Natural Resources Allocation:
Allotment of land – To educational institution – By the State – For shifting the institution from a Waqf property, pursuant to order by the Waqf Authority to evict the premises – Out of the 4 kanals allotted land State charged the institution only for 2 kanals @ Rs. 8,00,000/- per kanal while 2 kanals were allotted free of cost – Writ petitions challenging the allotment, on the ground interalia that the property was not put in auction – Single Judge dismissed the writ petitions – Division Bench of High Court quashed the allotment – On appeal, held: When there is transfer of land by the State, allocation must be guided by consideration of the common good as per Art. 39(b) and must not be violative of Art. 14 – This does not necessarily entail auction of the resources – It is discernible from the facts and circumstances of the case that the land was allotted keeping in mind public interest in education of hundreds of children – The circumstances of the case warranted deviation from the standard procedure of auction, to prevent prejudicing future of the children studying at the institution – Moreover, the allotment was in the nature of an exchange of the Waqf land – The action of the State in allotting the land does not suffer from vice of arbitrariness as the same is backed by a welfare purpose – the action of the State was fair, reasonable, transparent, unbiased, without favoritism and nepotism – However, the action of the State in allotting 2 kanals free of cost was bad in law as there is nothing on record to show that the institution was being run purely for charitable and educational purposes – The allotment/transfer (of the land allotted fee of cost) can be saved by giving the transferee an opportunity to make good the shortfall in the consideration by paying for the two kanals @ Rs. 8,00,000/- per kanal with interest @ 6% per annum from the date of allotment, till the date of payment – Constitution of India – Arts. 14 and 39(b) – Auction. – Tender. Constitution of India:
Art. 14 – Arbitrariness under – Test of – Held: An executive action would not be arbitrary merely because the action is not explicitly stated to have been taken for a particular reason or based on a particular principle which in itself is reasonable – It is open to the Court to see whether such a reasonable principle is discernible from the facts and circumstances of the case.
Arts. 38 and 39 – Rights under – Held: The rights u/Arts. 38 and 39 covers means of livelihood, health and the general wellbeing of all the sections of the people in society, of which education is an important part.
Auction/Tender:
Need of public auction or floating of tenders – In case of allotment/transfer of land by State – Held: Generally the State should resort to public auction or floating of tenders for transfer of its land – However, non-floating of tender or non-conducting of public auction cannot be deemed in all cases to be an arbitrary exercise of executive power, if the decision of the executive is result of a fair decision-making process – Constitution of India – Art. 14.
Allowing the appeals, the Court
HELD: 1.1 Generally, when any land is intended to be transferred by the State, or any State largesse is to be conferred, resort should be had to public auction or transfer by way of inviting tenders from the people. The State must ensure that it receives adequate compensation for the allotted resource. However, nonfloating of tender or non-conducting of public auction would not be deemed in all cases to be an arbitrary exercise of executive power. The ultimate decision of the executive must be the result of a fair decision-making process. The allocation must be guided by the consideration of the common good as per Article 39(b), and must not be violative of Article 14. This does not necessarily entail auction of the resource; however, allocation of natural resources to private persons for commercial exploitation solely for private benefit, with no social or welfare purpose, attracts higher judicial scrutiny and may be held to be violative of Article 14 if done by non-competitive and non-revenue maximizing means. [Para 6] [1111-G-H; 1112-A-C]
Institute of Law Chandigarh v. Neeraj Sharma (2015)
1 SCC 720 : [2014] 11 SCR 1096; Centre for Public Interest Litigation v. Union of India, 2012 3 SCC 1 : [2012] 3 SCR 147; In Re Natural Resources Allocation (2012) 10 SCC 1 : [2012] 9 SCR 31; Manohar Lal Sharma v. Principal Secy. (2014) 9 SCC 516 : [2014] 8 SCR 446; Bharti Airtel Limited v. Union Of India (2015)
12 SCC 1 : [2015] 5 SCR 867; Goa Foundation v. Sesa Sterlite Ltd. (2018) 4 SCC 218 : 2018 (2) SCR 361; Netai Bag & Ors. v. State of W.B. & Ors. (2000) 8 SCC 262 : [2003] 4 Suppl. SCR 187; 5 M&T Consultants v. S.Y. Nawab (2003) 8 SCC 100 : [2003]
4 Suppl. SCR 187; Villianur Iyarkkai Padukappu Maiyam v. Union of India (2009) 7 SCC 561 : [2009] 9 SCR 225; Ajar Enterprises (P) Ltd. v. Satyanarayan Somani (2018) 12 SCC 756; Goa Foundation v. Sesa Sterlite Ltd. (2018) 4 SCC 218 : [2018] 2 SCR 361 – relied on.
1.2 An executive action would not be arbitrary merely because the action is not explicitly stated to have been taken for a particular reason or based on a particular principle which in itself is reasonable; rather, it would be open to the Court to see whether such a reasonable principle is discernible from the facts and circumstances of the case. Just like the Court has the power to look into the underlying purpose of an executive action to determine whether it is motivated by extraneous reasons while examining it for arbitrariness, so also the Court may determine whether there is a germane objective being served through the execution of the action, by examining the surrounding facts and circumstances in which the executive action was effected. [Para 7] [1113-C-E]
Shrilekha Vidyarathi v. State of U.P. (1991) 1 SCC 212 : [1990] 1 Suppl. SCR 625 – relied on
1.3 Though the appellant is a private educational institution, it cannot be said that the action of the Government was not backed by a welfare purpose merely because it is not stated in so many words in the correspondence between the Academy and the State Government that the alternative land sought for allotment was to protect the interests of children studying at the school. This is because the same is clearly discernible from the facts and circumstances of the case. It has been stated that the appellant was evicted from the Wakf land not because of any wilful default or unauthorized use, but because the Wakf required the land for its own use. In such circumstances, having no other alternative, the Appellant approached the Government for allotment of suitable land for running the school. It seems that the State Government also preferred to peacefully settle the issue of getting the school vacated from the Wakf property, at an early date, without disturbing the education of the students and peace in the locality. [Para 7] [1113-E-H]
1.4 Articles 38 and 39 of the Constitution provide that the State must strive to promote the welfare of the people of the State by protecting all their economic, social and political rights. These rights may cover means of livelihood, health and the general well-being of all sections of the people in the society, of which education is an important aspect. [Para 8] [1114-A-B]
1.5 Imparting basic education is a constitutional obligation on the State as well as societies running educational institutions. Education is a basic tool for individuals to lead an economically productive life and is one of the most vital elements for the preservation of the democratic system of Government. The Constitution of India bestows considerable attention to the field of education. It recognizes the need for regulating the various facets of activity of education and also the need for not only establishing and administering educational institutions but also providing financial support for educational institutions run by private societies. [Para 9] [1114-B-D]
Secretary, Mahatama Gandhi Mission v. Bhartiya Kamgar Sena, (2017) 4 SCC 449 – referred to.
1.6 Thus, the State Government proceeded to allot the land in favour of the appellant keeping in mind the public interest in the education of hundreds of children as well as considering the urgency of the matter and it cannot be said that the action was not backed by a social or welfare purpose. The test of Article 14 must be applied from the perspective of substantive rather than formal equality, and must be mindful of the effect of the action or rule that is being tested. While under ordinary circumstances, the usual practice of allocation of sites on the basis of advertisements or auction was being followed, the instant situation warranted a deviation from the standard procedure to prevent prejudicing the future of the children studying at the Academy. Taking a holistic view of the matter, the action taken by the State Government did not suffer from the vice of arbitrariness insofar as it was backed by a welfare purpose. [Para 9] [1114-E-F]
1.7 The allotment of 4 Kanals of land to the appellant was in the nature of an exchange, inasmuch as the State Government wanted to evict the appellant who was running a school at Wakf land situated in the main city area. Such a decision seems to have been taken by the State Government to avoid any unrest in the locality or city. In such circumstances, there is no arbitrariness in the decision taken by the State in allotting 4 Kanals of property. On the other hand, the action of the State was fair, reasonable, transparent, unbiased, without favourtism and nepotism. [Para 10] [1114-G-H; 1115-A]
2.1 The action of the authorities can be assailed to the extent that the allotment of two kanals free of cost was bad in law. It is evident that the consideration paid by the appellant was only with respect to two kanals and the remaining two kanals of land were allotted for free to the appellant. It is not in dispute that Rs. 8,00,000/- per kanal was the average auction sale price which was fetched around the time of allotment. Keeping this figure in mind, the State Government fixed the allotment price at Rs. 8,00,000/- per kanal. It is clear that there was no arbitrariness in fixing the price at Rs. 8,00,000/- per kanal. However, the allotment of 2 Kanals of land for free was not justified. This is all the more significant in light of the absence of any material on record to show that the school was being run purely for charitable and educational purposes. [Para 12] [1115-E-G] In Re. Natural Resources Allocation (2012) 10 SCC 1 : [2012] 9 SCR 31; Union of India and another v. Jain Sabha, New Delhi and another (1997) 1 SCC 164 : [1996] 9 Suppl. SCR 1 – relied on.
2.2 Thus, there is a loss to the public exchequer to the extent of Rs.16,00,000/- for two kanals as on the date of allotment. However, having regard to the fact that the Appellant-Academy has been running on the allotted site since many years, after constructing a new building, the transfer may be saved by giving the transferee an opportunity to make good the shortfall in the consideration. [Para 13] [1116-G]
ITC Limited v. State of U.P., (2011) 7 SCC 493 : [2011]
7 SCR 66 – relied on.
2.3 It is appropriate to give the appellant the opportunity to make good the shortfall in consideration, as the loss to the public exchequer caused by the free allocation cannot be said to have had an everlasting effect or impact on public interest. Moreover, there is no high-handedness on the part of the appellant in seeking the allotment in its favour, as it acted in a bona fide manner. This would also be in consonance with the principle that the public must be adequately compensated for the alienation of natural resources by the State. [Para 14] [1118-B-C]
2.4 Therefore, the appellant should pay consideration for two kanals of land received gratuitously, at the rate of Rs. 8,00,000/- per kanal, which was the average auction price prevailing at the time of allocation. The appellant is also liable to pay interest at the rate of 6% per annum from the date of the allotment till the date of payment. [Para 15] [1118-D-E]
As published in the Supreme Court Reports, Supreme Court of India. Text from the Indian Supreme Court Judgments open data set (Dattam Labs), CC BY 4.0.
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