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

2003 AIR 4536, 2003 (4) Suppl. SCR 587, 2003 (8) SCC 567, 2003 (2) Suppl. JT 515, 2003 (8) SCALE 536 - 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 .....

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ment of the State adopted a policy decision of dealing with the applications received from the entrepreneurs 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 .....

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t inter alia on the ground that the statutory purposes for which the Board can acquire the land had been 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 .....

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notice under Order 1 Rule 8 of C.P.C. having published, the writ petition was not maintainable. c) That 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 In .....

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e Karnataka Industrial area Development Board on the basis of justification of total land requirement of 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 .....

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ned in consultation with the Director, Town Planning to form 28 plots of varying extent from 1 acre to 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 toppi .....

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adopted by the Single Window Agency. The anticipated investment of the Company was ₹ 600 crores. 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 Industri .....

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ctor, KEONICS Member 14. Executive Member, Karnataka Industrial Area Development Board Member Secretary 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 .....

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ertain interested parties as a result whereof the Company could not start its constructional activities. 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 less .....

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month from the date of receipt of communication signed by the LESSOR or any other officer authorised in 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. T .....

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is directed to recover possession of remaining land forthwith. c) After recovering possession, this petitioner 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 toge .....

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77; 10,000/- was awarded to writ petitioners to be paid by this Petitioner". STATUTES OPERATING IN 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 allo .....

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tions consistent with this Act and the rules made hereunder to carry out the purposes of this Act. 2) In 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 B .....

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o start industries. 13. Allotment of plots in Special cases: Notwithstanding anything contained in these 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 M .....

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peal thereover. It was urged that the High Court further committed a manifest error by arriving at the 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 .....

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, the learned senior counsel appearing on behalf of the respondents, on the other hand, would submit that 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 rela .....

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F THE PUBLIC INTEREST LITIGATION 17. The Company intended to set up more than one unit. For the purpose 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 the .....

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olour TV sets project, subject to the promoters indicating the individual land requirement for Colour Picture 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 .....

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vision Picture Tube Project of the Company and Manufacture of Batteries. The matter relating to allotment 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 .....

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nder, no procedure for holding such consultations had been laid down. In that situation it was open to 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 .....

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ls. The cost of the land is arrived at by this petitioner taking into consideration the cost of acquisition, 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, .....

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ulation 13. Once the Court finds that the power exercised by the statutory authorities can be traced to 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 ag .....

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er even as between the parties, there must be shown a public law element to the contractual decision before 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 re .....

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the realm of contract. Normally speaking, the decision to accept the tender or award the contract is reached 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 .....

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our of the respondents does not also appear to be unjust or improper. Whether protection by way of supply 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 cap .....

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tter of renewal of agreement should not be exercised by the State. It has been rightly contended by Dr. 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 t .....

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trial units for assured supply of sal seeds at concessional rate has been taken by the Government. The 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 pol .....

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itial burden of showing the prima facie existence of violation of the mandate of the Constitution lies 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 .....

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77; 11 crores. There cannot be any dispute with the proposition that generally when any State land is intended 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 exerc .....

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s. In the backdrop of the legal position noticed herein, it has to be seen, in the instant case, as to 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- .....

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n running in losses. The respondent State had failed to get any buyer for Durgapur Project despite newspaper 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 a .....

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on. If, for example the dispute is purely between two tenderers, the court must be vary careful to see 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 .....

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public body to a particular tenderer, the court must satisfy itself that the party which has brought the 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 c .....

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ice becoming available to the public. If it is a power project which is thus delayed, the public may lose 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 decisio .....

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is an allegation of mala fides or an allegation that the contract has been entered into for collateral 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, .....

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antime some environmental studies were conducted. The final clearance was not given because or the environmental 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 .....

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novated this type of litigation as there was a dire need for it. At that stage, it was intended to vindicate 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 .....

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n other spheres. Prof. S.B. Sathe has summarised the extent of the jurisdiction which has now been exercised 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 disadvantage .....

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ize people's right to natural resources such as air or water." There is, in recent years, a feeling 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-spiri .....

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and re-emphasize the same." 30. The extent of the court's jurisdiction to entertain a public 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 .....

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t undertake an unnecessary journey through the public interest litigation path. The High Court should not 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 wa .....

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devotees as to what practices should be followed by the temple authorities. There may be dispute as regard 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 .....

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core issues which have been highlighted by the learned counsels by the party must be considered from that 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, .....

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octrine of separation of powers which, however, although does not mean that the Court shall not step-in 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 als .....

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ying with the principles of natural justice. (See Whirlpool Corporation vs. Registrar of Trade Marks, Mumbai 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, an .....

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ts in policy and public administration - hence Jowell's point that the courts should not step beyond 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 .....

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stion the legitimacy of the judges exercising judicial review against Ministers and thus undermine the 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 committe .....

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