TMI Blog2014 (9) TMI 1164X X X X Extracts X X X X X X X X Extracts X X X X ..... d or received from interested persons. Obviously, when the tender was not advertised or any notice inviting applications were made then there was no occasion for any person to apply for allotment of these plots - no transparency has been maintained by the appellant-CIDCO in making these allotments of Government land. It is well settled that whenever the Government dealt with the public establishment in entering into a contract or issuance of licence, the Government could not act arbitrarily on its sweet will but must act in accordance with law and the action of the Government should not give the smack of arbitrariness. The High Court instead of looking into the matter, completely ignored the same on the ground that in the show cause notice none of the grounds were made basis of the order of cancellation of allotment. The High Court while exercising power of judicial review is supposed to have gone into the question as to how the three plots were allotted in favour of one group of persons. The High Court has lost sight of the admitted fact that by entertaining private applications of the same person three different valuable plots have been allotted in different names. The Hig ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion No.9467 of 2005, by way of an application made a request for allotment of plot in Airoli for setting up multiplex-cum-auditorium-cum-entertainment centre. On CIDCO s instructions, respondent submitted detailed project report. CIDCO, by their letter of intent, requested the respondent herein to pay an Earnest Money Deposit of ₹ 20,77,000/- within 15 days from the receipt of the letter to enable the Board to consider the allotment in favour of the respondent. The respondent, accordingly made EMD on 29.6.2004. On 29.7.2004, CIDCO approved the allotment of a plot in favour of the appellant as the Board had not got any response for similar plots in public tender. The total lease premium in respect of the plot was ₹ 2,07,70,000/- and the respondent was directed to pay the balance amount of ₹ 1,86,93,000/- by 14.9.2004. The allotment was allegedly made in terms of the New Bombay Land Disposal Regulations, 1975 and also in terms of the Land Pricing and Disposal Policy of CIDCO under which the land could be allotted to any person by considering individual application at the reserved price fixed by CIDCO. Thereafter, by making balance payment including additional amount ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 4 paid a further payment of ₹ 20 lakh along with ₹ 2,96,078/- plus ₹ 4957/- being the additional cost and the other charges. On 14.1.2005, the respondent paid a further sum of ₹ 19,828/- being the sum demanded. The respondent on 17.1.2005 entered into an agreement to lease with the appellant for the allotment of plot. On 28.2.2005, CIDCO being the development authority of the area issued commencement certificate to the respondent permitting the respondent to start construction. However, on 14.7.2005, the respondent received a show cause notice seeking cancellation of the allotment in favour of the respondent on the ground that the allotment was void in view of Section 23 of the Contract Act as being opposed to public policy. The main ground in the show cause notice was that the allotment was without issuance of tender and was opposed to public policy. The respondent submitted reply to the show cause notice. On 16.12.2005, CIDCO issued an order cancelling the agreement to lease and sought to resume the possession of the plot, against which the respondent approached the High Court by way of writ petition. 7. The respondent- M/s. Platinum Square Trust in the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 7; 1,52,09,400/- within the extended time permitted under the allotment. The respondent on 3rd May, 2005, wrote letter to the CIDCO for extension of time for making payment of second installment up to December, 2005. Clearly in terms of the allotment letter, the respondent could ask extension of second installment up to 29th December, 2005. The respondent Trust was registered under the Bombay Public Trust Act, 1950 on 19th April, 2005. The respondent submitted documents to CIDCO on 25th May, 2005 evidencing registration of the Trust. However, on 20th July, 2005 the respondent received show cause notice seeking cancellation of the allotment made in favour of the respondent on the basis of Shankaran Report. 9. The respondent, on 3rd August, 2005, submitted its detailed reply to the show cause notice challenging the cancellation of allotment of plot, reiterating that the allotment was in accordance with law as such it could not be cancelled. The respondent, on 29th December, 2005, wrote letter to the Marketing Manager of CIDCO requesting him to accept payment of second installment being the last date up to which the extension could be granted under the allotment. However, CIDCO ref ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t whether the Board of Directors of CIDCO disposed of lands in accordance with law. Enquiry was conducted by the Additional Chief Secretary and submitted the report (called Shankaran Report). The enquiry inter alia revealed that subject allotment was illegal, arbitrary and the appellant had suffered a financial loss in crores. Therefore, the appellant issued notice to the contesting respondents and ultimately cancelled the subject allotments, which led to filing of the writ petition. The writ petitions were dismissed by the High Court on the ground that alternative remedy was available to the writ petitioners by filing suits and therefore writ jurisdiction cannot be invoked. 13. Aggrieved by the decision of the High Court, respondents approached this Court by way of appeals by special leave. Those Civil Appeals being Civil Appeal Nos. 940-941 of 2007 were disposed of by this Court remitting the matters back to the High Court for deciding the writ petitions on merits. The said order is reported in Popcorn Entertainment Anr. vs. City Industrial Development Corpn. Anr., (2007) 9 SCC 593. In the order of remand this Court made some observations with regard to the merits of the c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... CC 1, have been made [pic]out and accordingly the writ petition was clearly maintainable and the High Court has committed an error in relegating the appellant to the civil court. 14. However, this Court took the view that the matter needs to be remanded back to the High Court, so that the High Court will consider all the submissions made by the parties and dispose of the same afresh. 15. The High Court on receipt of the remand order proceeded with the hearing of the writ petitions and after hearing both the parties allowed the writ petitions by passing the impugned order and quashed the orders passed by the appellant-CIDCO cancelling the allotment. The High court while passing the impugned order has gone through the merits of the case of both the parties but held that the observations made by this Court in the remand order (41, 43, 47, 48 and 49) relating to non-observations of rule and regulations causing substantial loss to the CIDCO operate as obiter and is binding on the High Court and, therefore, the High Court has to fall in line with the view expressed by this Court. Para 97 of the impugned order is quoted hereinbelow. 97. As already stated hereinabove, so far as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e of allotment. It is further contended on behalf of the appellant that as per Shankaran Report it was necessary to allot the plots by inviting tenders and testing the market. Had it been done so, these plots would have fetched at least five times greater value than the actual value received. Further Mr. Nilesh Gala, who is the proprietor of M/s. Platinum Entertainment, has used the same modus operandi for obtaining allotment of plots for country club at Kharghar and another multiplex plot in Kharghar and the CIDCO was found to have suffered a loss of ₹ 10 crores in this case. Show cause notice was issued mentioning three grounds, viz. favoritism, non-issuance of tender and loss caused to the Corporation. It is further urged that the order of cancellation of the allotment specifically states that the Board of Directors of the Corporation found itself in substantial concurrence with the findings recorded by Dr. Shankaran. 18. Learned senior counsel sought to justify the action of CIDCO on the basis of Sections 154 and 118 of MRTP Act contending that the purpose of constituting CIDCO is to develop a town by making allotment, and in case the allotments are allowed to be made ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as sports complexes saying that such allotment made without issuance of tender were justified as being within the power vested in CIDCO under Rule 4 of the aforesaid Rules. 20. In support of his contention, Mr. Vikas Singh cited the portion of a paragraph of the decision of this Court in Kasturi Lal Laxmi Reddy vs. State of Jammu Kashmir, 1980 (4) SCC 1, which is reproduced here: 22. .We do not think the State is bound to advertise and tell the people that it wants a particular industry to be set up within the State and invite those interested to come up with proposals for the purpose. The State may choose to do so, if it thinks fit and in a given situation, it may even turn out to be advantageous for the State to do so, but if any private party comes before the State and offers to set up an industry, the State would not be committing breach of any constitutional or legal obligation if it negotiates with such party and agrees to provide resources and other facilities for the purpose of setting up the industry. The State is not obliged to tell such party: Please wait I will first advertise, see whether any other offers are forthcoming and then after considering all offer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the reserve price and the method of disposal is only upon request at fixed rate from the registered trust/registered under the Public Trust Act. Learned senior counsel contended that allotments in favour of the respondents were clearly in conformity with the rules and also in conformity with the Land Pricing and Land Disposal Policy framed by CIDCO for allotment of various types of land in the Navi Mumbai area. 23. It has been submitted that in a similar case where allotment had also been cancelled on the only ground that the same had been made without inviting tenders, the Apex Court in Sunil Pannalal Banthia vs. City Industrial Development Corpn. of Maharashtra Ltd., (2007) 10 SCC 674, has held that once an allotment had been made in favour of a party, CIDCO has no right thereafter to cancel the allotment on the ground that no tenders had been invited. CIDCO had power to make allotment without calling for tender under Rule 4 and it could not be said that the allotment in favour of Sunil Pannalal Banthia was in any manner contrary to the rules for making such allotment. 24. It has also been contended on behalf of the contesting respondents that according to the informa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ble to be declared void . 26. Section 23 of the Indian Contract Act, 1872 reads as under:- What consideration and objects are lawful, and what not.-The consideration or object of an agreement is lawful, unless It is forbidden by law; or is such of such a nature that, if permitted, it would defeat the provisions of any law; or is fraudulent; or involves or implies, injury to the person or property of another; or the Court regards it as immoral, or opposed to public policy. In each of these cases, the consideration or object of an agreement is said to be unlawful. Every agreement of which the object or consideration is unlawful is void. 27. Before dealing with the legality and validity of the notice aforesaid, we shall first wish to mention some of the relevant facts:- A. Indisputably applications were made by the respondents to the then Chief Minister for allotment of plots of land in question. B. On the application submitted on behalf of M/s. Platinum Entertainment, through its proprietor Nilesh Gala, for the allotment of plot for constructing multiplex at Kharghar railway Station, the appellant was allotted the plot at Kharghar Railway Station; C. The said ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oms/Show Windows all|Developing Nodes. | | |types of Banks etc. |At 300% of RP in New | | |(FSI-1.5) |Nodes | | |Plots for Auditorium/ |At Reserve Price |On request at | |Multiplex theatre | |fixed rate By | |complex to be | |competitive | |developed in Private | |bidding | |Sector | | | 32. From the compilation, it reveals that Respondent M/s. Popocorn Entertainment Corporation sought information under the Right to Information Act, by mentioning some queries. One of the questions asked by the respondent was as to what is the method of disposal of plot for multiplex as per Land Pricing and Disposal Policy during the said period. It was answered that methodology as per the current land pricing policy approved by the Board is on request at fixed rate/by competitive bidding. In another query made by the proprietor of M/s. Platinum Entertainment was as to whether any other application has been made for allotment of the said plot for the same purpose and the answer was that no other application prior to this allotment for the same purpose was pending. 33. It further appears that an audit objection was raised by the office of the Accountant General, Mumbai to the effect that there ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that whenever the Government dealt with the public establishment in entering into a contract or issuance of licence, the Government could not act arbitrarily on its sweet will but must act in accordance with law and the action of the Government should not give the smack of arbitrariness. In the case of Raman Dayaram Shetty vs. International Airport Authority of India Ors., (1979) 3 SCC 489, this Court observed as under:- 11. Today the Government in a welfare State, is the regulator and dispenser of special services and provider of a large number of benefits, including jobs, contracts, licences, quotas, mineral rights, etc. The Government pours forth wealth, money, benefits, services, contracts, quotas and licences. The valuables dispensed by Government take many forms, but they all share one characteristic. They are steadily taking the place of traditional forms of wealth. These valuables which derive from relationships to Government are of many kinds. They comprise social security benefits, cash grants for political sufferers and the whole scheme of State and local welfare. Then again, thousands of people are employed in the State and the Central Governments and local autho ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 11) 5 SCC 29, this Court while considering the question of legality of allotment of land by the State or its agencies on the basis of applications made by individual, observed as follows:- 65. What needs to be emphasised is that the State and/or its agencies/instrumentalities cannot give largesse to any person according to the sweet will and whims of the political entities and/or officers of the State. Every action/decision of the State and/or its agencies/instrumentalities to give largesse or confer benefit must be founded on a sound, transparent, discernible and well-defined policy, which shall be made known to the public by publication in the Official Gazette and other recognised modes of publicity and such policy must be implemented/executed by adopting a non-discriminatory and non-arbitrary method irrespective of the class or category of persons proposed to be benefited by the policy. The distribution of largesse like allotment of land, grant of quota, permit licence, etc. by the State and its agencies/instrumentalities should always be done in a fair and equitable manner and the element of favouritism or nepotism shall not influence the exercise of discretion, if any, con ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by the Government in formulating its policies and it is on a total evaluation of various considerations which have weighed with the Government in taking a particular action, that the court would have to decide whether the action of the Government is reasonable and in public interest. But one basic principle which must guide the court in arriving at its determination on this question is that there is always a presumption that the governmental action is reasonable and in public interest and it is for the party challenging its validity to show that it is wanting in reasonableness or is not informed with public interest. This burden is a heavy one and it has to be discharged to the satisfaction of the court by proper and adequate material. The court cannot lightly assume that the action taken by the Government is unreasonable or without public interest because, as we said above, there are a large number of policy considerations which must necessarily weigh with the Government in taking action and therefore the court would not strike down governmental action as invalid on this ground, unless it is clearly satisfied that the action is unreasonable or not in public interest. But where it ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... also validated by the court as an emanation flowing directly from the doctrine of equality embodied in Article 14. The court referred to the activist magnitude of Article 14 as evolved in E.P. Royappa v. State of Tamil Nadu and Maneka Gandhi case, (1978) 1 SCC 248 and observed that it must follow as a necessary corollary from the principle of equality enshrined in Article 14 that though the State is entitled to refuse to enter into relationship with anyone, yet if it does so, it cannot arbitrarily choose any person it likes for entering into such relationship and discriminate between persons similarly circumstanced, but it must act in conformity with some standard or principle which meets that test of reasonableness and non- discrimination and any departure from such standard or principle would be invalid unless it can be supported or justified on some rational and non- discriminatory ground. This decision has reaffirmed the principle of reasonableness and non- arbitrariness in governmental action which lies at the core of our entire constitutional scheme and structure. 40. In the case of State of Haryana vs. Jage Ram, (1983) 4 SCC 556, the auction of liquor vends by excise ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bias, jobbery or nepotism. 42. In the case of Padma vs. Hiralal Motilal Desarda, (2002) 7 SCC 564, the process adopted by the City Industrial Development Corporation for disposal of land by bulk sell came for consideration before this Court, when it held as under:- 34. There is yet another angle of looking at the propriety of the questioned bulk sale of land by CIDCO and the manner in which it was done. The land acquired and entrusted to CIDCO cannot just be permitted to be parted with guided by the sole consideration of money-making. CIDCO is not a commercial concern whose performance is to be assessed by the amount it earns. Its performance would be better assessed by finding out the number of needy persons who have been able to secure shelter through CIDCO and by the beauty of the township and the quality of life for the people achieved by CIDCO through its planned development schemes. So long as such objectives are fulfilled CIDCO s operation on no-profit-no loss basis cannot be found fault with. There should have been no hurry on the part of CIDCO in disposing of the balance land and that too guided by the sole consideration of earning more money. Even that object C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lotment of plots meant for country club and another plot for multiplex in Kharghar. 2. An application was made by the petitioners to the Hon ble Chief Minister and the same was considered favourably by the Board of CIDCO. 3. The undue haste is shown in allotment of Plots resulting in illegal and arbitrary allotment with malafide intention to cause wrongful gain to the individual person. It is a case of favouritism supported by the Report of Dr. D.K. Shankaran. 4. The agenda note and the resolutions demonstrate no discussion about the individual merits of the allotters except need for multiplexes sought to be justified during the case of discussion without indicating any reason for choosing group of petitions for allotment of plots. 5. Absence of official members in the Board Meeting wherein the decisions of allotment of plots to the petitioners were taken. 6. The allotment of plots of land are factually for commercial purposes in the garb of construction of multiplexes and country club with a view to inure profit to the allottees. 7. The multiplex policy whereby certain tax benefits were granted with effect from year 2002 were ignored while making the allotment of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s and the manner of disposal of lands enumerated in the said policy by and large suggests that most of the allotments have to be made by inviting tenders or bids. 47. The document on record clearly demonstrates that there was no discussion about individual merits of the allottees and was only general consideration, which resulted in making arbitrary allotment without going through the tender process. The report of the Comptroller and Auditor General would show that the reasons given by CIDCO are not acceptable and there is loss caused to the Corporation by virtue of the said allotment made to the respondents. 48. The High Court ought to have seen the action of the then Board of Directors of CIDCO demonstrating that in the first meeting of the Board itself they cleared the special proposals without considering the individual merits. In the meeting, hardly any official members were present when the allotments were made to the respondents. 49. State and its agencies and instrumentalities cannot give largesse to any person at sweet will and whims of the political entities or officers of the State. However, decisions and action of the State must be founded on a sound, transpare ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tionally and after applying the methods which are more rational and reflect non-arbitrariness and would not be smacked under the clout of favouritism and/or nepotism or being influenced by political personalities. In our opinion, although CIDCO had the power to allot the land in any one of the manners stated in Rule 4 above, but the conduct of such allotment should have been more clear and transparent and without presence of any element of favouritism and/or nepotism and without being influenced by any such thing in exercising the discretion conferred upon CIDCO. 53. In the case of Humanity and Anr. vs. State of West Bengal and Ors., (2011) 6 SCC 125, this Court observed that in the matter of granting largesse, the Government has to act fairly and without even any semblance of discrimination. It was held as under: It is axiomatic that in order to achieve a bona fide end, the means must also justify the end. This Court is of the opinion that bona fide ends cannot be achieved by questionable means, specially when the State is involved. This Court has not been able to get any answer from the State why on a request by the allottee to the Hon ble Minister for Urban Development, t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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