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TMI Blog2010 (3) TMI 1076X X X X Extracts X X X X X X X X Extracts X X X X ..... rariness 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 proposal. This was conveyed to the Corporation ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s 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 demand for commercial sites, it is proposed to reduce the area of business center to 2.33 acres. Balance about 9.50 acres is proposed to be sub-divided into residential plots of on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 Managing Director of the Corporation) and the following recommendations were made: "Before taking up the regular agenda items, the Committee discussed the agenda notes on policy issues circulated by Industries Department vide t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... red 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 allotment will also be subject to fulfillment of following conditions:- i) M/s. Quark were allotted 5 acres of land in Phase VIII-B, Mohali by PSIEC and they are defaulter in making payment of cost enhancement amounting to Rs. 1.18 crore and applicable interest. The company will m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 the aforesaid Industrial Housing Scheme at Focal Point, Mohali. It is clarified that placement of successful applicants on the provisional list for allotment of plots will not confer any legal right either to claim interest on the earnest money remaining with the Corporation or for the allotment of residential plots on the basis of their having been declared successful in the draw of l ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d 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 falls within the ambit of Article 90. According to the Corporation, advertisement dated 23.3.2004 was issued for holding draw of lots because the Government's decision on the proposal for change of land use from industrial to residential was getting delayed and it was felt that the earnest money deposited by those who may be ultimately unsuccessful should not be retained for a long time ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 judgments of the High Court in CWP No.9626 of 2002 - Punjab State Industries and Export Corporation v. State of Punjab decided on 14.5.2004 and Punjab Financial Corporation Employees Welfare Association v. Punjab Financial Corporation 2004 (2) ILR (P & H) 113 and held the decision of the Government not to sanction change of land use from industrial to residential was in the nature of a direction which could be issued under ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e 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 Patiala and Ludhiana, the Corporation cannot refuse to fulfill its promise of allotting plots to those who had applied for the plots in focal point, Mohali. 17. Learned counsel appearing for the State and the Corporation argued that the writ petitioners are not entitled to invoke the doctrines of promissory estoppel and legitimate expectation because at the time of submitting applications, they were very much aware of the stipulati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd 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 to allot 46 acres of land at Mohali to M/s. Quark and proposal for allotment of 40-50 acres of land to M/s. A.B. Motions (Pvt.) Limited was considered. In the opinion of the Division Bench, refusal of the Government to sanction change of land use had close link/nexus with the decision taken and/or recommendations made by the Allotment Committee, which gave an impression that the State Government wanted to favour those who were inte ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lowed 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, inviting applications for 65 industrial plots. In its meting held on 13.12.2005, the Allotment Committee decided to allot 39.3 acres land in Phase VIII-A, focal point, Mohali to M/s. Wipro Limited for setting up its unit of Software and I.T. Enabled Services because the same was expected to attract investment of Rs. 1336 crores and generate employment opportunities for more than 9000 people. The Committee also decided to allot 25 acres ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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, JJ., observed: "Now, when we examine this contention we must bear in mind two important considerations. In the first place, we must make it clear, despite a very strenuous argument to the contrary, that we are not called upon to investigate into acts of maladministration by the political Government headed by the second respondent. It is not within our province to embark on a far-flung inquiry into acts of commission and omission charg ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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, no person shall use or permit to be used any land or carry out development in that area otherwise than in conformity with such Master Plan. Proviso to this section empowers the competent authority to allow continuance of any use of any land for a maximum period of 10 years for the purpose for which it was being used on the date of enforcement of the Master Plan. Section 81 of that Act lays down the procedure for change of land use. In terms of sub-section (2) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ndation 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 refused to invoke the doctrine of promissory estoppel in favour of the writ petitioners. 24. In Motilal Padampat Sugar Mills Co. Ltd. v. State of U.P., (1979) 2 SCC 409, a two-Judge Bench of this Court discussed the doctrine of promissory estoppel in great detail and laid down the various propositions including the following: "The true principle of promissory estoppel, therefore, seems to be that where one party has by his words or conduct made to the other a clea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... el 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 by it. This aspect has been dealt with fully in Motilal Sugar Mills case and we find ourselves wholly in agreement with what has been said in that decision on this point." 26. In Hira Tikoo v. Union Territory, Chandigarh (2004) 6 SCC 765, this Court considered whether the High Court was justified in refusing to invoke the doctrine of promissory estoppel for issuing a mandamus to the respondent-Chandigarh Administration to allot industrial plots to the petitioners, who had applied in r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g 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 Managing Director of the Corporation had taken part, made a negative recommendation in the matter of allotment of land for housing purposes, the same officer authorized issue of advertisement dated 23.3.2004 for holding provisional draw of lots. In our view, this exercise was wholly unnecessary and uncalled for. If the concerned officer had not acted in haste and waited for the decision of the competent authority on the issue of change of land use, the parties may not have been forced to fight this un ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is 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 cannot amount to a legitimate expectation. The legitimacy of an expectation can be inferred only if it is founded on the sanction of law or custom or an established procedure followed in regular and natural sequence. Again it is distinguishable from a genuine expectation. Such expectation should be justifiably legitimate and protectable. Every such legitimate expectation does not by itself fructify into a right and therefore it does not amount to a right in the conventional sense." 31. The same principle has been stated and r ..... X X X X Extracts X X X X X X X X Extracts X X X X
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