TMI Blog2019 (2) TMI 1451X X X X Extracts X X X X X X X X Extracts X X X X ..... thority. It is not a case where the land is being allotted to the respondent and the decision has been taken for social good, public good or common good like allotment of affordable houses to members of Scheduled Caste and Schedule Tribe or implementation of housing scheme for Below Poverty Line families. If allotment of land and execution of sale deed in favour of respondent is not for social good, public good or common good, it cannot be dissipated in favour of private entrepreneur virtually free of cost or for consideration not commensurate with its worth without attracting Article 14 and 39(b) of the Constitution of India. No allotment can be done in the manner and method it has been directed by the learned Single Judge in the present case. The land in question is situated in commercial area. Undisputedly, it is not a part of Press Complex and the plots in the Press Complex cannot be compared with the plots which are situated in commercial area and is valued at about ₹ 200 Crores. The State Government has framed Rules for allotment of land and the Indore Development Authority does not have any choice except to follow the Rules framed on the subject. In the presen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ourt with a prayer for quashment of order dated 14/03/2012 passed by Indore Development Authority by which the allotment of land to the petitioner in respect of plot No.A-7, Scheme No.54, PU-4, Commercial was cancelled. 03-The undisputed facts further reveal that without issuing any tender notice, a plot was allotted to the sole respondent Sansar Publication Private Limited on 30/04/1992 and possession was also given to Sansar Publication Private Limited on 01/05/1992. A lease deed was executed on 14/02/1997 for a period of 30 years. The plot, which was allotted to the respondent was a commercial plot and the Indore Development Authority also allotted various plots to various newspapers irrespective of their circulation again without adhering to tender process on concessional rates. 04-The allotment of plot to various newspapers in the Press Complex and the allotment of plot, which was done in favour of respondent No.1 i.e. Plot No.7, Scheme No.54, PU-4, Commercial was a subject matter of scrutiny before this Court in a Public Interest Litigation filed by one Vijay Kumar Tiwari i.e. Writ Petition No.3518/1992. In the writ petition, which was preferred by way of Public Interes ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... llector guidelines. No such letter was issued to the petitioner and the petitioner thereafter, preferred a writ petition i.e. Writ Petition No.5068/2008 and this Court by an order dated 12/09/2008 has directed the Indore Development Authority to decide the petitioner's representation and also directed that in case the petitioner is not found entitled for any relief, a speaking order should be passed in the matter. 09-The petitioner, thereafter, submitted a detailed representation on 19/09/2008 requesting for allotment of plot and finally preferred a writ petition i.e. Writ Petition No.6597/2009 seeking allotment of plot and an interim order was passed on 10/09/2009 directing the Indore Development Authority to grant similar relief to the petitioner, which has been extended to other newspapers. Thereafter, again on 16/09/2009, learned Single Judge again directed the Indore Development Authority to comply the earlier order passed in the matter and finally on 30/10/2009 a detailed and exhaustive order was passed by the learned Single Judge to grant the same relief, which has been extended to other newspapers and the learned Single Judge also observed that the matter shall be tr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... plot in question. The undisputed facts also reveal that plots, which were allotted to other newspapers are in a different scheme, which was meant for Press Complex, whereas the petitioner is claiming a plot bearing No.A-7 is under another scheme of Indore Development Authority i.e. Scheme No.54, PU-4 and the plot is purely a commercial plot. 14-The allotment of plots to various newspapers irrespective of their circulation on the basis of order issued by the State Government Department of Housing and Environment, dated 17/12/1991 was subjected to judicial scrutiny before this Court in a writ petition preferred by way of Public Interest Litigation by one Vijay Kumar Tiwari in Writ Petition No.3518/1992 (Vijay Kumar Tiawri Vs. State of M. P. and Others). The Division Bench of this Court on 09/12/2005 in the aforesaid writ petition in paragraphs No.7 to 19 has held as under:- 7. It may be mentioned that the petition was filed on 8-10-92 and interim order of stay was passed on 3-11-92. Thereafter, petition lingered on and respondents sought time for filing return. Ultimately on 14-3-05 this Court has observed as under :- Surprisingly, though the matter is pending since more ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to any public institution or body registered for the charitable purposes. Except the bodies mentioned in the Rule 20 no other body or press is entitled for the lease on concessional rate. Newspapers does not fall within the definition of charitable purpose. Charitable purpose has been considered in the case of Municipal Corporation of Delhi vs. Children Book Trust reported in AIR 1992 SC 1456 and it is held that an institution imparting education in school can not be regarded as a charitable object. An element of public benefit or philanthropy has to be present. Today, education has acquired a wider meaning. If education is imparted with a profit motive, to hold, in such a case, as charitable purpose, will not be correct. Thus charitable purpose should not be given to the body which is used for a profit motive. Thus newspapers do not fall within the definition as Institution for charitable purpose. 14. Therefore, transfer of land of the Authority on the orders of the State Govt. at concessional rate by any authority to the newspaper or any other institution which is not a charitable institution is void ab-initio and contrary to provisions of Section 57 and Rules made thereunder. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the contract pursuant to the letter by the fourth respondent to the Chief Minister is objectionable for more than one reason. The writer has indulged into allegations, the truth of which was not verified or asserted. The highest bidder whose bid was rejected on the ground that the bid did not represent the market price, was not given an opportunity to raise his own bid when privately a higher offer was received. If the allegations made in the letter influence the decision of the Chief Minister, fair-play in action demands that the appellant should have been given an opportunity to counter and correct the same. Application of the minimum principles of natural justice in such a situation must be read in the statute and held to be obligatory. When it is said that even in administrative action, the authority must act fairly, it ordinarily mean in accordance with the principles of natural justice variously described as fair play in action. That having not been done, the grant in favour of the fourth respondent must be quashed. 16. Therefore, as held in the case of Ram and Shyam (supra), it is not permissible to grant lease on concessional rate to Press and any decision, circular ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... entitled for transfer of lands in terms of the Rules and not on concessional rates. 19. Petition succeeds and is allowed. In the circumstances of the case, there shall be no order as to costs. The Division Bench of this Court has set aside all the allotments and all the leases granted on concessional rates, holding that they were executed in violation of Rule 19 and 20 of the Rules of 1975. The Division Bench has also held that the land belonging to Indore Development Authority shall be transferred strictly in terms of Rule 5 of the Rules of 1975 and by no stretch of imagination, the land can be allotted on concessional rates. 15-The undisputed facts also reveal that initial leases, which were executed in respect of other newspapers, are also not in existence at present and no fresh lease deed has been executed till date in respect of other newspapers also. Learned counsel appearing for Indore Development Authority has categorically stated before this Court that till date after the judgment was delivered by the Division Bench in the case of Vijay Kumar Tiwari, not a single lease deed has been executed, meaning thereby, the issue in respect of other newspapers has not been ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... may with the previous approval of the State Government lease out on concessional terms any Authority land to any public institution or body registered under any law for the time being in force. Rule 20. Ordinarily, no lease or sale of land on concessional terms shall be allowed for the purposes of other than charitable purposes such as for hospital, educational institutions and orphanages. 9. Rule 20 has not been happily worded and it appears that of between purposes and other is redundant for interpreting the said Rule. The Hindi version, however, gives the correct picture. However, the exercise of interpretation has become superfluous as the said Rule has already been taken into consideration by the Supreme Court in K.K. Bhalla v. State of M.P. and Others (A.I.R. 2006 SC 898). In Paragraph 36 of the judgment, Their Lordships have referred to the Rules and stated that approval of the State Government is required for transfer of the land on concessional terms and no lease on concessional terms shall be allowed for purposes other than charitable purposes such as hospital, educational institutions and orphanages. Thus, earlier judgment of this Bench to the eff ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... may consider the matter afresh for grant of such allotment in favour of the Private respondents herein treating the applications filed by them either before it or before the State Government as fresh applications. Such applications must be processed strictly in terms of the provisions of the 1973 Act and the Rules framed thereunder as also keeping in view the Master Plan. Such a decision should be taken by the Competent Authority of the JDA at an early date preferably within a period of two months from the date of receipt of the copy of this order. The JDA shall return the amount deposited by the Private respondents, if any, within four weeks from date. 13.From the narration of the facts above, it is luculent that insofar as charitable purpose was concerned, Chogelal Yadav's case, clearly concluded the issue by holding that newspapers also served an educational purpose and were, therefore, entitled to be considered for allotment in accordance with Rules. This position became further manifest in the judgment of K.K. Bhalla (supra), wherein Their Lordships held that no lease on concessional terms shall be allowed for purposes other than charitable purposes such as hospita ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... reas through a resolution no.137 passed on May 27, 2008, Indore Development Authority has regularized the allotment of the remaining petitions, but the requisite relief has not been granted to the petitioner and as such, there is clear case of discrimination vis-a-vis, the petitioner-Company. Although a show cause notice was issued to the respondent, but no reply has been filed so far. Since the primary grievance raised by the petitioner is with regard to the non-implementation of the directions used by Division Bench of this Court in the case of the petitioner and although it has been claimed that the said relief has been granted in the case of other writ petitioners, it would be appropriate to require the Indore Development Authority to examine the case of the petitioner, in the light of the Division Bench Judgment and take appropriate decision thereafter, within a period of two months from the date the authorized representative of the petitioner-Company appears before the Competent Authority of Indore Development Authority. If for any reason whatsoever, the relief to the petitioner is not made available, then a detailed and speaking order shall be communicated to the petit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aken by the appellants within two months from today. The decision will be communicated forthwith to the respondent. If the decision is in favour of the respondent, the respondent will have two weeks time from the date of receipt of the decision to deposit the entire sale consideration and also to supply the requisite stamp papers for execution of the lease deed, and the appellants will execute the requisite lease deed within a month from the date on which the deposited is intimated and the stamp papers are supplied, to the appellants by the respondent. If the decision is against the respondent, the same may be challenged by way of a fresh writ petition. This appeal is disposed of finally with the aforesaid directions. 22-The Indore Development Authority has finally passed an order dated 14/03/20112. The learned Single Judge has quashed the aforesaid order and has directed the Indore Development Authority to allot a plot to respondent by taking into account the rates applicable in the year 1992. The learned Single Judge has totally ignored the vital aspect of the case that the plot in question, which was earlier allotted to the respondent, is not a part of land of the sche ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... approval of the State Government and that Messrs Majestic Bottling Company had a corresponding legal right for its enforcement. No mandamus will lie where the duty sought to be enforced is of a discretionary nature nor will a mandamus issue to compel the performance by such public body or authority of an act contrary to law. The Commissioner of Prohibition Excise was under no legal duty to grant a licence to Messrs Majestic Bottling Company till he received the prior approval of the State Government under Rule 7. Even assuming that the Commissioner recommended the grant of a licence, to them under Rule 7, the State Government were under no compulsion to grant such prior approval. The grant or refusal of such licence was entirely in the discretion of the State Government. The High Court had no jurisdiction to issue a writ of Mandamus to the Commissioner to grant a licence to Messrs Majestic Bottling Company contrary to the provisions of Rule 7 of the Rules. 17. We should not be understood as laying down an inflexible rule that the High Courts cannot, under any circumstances, regulate or control the manner of grant of a liquor licence by the issue of a writ of mandamus. It woul ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... are no charges of mala fides on the part of the State Government. There is no suggestion that the State Government had already made up their mind. This is also not a case where the rules of necessity require recourse to a writ of mandamus to command the issue of a licence without conforming to the procedure prescribed under Rule 7. In the present case, allotment of land is done as per the Rules in existence. The Indore Development Authority being a public body has to take action strictly in consonance with the statutory provisions. This Court cannot direct the Indore Development Authority nor this Court can compel the Indore Development Authority to act contrary to law. In the considered opinion of this Court, the learned Single Judge had no jurisdiction to issue a writ of mandamus to the Indore Development Authority to allot a commercial plot to respondent by taking into account the rates applicable in the year 1992. 24-The apex Court in the case of Prabodh Verma and Others Vs. State of Uttar Pradesh and Others reported in AIR 1985 SC 167 has dealt with writ of mandamus and has also dealt with various prerogative writs. Paragraphs No.34 to 38 of the aforesaid judgment read ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing in that office and, if the case so requires, declaring that office to be vacant. These were, however, procedural changes only. By order 53 of the Rules of the Supreme Court, 1965, substituted for the old order 53 by Rules of Supreme Court (Amendment No.3), 1977 (S.1. 1977 No.1955), far reaching changes, not merely in the form but in the substance of procedural law, were introduced whereby reliefs by way of mandamus, prohibition, certiorari, declaration and injunction have been joined together under the general head of `judicial review' for which an application can be made for any or all of these reliefs in the alternative or in addition to other reliefs arising out of the same matter and the court is also conferred the power to award damages. An application, however, cannot be made without leave of the court and unless the court considers that the applicant has a sufficient interest in the matter to which the application relates . The expression `sufficient interest' has enabled the court in England to enlarge the rule of locus standi by giving to that expression a liberal interpretation. 36. In India, prior to the Constitution, the power to issue prerogative writs ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of prerogative writs as understood in England but the scope of those writs also is widened by the use of the expression `nature', for the said expression does not equate the writs that can be issued in India with those in England, but only draws an analogy from them, That apart High Courts can also issue directions, orders or writs other than the prerogative writs. It enables the high Courts to mould the reliefs to meet the peculiar and complicated requirements of this country. Any attempt to equate the scope of the power of the High Court under Article 226 of the Constitution with that of the English Courts to issue prerogative writs is to introduce the unnecessary procedural restrictions grown over the years in a comparatively small country like England with a unitary form of government in to a vast country like India functioning under a federal structure, such a construction defeats the purpose of the article itself. To say this is not to say that the High Courts can function arbitrarily under this article. Some limitations are implicit in the article and others may be evolved to direct the article through the defined channels. (Emphasis supplied) 37. The fact that the H ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1978 was unconstitutional and void and, if a consequential relief was thought necessary, a writ of mandamus or writ in the nature of mandamus or a direction, order or injunction restraining the State and its officers from enforcing or giving effect to the provisions of that ordinance. The High Court granted the proper relief by declaring that Ordinance to be void but it should have, before proceeding to hear the writ petition, insisted that the petitioners should set their house in order by amending the petition and praying for proper reliefs. The High Court was too indulgent in this matter. After all, it was not a petition from a Prisoner languishing in jail or from a bonded labourer or a party in person or by a public spirited citizen seeking to bring a gross injustice to the notice of the court Here, the High Court had before it as the main petitioner a union which had taken collective action to enforce its demands and had defied the Government by flouting its orders and an ordinance promulgated by the Governor, namely, U.P. Ordinance No. 25 of 1977 and had by reason of its collective might ultimately made the Government come to terms with it. The petitioners were represented ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... evived with its full figure, the constitutional invalidity held by the High Court having been removed by the Judgment of this Court. If the law so declared invalid is held constitutionally valid, effective and binding by the Supreme Court, the mandamus for bearing the authorities from enforcing its provisions would become ineffective and the authorities cannot be compelled to perform a negative duty. The declaration of the law is binding on everyone and it is therefore, futile to contend that the mandamus would survive in favour of those parties against whom appeals were not filed. In the aforesaid case, the apex Court has reiterated that the authorities cannot be compelled to perform a negative duty. In the present case, in fact the authorities are being compelled to perform a negative duty by directing allotment of commercial plot situated in different locality that too by charging the rates applicable in the year 1992 in the year 2019, dehors the allotment rules. 26-Article 226 of the Constitution of India deal with powers of High Court to issue certain writs. The power of judicial review is implicit in a written constitution and unless expressly excluded by a provi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Judge has erred in law and facts in allowing the writ petition preferred by the respondent. There cannot be an allotment dehors to the statutory allotment rules. In the present case, no fresh lease deed, after the judgment was delivered by the Division Bench, has been executed in case of other newspapers. The issue is yet to be finalized and therefore, the petitioner cannot claim parity with other newspapers. 31-The petitioner again cannot claim parity with other newspapers as the plot of the petitioner is not situated in the newspaper complex, on the contrary it is a commercial plot situated in different locality and it is a prime piece of valuable land having value of more than ₹ 250 Crores as informed by the Indore Development Authority. 32-Learned counsel Shri Purushaindra Kaurav, who has earlier appeared in the matter has argued before this Court the plot worth about ₹ 200 to 250 Crores, cannot be given for few lakhs of rupees as prayed by the petitioner by charging the rate, which were applicable in the year 1992. By taking into account the arguments canvassed by learned counsel Shri Purushaindra Kaurav (the earlier Advocate General), who has earlier argue ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and the rates received shall be presented to the Competent Authority, if it is satisfied that there was sufficient competition or sufficient efforts were made to obtain the best bid, may approve the highest bid if it exceeds the reserve price; even if single bid is received. (vi)In case the bids so received are less than the reserved price or in case no bid is received, fresh bids may be invited for the second and if necessary for the third time; (vii)If after the third time the bid continues to be less than the reserve price or no bid is received, the CEO shall prepare a report in Form-D and submit it to the Board of the Authority. The Board of the Authority may reduce the reserve price upto seventy five percent of the reserve price fixed in the first three rounds and invite fresh bids. The CEO shall ensure that a period of at least three months has elapsed between the first invitation of bids and the invitation at reduced reserve price; If the price of the bids received is found to be less than the revised price or in case no bid is received, then in such condition new bids can be called for the second and if require for the third time as well. If the bids called for th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... And E.S.D.M. Investment Promotion Policy-2016 under public and semi public use, shall also be calculated as above. (iv)Where the purpose is mixed type, for calculation of Reserve value, the reserve value calculated in clause (i) will be multiplied by factor. 1.20. But the State Government, may modify the reserve price, as it thinks fit, in special case or in category of special cases on the proposal by the Authority in a particular category. Tip: The work Mixed purpose shall mean such purpose as would be a combination of two or more of the following (1) residential (2) commercial (3) any other; (b)In case of building In the case of standalone building, reserve value will be calculated according to standard PWD norms, cost o the building as calculated in sub clause (a) hereinabove and the value of the cost of the building, appurtenant land or proportionate and/plot will be added in case of an apartment. (ix)The property to be disposed under this rule may be transferred in bhumiswami rights or on lease as may be determined by the Authority at the time of inviting the bids. The lease shall be eligible for conversion into freehold if the property was held by the Autho ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rice in such cases shall be calculated as under:- (a)In case of land/plot Reserved value of residential property = [area of land/plot in sq. mt.] X [the rate of developed plot (Rs. per sq. mt.) on the date of notification of invitations for proposals according to price guide principle (Collector Guideline) in the same residential area] X [0.40] Under these rules, for the purpose of calculating, if it is found that the property which is to be disposed, is situated in the area, for which the Collector Guidelines Rate haven not been issued, then in such situation, the rate (in sq. mt.) of developed plot according to the price guiding principle (Collector Guideline) of the nearest residential area (whose FAR should not be less than 1), will be valid. In case of any doubt regarding the applicability of the rate, the decision of the CEO will be final after calling a report from the District office, Nagar Tatha Gram Nivesh. OR The actual cost of acquisition and development of the land for disposal/Plot, whichever is higher, but the State Government will be able to modify the reserve price, as it thinks fit, in special case or in category of special cases on the proposed by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d is received, then in such condition new bids can be called for the second and if require for the third time as well. If the bids called for the third time are also found to be less than the revised price or no bid is received then the CEO will upload the information of all such properties on the website of the related Development Authority and the disposal of all such properties shall be done as per the revised price on the first come first serve basis. Provided that the State Government may in special circumstances, if so proposed by the Authority, reduce the reserve price to such extent as deemed necessary and also relax both conditions regarding minimum number of attempts and the elapse of a period of three months before such reduction in reserve price is made; (viii)The property under this rule shall be leased to the successful bidder and such property held in lease shall not be eligible for conversion into free hold; (ix)Bid which is accepted by the Development Authority, if the bidder wants to withdraw the bid or he is unable to deposit the amount mentioned by him in his bid document within the prescribed period as per the terms and conditions of the bid or the inf ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed by this Hon'ble Court in W.P.No.3518/1992 (Vijay Kumar Tiwari Vs. State of M.P. Ors.). No 03. Whether, till date any lease deed has been executed in favour of any Newspapers, whose allotment was terminated in light of order dated 09/12/2005 passed by this Hon'ble Court in W.P.No.3518/1992 (Vijay Kumar Tiwari Vs. State of M.P. Ors.). No Thus, in light of the aforesaid, it is evident that after termination of allotment to other newspapers, no fresh allotment has been done till date nor any regularization has taken place. No lease deed has been executed in respect of any newspaper, whose allotment was terminated in light of order dated 09/12/2005 passed by this Court in Writ Petition No.3518/1992 (Vijay Kumar Tiwari Vs. State of M. P. and Others). 34-The respondent before this Court has not be able to point out from any document to establish that any regularization has taken place in respect of other newspapers nor has been able to point out nor able to bring on record any lease deed, which has been executed in favour of any newspaper, whose allotment was terminated in light of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e with the decision in Goa Foundation [(2014) 6 SCC 590]. In view of our conclusion, the discussion on whether the State of Goa should have auctioned the mining leases through a process of competitive bidding is now rendered academic. However, since detailed submissions were made by learned counsel on both sides, including by the learned Additional Solicitor General, we propose to express our views on the subject. 62. The discussion on the question of auction being the only method of allocation or disposal of natural resources arose due to the view expressed by this Court in Centre for Public Interest Litigation v. Union of India [(2012) 3 SCC 1]. In that decision (hereafter referred to as CPIL although this case is generally referred to as the 2G scam case) the Court dealt with the question of following a non-discriminatory policy for alienation of natural resources. While doing so it was observed that an auction is perhaps the best method for discharging this burden and concluded by holding that while (2012) 3 SCC 1 transferring or alienating the natural resources, the State is duty-bound to adopt the method of auction by giving wide publicity so that all eligible persons ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... posal of all natural resources across all sectors and in all circumstances is by the conduct of auctions? Question 2. Whether a broad proposition of law that only the route of auctions can be resorted to for disposal of natural resources does not run contrary to several judgments of the Supreme Court including those of the larger Benches? 65. In the Reference, it was submitted before the Constitution Bench that paragraphs 94 to 96 in CPIL laid down the ratio vis- -vis disposal of natural resources. It was argued that these paragraphs lay down, as a proposition of law, that all natural resources across all sectors, and in all circumstances are to be disposed of by way of public auction, and on the other [hand], it was urged that the observations therein were made only qua spectrum. 66. The submissions made by learned counsel were then discussed and thereafter this Court recorded its conclusions between paragraphs 82 and 84 of Natural Resources Allocation. In paragraph 84, it was held: (2012) 10 SCC 1 84. Thus, having come to the conclusion that 2G case [Centre for Public Interest Litigation v. Union of India, (2012) 3 SCC 1] does not deal with modes of allocation for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... deviations on the limited scope of arbitrariness and fairness under Article 14 and its role is limited to that extent. Essentially, whenever the object of policy is anything but revenue maximisation, the executive is seen to adopt methods other than auction. 130. A fortiori, besides legal logic, mandatory auction may be contrary to economic logic as well. Different resources may require different treatment. Very often, exploration and exploitation contracts are bundled together due to the requirement of heavy capital in the discovery of natural resources. A concern would risk undertaking such exploration and incur heavy costs only if it was assured utilisation of the resource discovered: a prudent business venture would not like to incur the high costs involved in exploration activities and then compete for that resource in an open auction. The logic is similar to that applied in patents. Firms are given incentives to invest in research and development with the promise of exclusive access to the market for the sale of that invention. Such an approach is economically and legally sound and sometimes necessary to spur research and development. Similarly, bundling exploration and e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er than auction cannot be struck down as ultra vires the constitutional mandate. 149. Regard being had to the aforesaid precepts, we have opined that auction as a mode cannot be conferred the status of a constitutional principle. Alienation of natural resources is a policy decision, and the means adopted for the same are thus, executive prerogatives. However, when such a policy decision is not backed by a social or welfare purpose, and precious and scarce natural resources are alienated for commercial pursuits of profit maximising private entrepreneurs, adoption of means other than those that are competitive and maximise revenue may be arbitrary and face the wrath of Article 14 of the Constitution. Hence, rather than prescribing or proscribing a method, we believe, a judicial scrutiny of methods of disposal of natural resources should depend on the facts and circumstances of each case, in consonance with the principles which we have culled out above. Failing which, the Court, in exercise of power of judicial review, shall term the executive action as arbitrary, unfair, unreasonable and capricious due to its antimony with Article 14 of the Constitution. 150. In conclusion, our ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion either in the form of earning revenue or sub-serving the common good or both. The learned judge had this to say: (Natural Resources Allocation Case, (2012) 10 SCC 1, SCC pp.143-44) 199. The policy of allocation of natural resources for public good can be defined by the legislature, as has been discussed in the foregoing paragraphs. Likewise, policy for allocation of natural resources may also be determined by the executive. The parameters for determining the legality and constitutionality of the two are exactly the same. In the aforesaid view of the matter, there can be no doubt about the conclusion recorded in the main opinion that auction which is just one of the several price recovery mechanisms, cannot be held to be the only constitutionally recognised method for alienation of natural resources. That should not be understood to mean that it can never be a valid method for disposal of natural resources (refer to paras 186 to 188 of my instant opinion). 200. I would, therefore, conclude by stating that no part of the natural resource can be dissipated as a matter of largesse, charity, donation or endowment, for private exploitation. Each bit of natural resource expende ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e modes of allocation for natural resources other than spectrum. 75. The Court in Manohar Lal Sharma [(2014) 9 SCC 516] also referred to the views expressed by Justice Khehar and held, in paragraph 104 of the Report: 104. In light of the above legal position, the argument that auction is the best way to select private parties as per Article 39(b) does not merit acceptance. 76. This Court then exercised its power of judicial review and considered the merits of the explanation given by the Central Government for not adopting the competitive bidding route for the allocation of coal blocks. The various submissions made, the various hurdles faced (including objections of the State Governments) as well as the impracticality of opening up the allocation of coal blocks to competitive bidding were considered and then it was held (after opening the window of Article 14 of the Constitution) in paragraph 110 of the Report: (Manohar Lal Sharma v. Union of India, (2014) 9 SCC 516) 110. The above facts show that it took almost 8 years in putting in place allocation of captive coal blocks through competitive bidding. During this period, many coal blocks were allocated giving rise t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ecutive prerogative, it must nonetheless act in a manner which would subserve public interest and facilitate the distribution of scarce natural resources in a manner that would achieve public good. Where a public authority implements a policy, which is backed by a constitutionally recognised social purpose intended to achieve the welfare of the community, the considerations which would govern would be different from those when it alienates natural resources for commercial exploitation. When a public body is actuated by a constitutional purpose embodied in the Directive Principles, the considerations which weigh with it in determining the mode of alienation should be such as would achieve the underlying object. In certain cases, the dominant consideration is not to maximize revenues but to achieve social good such as when the alienation is to provide affordable housing to members of the Scheduled Castes or Tribes or to implement housing schemes for Below the Poverty Line (BPL) families. In other cases where natural resources are alienated for commercial exploitation, a public authority cannot 2017 (10) SCALE 346 Natural Resource Allocation allow them to be dissipated at its unbridle ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ts, then an auction is a more preferable method of such allotment; 80.3.A decision to not auction a natural resource is liable to challenge and subject to restricted and limited judicial review under Article 14 of the Constitution; 80.4.A decision to not auction a natural resource and sacrifice maximization of revenues might be justifiable if the decision is taken, inter alia, for the social good or the public good or the common good; 80.5.Unless the alienation or disposal of a natural resource is for the common good or a social or welfare purpose, it cannot be dissipated in favour of a private entrepreneur virtually free of cost or for a consideration not commensurate with its worth without attracting Article 14 and Article 39(b) of the Constitution. Keeping in view the law laid down by the apex Court in the aforesaid case, in the considered opinion of this Court a plot worth ₹ 200 Crores cannot be allotted to respondent as directed by the learned Single Judge and no mandamus can be issued as done by the learned Single Judge for execution of lease deed in favour of the petitioner therein that too after receiving few lakhs from the respondent therein. 39-The a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hasten to add that the Court can test the legality and constitutionality of these methods. When questioned, the Courts are entitled to analyse the legal validity of different means of distribution and give a constitutional answer as to which methods are 135 Page 136 ultra vires and intra vires the provisions of the Constitution. Nevertheless, it cannot and will not compare which policy is fairer than the other, but, if a policy or law is patently unfair to the extent that it falls foul of the fairness requirement of Article 14 of the Constitution, the Court would not hesitate in striking it down. (emphasis supplied) 76. In para 82, of Natural Resources Allocation, In reference No.1 of 2012, (2012) 10 SCC 1, this Court was categoric that the findings of 2G case were limited to the case of spectrum. Similarly, in para 146, this Court observed that this Court respects the mandate and wisdom of the executive in the matter of choosing the most suitable method of distribution of natural resources. This Court noted that this is clearly a matter of an economic policy entailing an intricate economic choice and the Court lacks necessary expertise to make such choice. In the light of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the course of auction and this Court has repeatedly upheld such actions. The judiciary tests such deviations on the limited scope of arbitrariness and fairness under Article 14 and its role is limited to that extent. Essentially whenever the object of policy is anything but revenue maximization, the Executive is seen to adopt methods other than auction. 130. A fortiori, besides legal logic, mandatory auction may be contrary to economic logic as well. Different resources may require different treatment. Very often, exploration and exploitation contracts are bundled together due to the requirement of heavy capital in the discovery of natural resources. A concern would risk undertaking such exploration and incur heavy costs only if it was assured utilization of the resource discovered; a prudent business venture, would not like to incur the high costs involved in exploration activities and then compete for that resource in an open auction. The logic is similar to that applied in patents. Firms are given incentives to invest in research and development with the promise of exclusive access to the market for the sale of that invention. Such an approach is economically and legally sou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sposal can be held ultra vires the Constitution, merely because of a potential abuse. 101. In Natural Resources Allocation Reference the Constitution Bench, in the main judgment, thus, concluded that auction despite being a more preferable method of alienation / allotment of natural resources cannot be held to be constitutional requirement or limitation for alienation of all natural resources and, therefore, every method other than auction cannot be struck down as ultra vires the constitutional mandate. The Court also opined that auction as a mode cannot be conferred the status of a constitutional principle. While holding so, the Court held that alienation of natural resources is a policy decision and the means adopted for the same are, thus, executive prerogatives. The Court summarized the legal position as under: 146. To summarise in the context of the present Reference, it needs to be emphasised that this Court cannot conduct a comparative study of the various methods of distribution of natural resources and suggest the most efficacious mode, if there is one universal efficacious method in the first place. It respects the mandate and wisdom of the executive for such matt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uits of profit maximising private entrepreneurs, adoption of means other than those that are competitive and maximise revenue may be arbitrary and face the wrath of Article 14 of the Constitution. Hence, rather than prescribing or proscribing a method, we believe, a judicial scrutiny of methods of disposal of natural resources should depend on the facts and circumstances of each case, in consonance with the principles which we have culled out above. Failing which, the Court, in exercise of power of judicial review, shall term the executive action as arbitrary, unfair, unreasonable and capricious due to its antimony with Article 14 of the Constitution. 102. J.S. Khehar, J., while concurring with the main opinion has stated that auction is certainly not a constitutional mandate in the manner expressed, but it can be applied in some situations to maximise revenue returns, to satisfy legal and constitutional requirements. In his view, if the State arrives at a conclusion, in a given situation, that maximum revenue would be earned by auction of the particular natural resource, then that alone would be the process which it would have to adopt. In the penultimate para of his opinion, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ay frustrate the broader concept of distribution, as conceived in Article 39(b). There cannot, therefore, be a cavil that common good and larger public interests have to be regarded as constitutional reality deserving actualisation. 116. The learned counsel for CPIL argued that revenue maximisation during the sale or alienation of a natural resource for commercial exploitation is the only way of achieving public good since the revenue collected can be channelised to welfare policies and controlling the burgeoning deficit. According to the learned counsel, since the best way to maximise revenue is through the route of auction, it becomes a constitutional principle even under Article 39(b). However, we are not persuaded to hold so. Auctions may be [pic]the best way of maximising revenue but revenue maximisation may not always be the best way to subserve public good. Common good is the sole guiding factor under Article 39(b) for distribution of natural resources. It is the touchstone of testing whether any policy subserves the common good and if it does, irrespective of the means adopted, it is clearly in accordance with the principle enshrined in Article 39(b) *** *** * ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Reference, it was stated: (Goa Foundation Case, SCC p.634, para 81) 81. it is for the State Government to decide as a matter of policy in what manner the leases of these mineral resources would be granted, but this decision has to be taken in accordance with the provisions of the MMDR Act and the Rules made thereunder and in consonance with the constitutional provisions . 110. The above facts show that it took almost 8 years in putting in place allocation of captive coal blocks through competitive bidding. During this period, many coal blocks were allocated giving rise to present controversy, which was avoidable because competitive bidding would have brought in transparency, objectivity and very importantly given a level playing field to all applicants of coal and lowered the difference between the market price of coal and the cost of coal for the allottee by way of premium which would have accrued to the Government. Be that as it may, once it is laid down by the Constitution Bench of this Court in Natural Resources Allocation Reference20 that the Court cannot conduct a comparative study of various methods of distribution of natural resources and cannot mandate one method ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... le in their relatively unmodified, natural form. A natural resource's value rests in the amount of the material available and the demand for it. The latter is determined by its usefulness to production. Natural resources belong to the people but the State legally owns them on behalf of its people and from that point of view natural resources are considered as national assets, more so because the State benefits immensely from their value. 75. The State is empowered to distribute natural resources. However, as they constitute public property/national asset, while distributing natural resources the State is bound to act in consonance with the principles of equality and public trust and ensure that no action is taken which may be detrimental to public interest. Like any other State action, constitutionalism must be reflected at every stage of the distribution of natural resources. In Article 39(b) of the Constitution it has been provided that the ownership and control of the material resources of the community should be so distributed so as to best subserve the common good, but no comprehensive legislation has been enacted to generally define natural resources and a framework fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... minate between similarly placed private parties. 89. In conclusion, we hold that the State is the legal owner of the natural resources as a trustee of the people and although it is empowered to distribute the same, the process of distribution must be guided by the constitutional principles including the doctrine of equality and larger public good. 42-The Hon'ble Supreme Court has taken care of various judgments delivered on subject from time to time and in the considered opinion of this Court in case of allotment of land a fair and transparent procedure has to be adopted. The writ of mandamus cannot be issued in the manner and method it has been done by the learned Single Judge directing the Indore Development Authority to execute the lease deed in favour of the petitioner. The impugned judgment delivered by the learned Single Judge deserves to be set aside and is accordingly set aside. 43-The Hon'ble Supreme Court in a recent judgment dated 30/10/2018 delivered in Civil Appeal No.7184-7185 of 2013 (J. S. Luthra Academy Another Vs. State of Jammu and Kashmir Others) has dealt with a issue of allotment of public land / government land without following the proc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lic property, and ensure that a nondiscriminatory method is adopted for distribution and alienation, which would necessarily result in national/public interest. The principles governing the distribution of natural resources by the State were also discussed in the decision of the constitutional bench of this Court in Natural Resources Allocation, In Re, Special Reference No. 1 of 2012, (2012) 10 SCC 1. In para 149 thereof, the Court observed as follows: 149. Regard being had to the aforesaid precepts, we have opined that auction as a mode cannot be conferred the status of a constitutional principle. Alienation of natural resources is a policy decision, and the means adopted for the same are thus, executive prerogatives. However, when such a policy decision is not backed by a social or welfare purpose, and precious and scarce natural resources are alienated for commercial pursuits of profit maximising private entrepreneurs, adoption of means other than those that are competitive and maximise revenue may be arbitrary and face the wrath of Article 14 of the Constitution. This decision emphasised that the ultimate goal to be served was that of the public good, and all methods ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rregularities, illegalities or unconstitutionality nor can the courts substitute their opinion for the bona fide opinion of the State executive. The courts are not concerned with the ultimate decision but only with the fairness of the decision making process. The above principles were also reiterated in Manohar Lal Sharma (supra), wherein this Court observed at para 110: It is not the domain of the Court to evaluate the advantages of competitive bidding vis- -vis other methods of distribution/disposal of natural resources. However, if the allocation of subject coal blocks is inconsistent with Article 14 of the Constitution and the procedure that has been followed in such allocation is found to be unfair, unreasonable, discriminatory, nontransparent, capricious or suffers from favouritism or nepotism and violative of the mandate of Article 14 of the Constitution, the consequences of such unconstitutional or illegal allocation must follow. In Ajar Enterprises (P) Ltd. v. Satyanarayan Somani, (2018) 12 SCC 756, this Court affirmed the above principles in the following terms: 49. Where a public authority exercises an executive prerogative, it must nonetheless act in a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sation for the allotted resource. However, non-floating of tender or nonconducting of public auction would not be deemed in all cases to be an arbitrary exercise of executive power. The ultimate decision of the executive must be the result of a fair decision-making process. (ii) The allocation must be guided by the consideration of the common good as per Article 39(b), and must not be violative of Article 14. This does not necessarily entail auction of the resource; however, allocation of natural resources to private persons for commercial exploitation solely for private benefit, with no social or welfare purpose, attracts higher judicial scrutiny and may be held to be violative of Article 14 if done by noncompetitive and non-revenue maximizing means. Keeping in mind the aforementioned principles formulated by this Court in the aforementioned judgments, we have considered the entire material on record. It must be determined as to whether the allocation made in favour of the Academy fell foul of the above principles. In the instant case, the allocation has evidently been done to a private educational institution by non-revenue maximizing means. Assuming that the Academy is eng ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
