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Chairman And M.D.B.P.L. Ltd. Versus S.P. Gururaja And Ors.

2003 (10) TMI 655 - SUPREME COURT OF INDIA

Appeal (Civil) No. 2166 of 1998 With C.A. No. 2167 of 1998 - Dated:- 13-10-2003 - V. N. Khare (CJ), Ashok Bhan And S. B. Sinha For Appellant (s) Mr. Rajan Narain, Adv. Ms. Kiran Suri, Adv. For Respondent (s) Mr. P.P. Singh, Mr. Sanjay R. Hegde, Adv. JUDGMENT S. B. Sinha, J. How economic development of a State can be halted by a Public Interest Litigation has received the attention of this Court in some of its decisions. The case at hand adds to the said list. BACKDROP FACTS: 2. The Karnataka Ind .....

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neurs through one window system. With a view to achieve the said objective a High Level Committee was constituted. BPL Limited (hereinafter referred to as 'the Company' with a view to set up industries applied for allotment of 500 acres of land for its three projects. The said application was considered by the High Level Committee wherein a decision was taken to allot 175 acres of land in favour of the Company at RS. 92/- per sq.m. The Company was held to be entitled to various other inc .....

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n breached by reason thereof. The respondent Nos. 1 to 3 describing themselves to be the social workers in the writ petition raised the following contentions: (a) That the Board can acquire the land only for the purposes (three in number a stated in the Act). (b) That the land to other Entrepreneurs is sold at the rate of ₹ 8,80,000/- per acre whereas it is sold to BPL at ₹ 3,72,324/- per acre. (c) That the allotment being contrary to Regulations is arbitrary and unreasonable. (d) Th .....

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t the Government of Karnataka in exercise of its executive powers under Article 162 of the Constitution of India has established a single window Agency to accord, with significant authenticity, sanction/clearance/approval to the establishment of new Industries of expansion of existing units, which include sanction of infrastructural facilities like and, power, water, finance etc. Wherever an Industrial Project involves an investment beyond fifty crores, the decision to accord sanction/ approval .....

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f 500 acres to be furnished by the group. In its 28th meeting held on 29.3.1995, the Committee took notice of the requirements of the BPL India Ltd. and after thorough discussion resolved that Karnataka Industrial Area Development Board (KIADB for short) shall handover 175 acres of land at Dobospet Industrial Area to the BPL India Ltd. e) That thereafter the Government of Karnataka by its order dated 16.5.1995 cleared the three projects of the BPL India Ltd. which involved a total investment of .....

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210 acres. Plot No.1 and 2 measuring 30 acres and 210 acres are reserved in favour of BPL India Ltd. In the remaining 74 acres small plots are formed to accommodate non-polluting Industries. An extent of 28.80 acres will be occupied by roads, civic amenities etc. g) That this respondent while developing an industrial area undertakes development work like formation of WBM Roads, with block topping, drains with dick also culverts, stream water drains, drains supply through borewell, street lightin .....

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The Composition of the Committee was as follows: 1. Additional Chief Secretary to Government of Karnataka Chairman 2. Secretary to Government Commerce & Industries Department Member 3. Commissioner and Secretary to Government, Housing & Urban Development Department Member 4. Secretary to Government, Science & Technology & Ecology & Environment Member 5. Director of Industries & Commerce Member 6. Chairman & Managing Director, Karnataka State Industrial Investment &am .....

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15. General Manager (P & D), Karnataka State Industrial Investment & Development Corporation Limited Member Secretary 16. Joint Director, (Industrial Development) Industries & Commerce Department Member Secretary 6. The application filed by the Company went through various processes and several meetings of the different committees were held. The High Level Committee also considered the matter in a number of meetings, pursuant whereto and in furtherance whereof the aforementioned dec .....

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. 8. Ultimately, a lease-cum-sale agreement was executed on 17.4.1996 which came into force with effect from 29.5.1995. The lease was for a period of 11 years and the yearly rent payable therefor was ₹ 55,479/- and maintenance charges at ₹ 74,568/-. It was stipulated that on expiry of the said period of 11 years the property would be sold to the lessee at the price fixed by the lessor. 9. Clause 11(b) of the said Agreement to Lease reads as follows: "As soon as it may be conveni .....

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this behalf by the LESSOR. On the other hand, if any sum is determined as payable by the LESSOR to the LESSEE after the adjustment as aforesaid, such sum shall be refunded to the LESSEE before the date of execution of the sale deed." 10. The appellants also contended before the High Court that the writ petitioners-respondents had been set up by the persons whose lands had been acquired. They were members of political parties also. DIRECTIONS BY THE HIGH COURT 11. The High Court called for .....

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titioner is directed to form industrial plots and allot the same to prosecutive industrialist after notifying and inviting applications. d) In respect of land that is left with the BPL India Ltd., this Petitioner shall work out the cost of such land at the rate of ₹ 8 lakhs per acre and after adjusting the amount already paid by BPL India, shall refund the balance amount to BPL India together with interest at the rate of 6% per annum from the date of receipt of the amount. e) In order to a .....

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THE FIELD: 12. It is not in dispute that the matter relating to allotment of industrial land is governed by Karnataka Industrial Areas Development Act, 1966 (hereinafter referred to as 'the Act'). The appellant-Board has been constituted thereunder. In terms of the said Act, the State Government is empowered to acquire land and to handover the same to the Board for development and allotment to eligible industries. The relevant provisions of the said Act are as under: "17. Direction .....

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n particular and without prejudice to the generality of the foregoing power, such regulations may provide for:- a) ... b) the terms and conditions under which the Board any dispose of land." 13. Pursuant to and in furtherance of the power conferred upon the State, regulations were framed known as 'Regulations governing the disposal of land by the Karnataka Industrial Area Development Board'. Regulations 7 and 13 of the said Regulations which are relevant for the purpose of this case .....

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e Regulations the Board in consultation with the State Government may allot any plot or area other than those in respect of which applications are called for under Regulations 7 to any individual or company for the establishment of an industry or for the provision for any amenity required in the Industrial Area." SUBMISSIONS: 14. Mr. Mukul Rohtagi, the learned Addl. Solicitor General and Mr. D.A. Dave, the learned senior counsel, appearing for the appellants would submit that the High Court .....

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conclusion that the State had shown undue haste in the matter of grant of allotment and that too at a price of ₹ 3,72,324/- per acre although it received the consideration of ₹ 8,00,000/- per acre from another entrepreneur. 15. The learned counsel would further urge that the High Court has failed to consider that the writ petitioners had no locus standi to file the writ application as they had been set up by those whose lands had been acquired. It was pointed out that whereas the lan .....

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at the purported allotment was made in favour of the company by the Board without making any enquiry as regard the area of the land it actually needed not there had been any application of mind in relation thereto. The property having been acquired under a statute is a public property, contends Mr. Iyer, and being trustees thereof, the Board was required to take extreme care and caution in relation thereto. It was contended that the High Court had rightly found that for all intent and purport su .....

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of achieving the objective of economic development of the State, the State is entitled to deal with the applications of the entrepreneurs in an appropriate manner. For the said purpose a High Level Committee was constituted. The said Committee held its meeting on 10.10.1994 wherein not only the members referred to hereinbefore but also various other officers were present. Presumably, prior thereto the applications filed by the Company were scrutinized by the competent authorities. After detaile .....

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icture Tube project, Colour TV project and the battery project duly justifying the requirement with necessary plans, block diagrams, etc. As regard incentives, it was resolved: "(3) INCENTIVES: The HLC resolved to offer the following incentives: 100% exemption of sales tax (KST. CST & Turnover Tax) on sale of finished goods for a period of 8 years or deferment for a period of 10 years from the date of commencement of commercial production subject to a limit of 100% of the value of the f .....

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nt of land is a statutory function on the part of the Board. In terms of the provisions of the Act, consultations with the State Government is required if Regulation 13 of the Regulations in place of Regulation 7 is to be taken recourse to. Does it mean that consultations must be held in a particular manner, i.e. by exchange of correspondences and in no other? Answer to the said questions must be rendered in negative. The High Level Committee was chaired by the Minister who in terms of the Rules .....

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the competent authorities to evolve their own procedure. Such a procedure of taking a decision upon deliberations does not fall foul of Article 14 of the Constitution of India. No malice of fact has been alleged in the instant case. The High Court has proceeded to pronounce its judgment inter alia on the ground that the price of the land should have been fixed at ₹ 8,00,000/- per acre. In the support of the said decision, the High Court has relied upon a grant at the aforementioned rate. H .....

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tion, cost of partial development, service and establishment charges." 19. This aspect of the matter did not receive due attention of the High Court despite its merit. 20. It is a well-settled principle of law that different considerations arises for the purpose of fixation of price in respect of price of land i.e. for a small area vis-a-vis a large area. The allotment price was ₹ 3,73,324/- per acre which, having regard to the policy decision of the State as also the facts and circum .....

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a provision of statute, unless and until violation of mandatory provisions thereof are found out and/ or it is held that a decision is taken for unauthorised or illegal purpose, the court will not ordinarily interfere either with the policy decision or any decision taken by the executive authorities pursuant to or in furtherance thereof. 21. Malice in common law or acceptance means ill will against a person, but in legal sense means a wrongful act done intentionally without just cause or excuse .....

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fore judicial review is invoked. In the present case the material placed before the court falls far short of what the law requires to justify interference." 23. In Tata Cellular vs. Union of India 1994 (6) SCC 651 ), the Court laid down the following principles in the matter of judicial review: "94. The principles deducible from the above are: 1) The modern trend points to judicial restraint in administrative action. 2) The court does not sit as a court of appeal but merely reviews the .....

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ached by process of negotiations through several tiers. More often than not, such decisions are made qualitatively by experts. 5) The Government must have freedom of contract. In other words, a fair play in the joints is a necessary concomitant for an administrative body functioning in an administrative sphere or quasi-administrative sphere. However, the decision must not only be tested by the application of Wednesbury principle of reasonableness (including its other facts pointed out above) but .....

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ly of sal seeds under the terms of agreement requires to be continued for a further period, is a matter for decision by the State Government and unless such decision is patently arbitrary, interference by the Court is not called for. In the facts of the case, the decision of the State Government to extend the protection for further period cannot be held to be per se irrational, arbitrary or capricious warranting judicial review of such policy decision. Therefore, the High Court has rightly rejec .....

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Singhvi that the respondents legitimately expect that the renewal clause should be given effect to in usual manner and according to past practice unless there is any special reason not to adhere to such practice. The doctrine in 'legitimate expectation" has been judicially recognised by this Court in a number of decisions. The doctrine of 'legitimate expectation' operates in the domain of public law and in an appropriate case, constitutes a substantive and enforceable right&quo .....

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rate of royalty has also been fixed on some accepted principle of pricing formula as will be indicated hereafter. Hence, distribution or allotment of sal seeds at the determined royalty to the respondents and other units covered by the agreements cannot be assailed. It is to be appreciated that in this case, distribution by public auction or by open tender may not achieve the purpose of the policy of protective measure by way of supply of sal seeds at concessional rate of royalty to the industri .....

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upon the person approaching the court. We have found in this case, that the appellants have miserably failed to place on record or to point out to any alleged constitutional vice or illegality. Neither the High Court nor this Court would have ventured to make a rowing inquiry particularly in a writ petition filed at the instance of the erstwhile owners of the land, whose main object appeared to get the land back by any means as, admittedly, with the passage of time and development of the area, t .....

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ntended to be transferred or the State largesse decided to be conferred, resort should be had to be public auction or transfer by way of inviting tenders from the people. That would be a sure method of guaranteeing compliance with the mandate of Article 14 of the Constitution. Non-floating of tenders or not holding of public auction would not in all cases be deemed to be the result of the exercise of the executive power in an arbitrary manner. Making an exception to the general rule could be jus .....

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whether the action of Respondent 1 was illegal, arbitrary or mala fide. To justify their action of entering into an agreement of lease by negotiation, even in the absence of pleadings on behalf of the appellants, the State has submitted that the entire transaction of granting the lease to Respondent 5 for an integrated food processing unit with an abattoir in a semi-rural area, which was a low- lying land, despite their best efforts, the State Government were unable to set up any project. The le .....

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paper advertisement. In view of the peculiar facts and circumstances of the case we are not persuaded to hold that the action of the respondent State in executing the lease deed with Respondent 5 was unreasonable, illegal, arbitrary or actuated by extraneous considerations. In this regard it is worth noticing that none except the erstwhile owners and the propounders of vegetarianism have made any grievance to the effect that the market value of the property, as charged from Respondent 5, was eit .....

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if there is any element of public interest involved in the litigation. A mere difference in the prices offered by the two tenderers may or may not be decisive in deciding whether any public interest is involved in intervening in such a commercial transaction. It is important to bear in mind that by court intervention, the proposed project may be considerably delayed thus escalating the cost for more than any saying which the court would ultimately effect in public money by deciding the dispute i .....

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e litigation is litigating bona fide for public good. The public interest litigation should not be merely a cloak for attaining private ends or a third party or of the party bringing the petition. The court can examine the previous record of public service rendered by the organisation bringing public interest litigation. Even when a public interest litigation is entertained, the court must be careful to weigh conflicting public interests before intervening. Intervention by the court may ultimate .....

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se substantially because of shortage in electricity supply and the consequent obstruction in industrial development. If the project is for the construction of a road or an irrigation canal, the delay in transportation facility becoming available or the delay in water supply for agriculture being available, can be a substantial setback to the country's economic development. Where the decision has been taken bona fide and a choice has been exercised on legitimate considerations and not arbitra .....

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purposes and the court is satisfied on the material before it that the allegation needs further examination, the court would be entitled to entertain the petition. But even here, the court must weigh the consequences in balance before granting interim orders. 28. In Narmada Bachao Andolan vs. Union of India and others 2000 (10) SCC 664 ) this Court opined: "47. The project, in principle, was cleared more than 25 years ago when the foundation stone was laid by late Pandit Jawahar Lal Nehru. .....

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ronmental concern which is quite evident. Even though complete data which regard to the environment was not available, the Government did not 1987 finally give environmental clearance. It is thereafter that the construction of the dam was undertaken and hundreds of crores have been unvested before the petitioner chose to file a writ petition in 1994 challenging the decision to construct the dam and the clearance as was given. In our opinion, the petitioner which had been agitating against the da .....

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icate public interest where fundamental and other rights of the people who were poor, ignorant or in socially or economically disadvantageous position and were unable to seek legal redress were required to be espoused. PIL was not meant to be adversial in nature and was to be a cooperative and collaborative effort of the parties and the court so as to secure justice for the poor and the weaker sections of the community who were not in a position to protect their own interests. Public interest li .....

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cised in the following words: "PIL may, therefore, be described as satisfying one or more of the following parameters. These are not exclusive but merely descriptive. - Where the concerns underlying a petition are not individualist but are shared widely by a large number of people (bonded labour, undertrial prisoners, prison inmates). - Where the affected persons belong to the disadvantaged sections of society (women, children , bonded labour, unorganised labour etc.). - Where judicial law .....

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eling which is not without any foundation that public interest litigation is now tending to become publicity interest litigation or private interest litigation and has tendency to be counterproductive. PIL is not a pill or a panacea for all wrongs. It was essentially meant to protect basic human rights of the weak and the disadvantage and was a procedure which was innovated where a public-spirited persons filed a petition in effect on behalf of such persons who on account of poverty, helplessnes .....

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interest litigation has been pointed out by this Court in Guruvayur Deaswom Managing Committee and Anr. vs. C.K. Rajan & others (2003) (6) SCALE 401). After referring to a large number of decisions, this Court held: "It is trite, where a segment of public is not interested in the cause, public interest litigation would not ordinarily be entertained. Existence of certain gray areas may not be ruled out but such a case was required to be made out before the High Court which has not been d .....

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ot have proceeded simply to supplant, ignore or by- pass the statute. The High Court has not shown any strong and cogent reasons for an Administrator to continue in an office even after expiry of his tenure. It appears from the orders dated 7th February, 1993 that the High Court without cogent and sufficient reason allowed Administrator to continue in office although his term was over and he was posted elsewhere. He also could not have been conferred powers wider than Section 17 of the Act. The .....

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ard the rites and rituals to be performed in the temple or omission thereof. Any decision in favour of one sector of the people may heart the sentiments of the other. The Courts normally, thus, at the first instance would not enter into such disputed arena, particularly when by reason thereof the fundamental right of a group of devotees under Articles 25 and 26 may be infringed. Like any other wing of the State, the Courts also while passing an order should ensure that the fundamental rights of .....

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at angle. Administration of temple by entertaining complaints does not lead to a happy state of affairs. Roving enquiry is not contemplated. Principles of natural justice and fair play ought to be followed even in the pro bono public proceedings. The Courts undoubtedly would be parens patriate in relation to idols, but when the statute governs the field and the State takes over the management, ordinarily the Courts would not step in. 31. It was further held: "Mr. Subba Rao referred to N.M. .....

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in any circumstance whatsoever but the Court while exercising its power must also remind itself about the rule of self-restraint. The courts, as indicated hereinbefore, ordinarily is reluctant to assume the functions of the statutory functionaries. It allows them to perform their duties at the first instance. The court steps in by Mandamus when the State fails to perform its duty. It shall also step in when the discretion is exercised but the same has not been done legally and validly. It steps .....

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umbai and others (1998) 8 SCC 1). Exercise of self-restraint, thus, should be adhered to, subject of course to, just exceptions." 32. Dawn Oliver in Constitutional Reform in the UK under the heading 'the Courts and Theories of Democracy, Citizenship, and Good Governance' at page 105 states: "However, this concept of democracy as rights-based with limited governmental power, and in particular of the role of the Courts in a democracy, carries high risk for the judges- and for the .....

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d their institutional capacity (Jowell, 2000). Acceptance of this approach is reflected in the judgments of Laws LJ in International Transport Roth GmbH vs. Secretary of State for the Home Department (2002) EWCA Civ 158, (2002) 3 WLR 344), and of Lord Nimmo Smith in Adams vs. Lord Advocate (Court of Session. Times, 8 August 2002) in which a distinction was drawn between areas where the subject matter lies within the expertise of the courts (for instance, criminal justice, including sentencing an .....

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authority of the courts and the rule of law." CONCLUSIONS: 33. Salient principles of law as noticed hereinbefore, were not considered by the High Court in passing the impugned judgment. 34. In the facts and circumstances, we do not find that the Board and the State had committed any illegality which could have been a subject matter of judicial review. The High Court in our opinion committed a manifest error insofar as it failed to take into consideration that the delay in this case had defe .....

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