated by the Corporation. The issue relating to disposal of surplus land in Phases VIII-A and VIII-B, focal point, Mohali was considered in the meeting of Plan Approval Committee of the Corporation held on 15.12.2003 and it was decided that such land may be utilized for carving out residential pockets. This was subject to approval of change of land use under the Punjab Regional and Town Planning and Development Act, 1995 (for short, `the Act'). The relevant portions of the decision taken in that meeting are reproduced below:- "Lay-out plans of 3 residential pockets in Phase VIIIA and B, Indl. Focal Point, Mohali were discussed in details and following decisions were taken: 1. Pocket consisting of Business center Phase-VIIIB, Mohali: It was explained by STP, PSIEC that originally pocket comprising of about 11.83 Acres was earmarked for proposed business center in Phase VIII B, Mohali. However, due to inadequate ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ors developed by PUDA. Instead plots of one kanal size may be planned in this pocket. Lay out plan was approved after making suitable modifications as proposed above. It was pointed out by Sh. Rajinder Sharma, STP o/o Chief Town Planner, Punjab that as per Punjab Regional and Town Planning and Development Act 1995, permission for change of land use from industrial to residential/non industrial use is required to be taken from the competent authority. However, STP, PSIEC explained that the proposal to earmark 20% to 30% for Housing as a matter a policy in the existing as well as coming up Indl. Focal points/Growth centers developed by PSIEC stands approved by the Govt. and the area earmarked for housing in Phase-VIII A and B, Mohali is well within the prescribed norms. Layout plans were approved subject to approval of change of land use under the PRTPD Act." (emphasis supplied) 7. The matter was then considered in the meeting of the Allotment Committee under `Off-The-Shelf Scheme' (hereinafter referred to as, `the Allotment Committee') held on 5.2.2004 under the Chairmanship of Chief Secretary (the meeting was also attended by Shri Arun Goel, the then Ma....
X X X X Extracts X X X X
X X X X Extracts X X X X
....greater revenue in view of higher allotment price for such land as indicated at (i) above. It was, therefore, recommended that no allotment may be made by PSIEC for housing purposes. (emphasis supplied) The Allotment Committee then considered regular agenda items and took the following decisions: "Item No. 21.1 Confirmation of Minutes of 20th meeting of Allotment Committee held on 23.12.2003. Confirmed. Item No. 21.2 Allotment of 46 Acres of land to M/s Quark at Focal Point, Phase VIII, Extension, Mohali. It was decided to allot 46 acres of land at Mohali to M/s. Quark for setting up an industrial Park, in view of approval of their project as mega project by the Empowered Committee under Industrial Policy 2003 and thereafter by the Cabinet. Contents of letter No. Spl./114/SHUD dated 4.2.2004 from Secretary, Housing Urban Development highlighting the possible implications of the restraint orders of Punjab and Haryana High Court regarding `Change in Land Use' were also brought to the notice of the Committee. It was decided that allotment to M/s. Quark will be subject to legal advice to be obtained by the Housing Department. The allotme....
X X X X Extracts X X X X
X X X X Extracts X X X X
....0 residential plots in Phases VIII-A and VIII-B, focal point, Mohali under the Industrial Housing Scheme. In the application form issued by the Corporation, the following stipulation was incorporated: "The acceptance of application form and earnest money does not place the corporation under any obligation to allot you a plot." 10. About 3500 persons including those who filed writ petitions before the High Court applied for allotment of residential plots in Mohali. After five months, another advertisement was issued on 23.3.2004 under the authority of the Managing Director of the Corporation-cum-Chairman, Allotment Committee informing the applicants that draw of lots for allotment of residential plots in Phases VIII-A and VIII-B, Mohali, focal point, Patiala and Phase VIII (Jeevan Nagar), Ludhiana will be held on 31.3.2004. That advertisement carried the following note: "The above draw of lots for allotment of residential plots under Industrial Housing Scheme in Phase VIII A and B at Focal Point, Mohali is being held provisionally and the applicants declared successful will be placed on a provisional list for allotment of plots subject to the final decision on t....
X X X X Extracts X X X X
X X X X Extracts X X X X
....e by building multiplex complexes. They further pleaded that the Corporation's failure to issue allotment letters has resulted in discrimination and violation of their fundamental right to equality guaranteed under Article 14 of the Constitution. In the written statements filed on behalf of the State Government and the Corporation, it was pleaded that the decision contained in Memo dated 5.8.2004 was in consonance with policy of the State Government to promote industrialization of the State, which was expected to give impetus to the economy of different areas and generate employment. It was further pleaded that in its capacity as owner of the land, the State Government was entitled to take appropriate policy decision and the writ petitioners are not entitled to claim allotment of plots merely because they had applied pursuant to advertisement dated 20.10.2003 or their names were included in the provisional list of successful applicants. The Corporation relied upon Article 90 of its Memorandum of Association and pleaded that the State Government is empowered to issue directions on policy matters and its refusal to sanction change of land use in Phases VIII- A and VIII-B, Mohali ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....State Government and the Corporation, which is an instrumentality of the State, are expected to act fairly and reasonably in their dealing with the members of public, mere inviting of applications and draw of lots by the Corporation did not create a right in favour of the writ petitioners and they cannot invoke the doctrines of legitimate expectation and promissory estoppel for compelling the Corporation to allot plots to them in Phases VIII-A and VIII-B, focal point, Mohali because in the format of application, it was clearly mentioned that acceptance of the application form and earnest money will not place the Corporation under an obligation to allot plot to the applicant. 14. The Division Bench then referred to Article 90 of the Memorandum of Association of the Corporation, noticed the judgments of this Court in Rakesh Ranjan Verma and others v. State of Bihar and others (1992) Supp. 2 SCC 343, Gujarat Housing Board Engineers Association and another v. State of Gujarat and others (1994) 2 SCC 24, Chittoor Zilla Vyavasayadarula Sangham v. A.P. State Electricity Board and others (2001) 1 SCC 396, Chairman and MD, BPL Limited v. S.P. Gururaja and others (2003) 8 SCC 567 and two ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....poration and others (supra) and argued that refusal of the State Government to approve utilization of some portions of land in focal point, Mohali for carving out residential pockets was wholly arbitrary and the Division Bench was not at all justified in declining relief to the writ petitioners only on the ground that at the time of submitting applications, they knew that the Corporation will not be obliged to allot plots to the successful applicants and that draw of lots was held with a clear indication that the same would be provisional. Learned senior counsel emphasized that residential pockets were carved out by the Corporation in focal point, Mohali in consonance with the policy contained in Memo dated 26.12.2001 and when the Division Bench held that the decision contained in Memo dated 5.8.2004 is vitiated due to malafides, a direction ought to have been given for allotment of residential plots to the successful applicants. Learned counsel further argued that even though the draw held in furtherance of advertisement dated 23.3.2004 was provisional, after having treated the same as final and allotted residential plots to those who had applied for plots in focal points at Patia....
X X X X Extracts X X X X
X X X X Extracts X X X X
....arned counsel laid considerable emphasis on the fact that the State Government had not accepted the recommendations made by the Plan Approval Committee of the Corporation or the Allotment Committee and submitted that this, by itself, was indicative of the fact that ultimate decision of the Government was not influenced by any extraneous consideration. Learned counsel lastly argued that the Corporation cannot, on its own, allot land in any focal point for a purpose other than industrial and, in any case, land use cannot be changed from industrial to residential without complying with the relevant provisions of the 1995 Act. 18. We have considered the respective arguments/submissions and scrutinized the records. We shall first consider whether the State Government's refusal to sanction change of land use from industrial to residential is vitiated due to malafides or arbitrary exercise of power. The Division Bench of the High Court answered this question in negative by relying upon notings dated 9.6.2004 and 20.6.2004 recorded by Principal Secretary, Industries and Commerce, minutes of the meeting of Allotment Committee held on 5.2.2004 wherein a conditional decision was taken ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....e idea of allotment of land for housing purposes. The issue was then considered by the State Government and an unequivocal decision was taken not to allow change of land use from industrial to residential. The record produced before the High Court and the documents produced before this Court do not show that the State Government had sanctioned change of land use in Phases VIII-A and VIII-B, Mohali from industrial to commercial and allowed setting up of multiplex complexes within the focal points or growth centres. The writ petitioners have also not placed any material before this Court to show that the State Government had approved conditional allotment of land to M/s. Quark by the Allotment Committee or accepted the tentative recommendation made by it for allotment of land to M/s. A.B. Motion (Pvt.) Ltd.. Rather, the events which followed the State Government's refusal to sanction change of land use from industrial to residential demonstrate that the said decision was in consonance with the policy of industrialization which was unquestionably in public interest. In August 2004, the Corporation issued an advertisement which was published in `The Tribune' dated 13.8.2004, in....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ion, which may not be conducive to public interest and others may suggest adoption of a different mode in larger public interest. However, the final decision is required to be taken by the designated authority keeping in view the larger public interest. The notings recorded in the files cannot be made basis for recording a finding that the ultimate decision taken by the Government is tainted by malafides or is influenced by extraneous considerations. The Court is duty bound to carefully take note of the same. In this context, reference can usefully be made to the decision of the Constitution Bench in E.P. Royappa v. State of Tamil Nadu (1974) 4 SCC 3. In that case, the petitioner, who was, at one time holding the post of Chief Secretary of the State, questioned the decision of the Government to post him as an Officer-on-Special Duty. One of the grounds on which he attacked the decision of the Government was that the Chief Minister of the State, Shri K. Karunanidhi was ill- disposed against him. While dealing with the question whether the transfer and posting of the petitioner was vitiated due to malafides, Bhagwati, J. speaking for self and Y.V. Chandrachud and V.R. Krishna Iyer, J....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... which are necessary in the execution of their duties. These acts may lend themselves to misconstruction and suspicion as to the bona fides of their author when the full facts and surrounding circumstances are not known. The Court would, therefore, be slow to draw dubious inferences from incomplete facts placed before it by a party, particularly when the imputations are grave and they are made against the holder of an office which has a high responsibility in the administration. Such is the judicial perspective in evaluating charge of unworthy conduct against ministers and other high authorities, not because of any special status which they are supposed to enjoy, nor because they are highly placed in social life or administrative set up--these considerations are wholly irrelevant in judicial approach--but because otherwise, functioning effectively would become difficult in a democracy." (Emphasis supplied) 21. The issue deserves to be considered from another angle. Section 79 of the 1995 Act, the applicability of which to the case in hand has not been questioned by the writ petitioners-appellants, mandates that after coming into operation of any Master Plan in any area,....
X X X X Extracts X X X X
X X X X Extracts X X X X
....poration had made it clear to the prospective applicants that there is no certainty of their getting residential plots in Phases VIII-A and VIII-B, Mohali. The decision taken by Plan Approval Committee of the Corporation to approve the layouts of residential pockets in Phases VIII-A and VIII-B, Mohali was not final. The same was subject to sanction of change of land use in accordance with the provisions of the 1995 Act. The Allotment Committee made a clear recommendation against utilization of surplus land for housing purposes. The writ petitioners were very much aware of the tentative character of the initial advertisement as also the advertisement issued for holding draw of lots. By incorporating note in the second advertisement, which has been reproduced herein above, the Corporation had made it known to every one that the entire exercise was provisional and those who did not want to participate in that exercise were at liberty to seek refund of the earnest money. To put it differently, the Corporation did not make any representation to the prospective applicants which induced them to part with their money or adversely change their position. Therefore, the High Court rightly ref....
X X X X Extracts X X X X
X X X X Extracts X X X X
....its legislative functions nor can the Government or public authority be debarred by promissory estoppel from enforcing a statutory prohibition. It is equally true that promissory estoppel cannot be used to compel the Government or a public authority to carry out a representation or promise which is contrary to law or which was outside the authority or, power of the officer of the Government or of the public authority to make. We may also point out that the doctrine of promissory estoppel being an equitable doctrine, it must yield when the equity so requires; if it can be shown by the Government or public authority that having regard to the facts as they have transpired, it would be inequitable to hold the Government or public authority to the promise or representation made by it, the Court would not raise an equity in favour of the person to whom the promise or representation is made and enforce the promise or representation against the Government or public authority. The doctrine of promissory estoppel would be displaced in such a case, because on the facts, equity would not require that the Government or public authority should be held bound by the promise or representation made ....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... relied, to his detriment, on an erroneous representation made by public authorities and suffered loss and where the doctrine of "estoppel" will not be invoked to his aid, directing administrative redressal would be a more appropriate remedy than payment of monetary compensation for the loss caused by non-delivery of the possession of the plots and consequent delay caused in setting up industries by the allottees." 27. The plea of the writ petitioners that they had legitimate expectation of being allotted residential plots in Phases VIII-A and VIII-B in Mohali because in 2002 138 plots were allotted to the successful applicants sans merit. At the cost of repetition, it is necessary to mention that the writ petitioners had submitted applications knowing fully well that the same would not obligate the Corporation to allot plots to them. It is rather intriguing that even though approval of the layouts of residential pockets in Phases VIII-A and VIII-B, Mohali by Plan Approval Committee of the Corporation was subject to approval being accorded by the competent authority under the 1995 Act for change of land use from industrial to residential, and the Allotment Committee in which Man....
X X X X Extracts X X X X
X X X X Extracts X X X X
....er the question arises, it is to be determined not according to the claimant's perception but in larger public interest wherein other more important considerations may outweigh what would otherwise have been the legitimate expectation of the claimant. A bona fide decision of the public authority reached in this manner would satisfy the requirement of non-arbitrariness and withstand judicial scrutiny. The doctrine of legitimate expectation gets assimilated in the rule of law and operates in our legal system in this manner and to this extent." 30. In Union of India v. Hindustan Development Corporation (supra), the doctrine of legitimate expectation was explained in the following words: ". ... For legal purposes, the expectation cannot be the same as anticipation. It is different from a wish, a desire or a hope nor can it amount to a claim or demand on the ground of a right. However earnest and sincere a wish, a desire or a hope may be and however confidently one may look to them to be fulfilled, they by themselves cannot amount to an assertable expectation and a mere disappointment does not attract legal consequences. A pious hope even leading to a moral obligation ca....