The Jullundur Improvement Trust Through Its Chairman-cum-administrator Vs. Baldev Raj Verma - Court Judgment

M.L. Singhal, J.

1. One Baldev Raj Verma, resident of 139, Model Town, Jalandhar City filed suit for permanent injunction against Jalandhar Improvement Trust, Jalandhar represented by Punjab State through Shri D.S. Chaudhary, IAS to perform the functions of the Trust and the Chairman restraining it from selling or interfering with his peaceful and lawful possession of plot No. 8 measuring 3 kanal shown as red in the plan attached to the plaint situated in the development Scheme of 84.87 acres behind Civil Hospital, Jalandhar on the allegations that this plot was allotted to him by the Jalandhar Improvement Trust, Jalandhar in Development Scheme of 84.87 acres @ Rs. 700/- per marla vide memo No. JIT/3050 dated 7.10.1970. Jalandhar Improvement Trust, Jalandhar vide resolution No. 44 dated 4.9.70 had resolved to allot plots to its trustees of their choice. There were six trustees in all of which he was one. Trustees were asked by the Jalandhar Improvement Trust, Jalandhar vide memo No. JIT/2618-23 dated 11.9.70 whether they were interested in getting the allotments of plots or not, He gave his consent to the allotment of one of the plots in the said scheme vide application dated 14.9.70, Jalandhar Improvement Trust, Jalandhar accepted his offer and the plot was allotted to him @ Rs. 701/- per marla. Resolution No. 9 dated 23.9,70 was duly passed by the Jalandhar Improvement Trust, Jalandhar and he was required to make payment of l/4th of the sale price which worked out to Rs. 10,515/-. He accepted this allotment and paid the aforesaid price of Rs. 10,515/- vide receipt No. 35, Book No. 173 dated 13.10.70. Letter dated 12.10.70 was also sent by him to Jalandhar Improvement Trust, Jalandhar Thereafter, he was put in possession. He submitted plan for construction of the building on the said site in accordance with the building bye-laws and the rules, No order was passed on his application for a period of 60 days. In view of section 49 of the Punjab Town Improvement Act, 1922 read with section 193 of the Punjab Municipal Act, the presumption arose that sanction had been given. A valid and binding contract thus came into existence between him and the Jalandhar Improvement Trust, Jalandhar and he became absolute owner of the Plot. Jalandhar Improvement Trust, Jalandhar cannot interfere with his peaceful and lawful possession. Jalandhar Improvement Trust, Jalandhar, however, in gross violation of the contractual obligations as well as statutory provisions, on 8.2,76 advertised to sell the plot in dispute by amalgamating the same with some contiguous plots intending to put to auction on 11.2.76. Scheme and lay out plan having been sanctioned by the Punjab Govt. under section 41 and notified under section 42 of the Punjab Town Improvement Act, 1922, no modification or alteration could be made by the defendant thereafter. The act of amalgamating the plot with other plots was obviously without any legal sanction or authority. Jalandhar Improvement Trust, Jalandhar allotted one plot to Shri Gurdas Mal who was also one of the trustees and in whose favour transaction was finalised with the execution of the sale deed. Non execution of the sale deed in his favour was obviously arbitrary, discriminatory and mala fide.

2. Defendant-Jalandhar Improvement Trust, Jalandhar contested the suit of the plaintiff urging that the allotment of the disputed plot was only provisional to the plaintiff. Provisional allotment never fructified into permanent allotment, as such, he acquired noright, title or interest to the plot. It was denied that he was ever delivered possession of the plot. Jalandhar Improvement Trust, Jalandhar had every right to put the plot to sale. No valid and binding contract regarding the sale of the disputed plot to the plaintiff came into being between the parties.

3. On the pleadings of the parties, the following issues were framed:-

1. Whether the plot No. 8 was allotted to the plaintiff in development Scheme of 84.87 acres behind the Civil Hospital, Jalandhar? OPP

2. Whether a valid and binding contract of sale of the plot No. 8 has come into existence between the plaintiff and the defendant? OPP

3. Whether the plaintiff is entitled to the injunction prayed for? OPP

4. Whether the suit is mala fide and has been filed with ulterior motive, if so, to what effect? as alleged in para No. 3 of the preliminary objection? OPD

5. Whether the plaintiff is in possession of the plot No. 8? OPP

6. Whether the plaintiff is estopped from filing the present suit by his own act and conduct? OPD

7. Whether the plaintiff was required to serve any notice under Section 98 of the Punjab Town Improvement Act? what is the effect of its non issuance? OPD

8. Whether the suit is not properly valued for the purpose of court fee and jurisdiction?OP Parties?

9. Whether the plot No. 8 does not fall within the scheme of 84.87 acres of the development scheme as alleged in para No. 9 and 10 of the preliminary objections of the written statement? OPD ,

10. Whether the alleged agreement is vague and indefinite and as such is not maintainable in the present form? OPD

11. Relief.

4. Vide order dated 28.11.81. Sub Judge, First Class, Jalandhar dismissed the plaintiffs suit in view of his finding that disputed plot was allotted to him but his allotment was provisional i.e. temporary and as such no valid and binding contract came into being between the parties and possession of the plot was still with the Trust. Contract as contained in allotment letter Ex.P4 was found to be vague, indefinite and unenforceable. It was found that after obtaining allotment letter Ex.P4 and deposit of l/4th price on 13.10.70 vide Ex.P6, plaintiff kept mum and never approached the defendant for transfer of the plot to him and pay the balance sale price. He never gave any application offering to pay the balance price. It was found that he filed this suit mala fide when the price had gone up with a view to getting this plot on low price. Provisional allotment did not confer upon him any right.

5. Plaintiff went in appeal against the judgment and decree dated 28.11.81 of Sub Judge First Class, Jalandhar. Vide order dated 31.5.84, Additional District Judge, Jalandhar allowed the appeal and decreed the plaintiffs suit as prayed for. Not satisfied with the reversal of the judgment and decree by the Additional District Judge, Jalandhar of Sub Judge First Class, Jalandhar, defendant Trust has come up in further appeal to this court.

6. I have heard the learned counsel for the parties and have gone through the record.

In this regular second appeal, the following question of law, which is substantial, arises:-

'(1) Whether it was provisional allotment which never fructified into permanentallotment, if so, whether the plaintiff could still lay claim to the plot?'

It was a provisional allotment as is suggested by the letter of allotment. Provisional allotment was required to be approved by the Govt. Allotment was cancelled by Administrator, Jalandhar Improvement Trust, Jalandhar in view of the State Govt. having turned down the recommendation of the Ex-Chairman of the Jalandhar ImprovementTrust, Jalandhar for the allotment of plot to him out of Govt. quota. It was submitted by the learned counsel for the Jalandhar Improvement Trust, Jalandhar that this allotment was made by the Trust in violation of the utilization of land allotment of plots by Improvement Trust Rules, 1975. Rule 7(1)(b) of 1975 Rules lays down as follows:-

'Such tenements and plots shall be allotted by the Trust at reserved price with the approval of the government.'

7. It was submitted that the respondent plaintiff did not file declaration to this effect that he had been owning a residential house or dwelling unit in the urban area of Jalandhar though he was called upon vide memo No. JIT/2618-23 dated 11.9.70 to submit a declaration to the effect that he does not own any dwelling unit or building site in any area other than a slum or in Jalandhar. In resolution No. I dated 7.12.70 it was also mentioned that 'resolved further that in view of the objection raised by the Resident Audit Officer, no further action on the allotment of plots to the trustees be taken till approval of the Govt. to the allotment is obtained.'

8. Further, in the provisional allotment made in favour of the plaintiff, there was a pre-condition of securing approval of the Govt. especially when Section 10(e) of the Punjab Town Improvement Act, 1922 debars the trustees from knowingly acquiring or continue to held without the permission in writing of the State Govt. directly or indirectly any share or interest in any contract or employment with, by or on behalf of the Trust. Without the permission of the Govt. No binding allotment or contract could have been entered into with the Improvement Trust in view of the provisions of Section 10(e). As such no valid contract came into being.

9. It was submitted that this provisional allotment was void abinitio because there was no residential plot of 3 kanal in the scheme approved by the state Govt. Plot No. 8 in this approved scheme is of 10 marla residential house.

10. It was submitted that it was a provisional allotment to the plaintiff which could come into play only after approval had been granted by the state Govt. to this allotment. It was held in Nathulal v. Phoolchand, A.I.R, 1970 S.C. 546 that 'where by a statute, property is not transferable without the permission of the authority, an agreement to transfer the property must be deemed subject to the implied condition that the transferor will obtain the sanction of the authority concerned'. In Jalandhar Improvement Trust v. Sampuran Singh etc. etc., (1999-2)101 P.L.R. 295, the Hon'ble Supreme Court held that if allotment was made wrongly in favour of persons, the same may become liable for cancellation if permissible but will not create an enforceable right on the respondent to claim similar wrongful allotments in their favour. There is no estoppel against law. Principle of promissory/equitable estoppel cannot be invoked to protect such illegal allotments. Allotment in favour of the plaintiff being provisional could well be cancelled by the state govt. and the state govt. could refuse approval to this allotment which in its opinion was illegal.'

11. In this case, we have to see whether the action of the State Govt. in refusing to accord approval to the allotment of plot to the respondent was within the ambit of its authority. Action of the State Govt. falls within the ambit of Section 72 of the Act.

12. Section 72-E of the Punjab Town Improvement Act, 1922 lays down that;-

72-E Power of State Government and its officers over trusts.- (1) The State Government and Deputy Commissioners acting under the orders of the State Government, shall be bound to require that the proceedings of trusts shall be in conformity with law and with the rules in force under any enactment for the time being applicable to Punjab generally or the areas over which the trusts have authority. (2) The State Government may exercise all posers necessary for the performance of this duty and may among other things, by order in writing, annul or modify any proceeding which it may consider not to be in conformity with law or with such rules as aforesaid, or for the reasons, which would in its opinion justify an order by theDeputy Commissioner under Section 72-B.

(3) The Deputy Commissioner may, within his jurisdiction for the same purpose, exercise such powers as may be conferred upon him by rules made in this behalf by the state Government.

13. In this case, the recommendation of allotment of plot to the plaintiff by the Trust was turned down by the government. It may be mentioned here that this allotment by the Trust was in violation of the said rules. If allotment was in violation of any provision of the Act or the rules framed thereunder, allotment has to fall on the ground. It was held in Anil Sahharwal v. State of Haryana and Ors. (1997-2)116 P.L.R. 7 that property acquired for public purpose cannot be misused for the benefit of few individuals in the garb of allotment under discretionary quota. There can be no unbridled and unguided discretion to allot plot to any individual according to the whim and fancy of the authority in whom this discretion vests. Discretion of statutory body is never unfettered. It is a discretion which is to be exercised according to law. That means at least this; the statutory body must be guided by relevant considerations and not by irrelevantly. If its decision is influenced by extraneous considerations which it ought not to have taken into account, then the decision cannot stand. No matter that the statutory body may have acted in good faith; nevertheless the decision will be set aside.

14. In S.G. Jaisinghani v. Union of India, A.I.R. 1967 S.C. 1427, it was observed as follows:-

'In this context it is important to emphasize that the absence of arbitrary power is the first essential of the rule of law upon which our whole constitutional system is based. In a system governed by rule of law, discretion, when conferred upon executive authorities, must be confined within clearly defined limits. The rule of law from this point of view means that decisions should be made by the application of known principles and rules and, in general, such decisions should be predictable and the citizen should know where he is. If a decision is taken without any principle or without any rule, it is unpredictable and such a decision is the antithesis of a decision taken in accordance with the rule of law. Discretion means sound discretion guided bylaw. It must be governed by rule, not humour; it must not be arbitrary, vague and fanciful. Where discretion is absolute, man has always suffered. It is in this sense that the rule law may be said to be the sworn enemy of caprice.'

15. In Shrilekha Vidyarthi v. State of U.P., A.I.R. 1991 S.C. 537, the Hon'ble Supreme Court observed as follows:-

'...We have no doubt that the Constitution does not envisage or permit unfairness or unreasonableness in State actions in any sphere of its activity contrary to the professed ideals in the Preamble. In our opinion, it would be alien to the constitutional scheme to accept the argument of exclusion of Art. 14 in contractual matters. The scope and permissible grounds of judicial review in such matters and the relief which may be available are different matters but that does not justify the view of its total exclusion. This is more so when the modern trend is also to examine the unreasonableness of a term in such contracts where the bargaining power is unequal so that these are not negotiated contracts but standard form contracts between unequals.'

16. In LIC of India and Anr. v. Consumer Education and Research Centre and Ors., J.T. 1995(4) S.C. 366, the Hon'ble Supreme Court negatived the claim of immunity of the State action from judicial review in the context of Articles 14 and 21 of the Constitution and observed that:-

'....Every action of the public authority or the person acting in public interest or its acts give rise to public element, should be guided by public interest. It is the exercise of the public power or action hedged with public element becomes open to challenge. If it is shown that the exercise of the power is arbitrary, unjust and unfair it should be no answer for the State, its instrumentality, public authority pr personwhose acts have the insignia of public element to say that their actions are in the field of private law and they are free to prescribe any conditions or limitations in their actions as private citizens, do in the field of private law. Its actions must be based on some rational and relevant principles. It must not be guided by traditional or irrelevant considerations....'

17. It was submitted that in this case. Article 14 of the Constitution of India was violated in as much as no criteria was laid down for the allotment of plots by the Trust. It was submitted that no guidelines were framed by the Trust governing the allotment of discretionary quota plots. If some guidelines had been drawn up others who fulfilled those guidelines could also apply for the allotment of the plots and compete with others. Plaintiff did not bring on record the application made by him pursuant to which plot measuring 3 kanals was allotted to him so that it could be seen how he was distinguishing himself from others while asking for the allotment of such a bigger plot in an age when austerity is the need of the hour. It was public property which the Trust was required to deal with in a just, equitable and impartial manner. It could be allotted to the one who fulfilled some criteria governing such allotments. No such criteria was brought on record by the plaintiff so that court could see for itself whether he was fulfilling that criteria or not. The holder of a public office can be stated to have misused his position when in pursuit of private satisfaction as distinguished from public interest he has done something which ought not have been done. The important elementary qualification demanded of the holder of a public office is honesty and incorruptibility. He should not only possess these qualifications but also appear to possess these qualifications. He has to deal with the peoples' property in a fair and just manner and should not distribute the benefits and largesses to his own people. He holds a trust on behalf of the people. It was submitted that in this case, the Trust did not frame any policy for the allotment of plots in the exercise of discretion to its trustees.

18. It was submitted by the learned counsel for the appellant that no opportunity of hearing was required to be given to the respondent before refusing to accord approval to the allotment of plot to the respondent by the Trust. In support of this submission, he drew my attention to Balha Ram v. State of Punjab, 1953 P.L.J. 381. It was held that it was not incumbent upon the Director, Local Govt. Punjab to issue notice and afford an opportunity of hearing to the petitioner before annulling the resolution of the Improvement Trust under which allotment has been made in his favour. It was held in Common Cause a registered Society v. Union of India, J.T. 1996(8) S.C. 613 that no public servant can arrogate to himself the power to act in a manner which is arbitrary. In pith the argument of the learned counsel for the appellant-Trust was that the Trust had allotted plot to the respondent arbitrarily. Before allotting the plot, it had not framed any guidelines. It had not sought applications from others similarly situated. More so, it was a provisional allotment which could fructify only if it had been approved by the State Govt. State Govt. had refused to approve it in view of the powers vesting in it under Section 72 of the Punjab Town Improvement Act, 1922 and also that this allotment was in violation of the utilization of land and allotment of plots by Improvements Trust Rules 1975.

19. Learned counsel for the appellant on the other hand submitted that State Govt. has given no reason for refusing to accord approval to the allotment of the plot made by the Trust in favour of the plaintiff, It was submitted that exercise of the power by the State Govt. was in the nature of Farmanshai which used to be issued by the sovereign ruler/autocrats. He drew my attention to Balbir Kaur v. State of Punjab, 1983 P.L.J. 414 where the allotments made by the Amristsar Improvement Trust, Amritsar were restored by this court in CWP No. 611 of 1982 decided on 24.5.83 which had been cancelled by the State Govt. through a blanket order. Impugned order passed by the State Govt. runs as under:-

'All recommendation made by former Chairmen of Improvement Trusts inallotment of plots to various person out of govt. quota have been considered and rejected by the govt. This will be applicable to all categories of plots of all improvement trusts which are yet to be allotted out of govt. quota. It was in pursuance of this order that the Improvement Trust, Amritsar issued individual letters to the petitioners conveying the cancellation of allotments in their favour.'

20. It was laid down in Balbir Kaur v. State of Punjab etc. (supra) that allotment to be effective must have approval of the State Govt.

21. For the reasons given above, this appeal is allowed on a pure question of lawwhich by no means is substantial involving public interest. Judgment and decree passedby Additional District Judge, Jalandhar reversing that of Sub Judge First Class, Jaland-har, is set aside. In consequence, the suit of the plaintiff is dismissed. No order as tocosts.