Mohan Lal Sharma Vs. State of Rajasthan and ors. - Court Judgment

Narayan Roy, C.J.

1. Heard counsel for the parties.

2. The writ petitioner, who is said to be a public spirited person, filed this P1L application raising a grievance that the State Government had decided to allot 47073 Square Metres of land on Ashram Road in favour of respondent No. 3-M/s. DLF, which is a valuable land, at a throw-away price. According to him, the value of the land would not be less than Rs. 375 crores, but the same is being allotted in favour of respondent No. 3 for a meagre amount of Rs. 117 crores, and thus causing loss to the public exchequer to the tune of Rs. 250 crores. It is the further grievance of the writ petitioner that in the present case, no transparent procedure has at all been adopted and the State Government and also the Board of infrastructure Development and Investment Promotion (BIDI) have taken decision to make allotment of the land in favour of M/s. DLF nor any procedure of law as contemplated under Section 54 of the Jaipur Development Authority Act, 1982 (hereinafter referred to as 'the JDA Act') nor Rules 15 and 15-B of the Rajasthan Improvement Trust (Disposal of Urban Land) Rules, 1974 (hereinafter referred to as 'the Rules of 1974) have been applied in distribution of the land in question.

3. In sum and substance, it is the grievance of the writ petitioner that the land in question is being settled in favour of respondent No. 3 in violation of the provisions of law, as referred to above and without any public bid or without inviting tenders from the other interested persons. A prayer, therefore, has been made to set aside the settlement of land so made in favour of respondent No. 3 and in case it has not been settled, the Jaipur Development Authority (JDA) may be restrained from settling the same in favour of respondent No. 3.

4. Mr. G.S. Bapna, learned Counsel appearing on behalf of the petitioner submitted that the writ petitioner is a public spirited person and always remains vigilant so far the policy decision are taken by the State Government, particularly in regard to parting with the land of the State/JDA. Learned Counsel submitted that the land in question is being settled in favour of respondent No. 3 at a throw-away price without advertising the same attracting some more persons to offer highest bid, and thus, the action of the State authorities and the JDA appears to be in complete violation of the principles of natural justice and the law laid down by this Court and the Apex Court from time to time so far as the distribution of largesse is concerned.

5. Learned Counsel also submitted that in every action of the State or its authorities, there should be transparency in distribution of the largesse and public property, and thus in no manner the same can be auctioned/settled or sold in complete violation of the norms laid down by the courts of law. In the present case, proper decision was not taken by the decision-taking authorities nor the provisions of Section 54 of the JDA Act and Rules 15 and 15-B of the Rules of 1974 were followed nor notice inviting tenders was published in the newspapers. Thus the action of the State authorities/JDA is wholly illegal, arbitrary, discriminatory and violative of the principles of natural justice. At the same time, it is also stated by Mr, 3apna that by settling the land in favour of respondent No. 3 for a meagre amount of Rs. 117 crores would cause a huge loss to the Slate exchequer as the price of the land would not be less than Rs. 375 crores.

6. It is further submitted by Mr. Bapna, learned Counsel that under Section 54 of the JDA Act, it has been provided that the authority may dispose off the land by way of allotment, regularization or auction subject to such conditions and restrictions as the State Government may from time time lay down and in such manner as it may from time to time prescribe. At the same time, Rule 15 of the Rules of 1974 provides that the land of commercial nature shall be disposed of by public auction in the prescribed manner; it has further been provided under this Rule that the land reserved for luxury hotels and various other categories shall be allotted and disposed of in accordance with the direction of the State Government that may be issued from time to time. Under Rule 15-B, it has been provided that the land may be allotted with prior approval of the State Government for infrastructure projects including tourism units on such terms and conditions as may be determined by the State Government from time to time. He also contended that under Section 90 of the JDA Act, it has been provided that the authority will exercise its powers and perform its duties under the Act in accordance with the policy framed and the guidelines laid down from time to time.

7. Mr. Bapna, learned Counsel in the background of the aforesaid contentions, submitted that the action of State authorities/JDA per se, appears to be illegal, arbitrary, unreasonable, discriminatory and also violative of the principles of natural justice inasmuch as, the requirements of the provisions of law, as referred to above, were not observed in stricto sensu. In support of his contentions, Mr. Bapna has placed reliance on decisions in Guru Nank Tubewell Pvt. Ltd. v. State of Rajasthan (DB Civil Special Appeal (Writ) No. 814/1994), 'Cyan Vihar' Senior Secondary School v. State of Rajasthan and Ors. 2007(3) WLC (Raj.) 346, Ram and Shyam v. State of Haryana : AIR1985SC1147 and Mahesh Chand v. UPFC : [1992]1SCR616 ).

8. Mr. Bharat Vyas, learned Additional Advocate General appearing on behalf of the State and the JDA submitted that the writ petitioner is in the habit of filing PIL applications without having cogent materials to disapprove the action of the State authorities vis-a-vis JDA, and therefore, the writ application is liable to be dismissed, summarily. He further contended that the provisions of law as contemplated under Section 54 of the JDA Act and the provisions of Rules 15 and 15-B of the Rules of 1974 were followed in its true term and spirit. Learned Counsel further submitted that the impugned decision was taken in accordance with law keeping in view the larger pubic interest. On the basis of recommendation of B1D1, which is the highest policy-making body, the decision was taken to allot the land in question in favour of respondent No. 3. Learned Counsel further submitted that owing to the socio economic conditions of the State of Rajasthan coupled with its geographical situations, it attracts large number of tourists and the economy of the State is partially based on tourism, and keeping in view, these aspects of the matter, the State Government, from time to time, took measures of liberalization, de-licensing and single window clearance system so as to attract more investment in the industrial sector. He further submitted that Special Economic Zones (SEZs) are being developed with a view to provide the infrastructure and an environment conducive to promoting exports, and further to attract investment, relaxations have been provided to investors under the Rajasthan Investment Promotion Scheme, 2003. Learned Counsel further submitted that in view of its rich historical, cultural and environmental heritage, coupled with colourful fairs, festivals and popular tourist products, the State of Rajasthan has become one of the most important destination attracting domestic and international tourists in India, and therefore, a liberal policy is taken to boost up tourism in the State of Rajasthan.

9. Learned Counsel further submitted that on the basis of recommendations made by BIDI, the JDA took decision to allot the land in question to promote hotel business, particularly keeping in view the inflow of international tourists in the State. He further submitted that in view of single window clearance system, the settlement was made by negotiation which is permissible in law, and therefore, the writ application has no merit at all and the same is liable to be dismissed.

10. Mr. Alok Sharma, learned Counsel appearing on behalf of the respondent No. 3 contended that the State authorities and the JDA took the decision to settle the land in question to respondent No. 3 after following the due process of law and after having negotiation with respondent No. 3. Learned Counsel, therefore, submitted that in the facts and circumstances of the case, there was no need for the State authorities or the JDA to invite tenders after publishing notice in the newspapers; the principles of natural justice, thus, was fully subserved nor the action of the authorities can be said to be violative of Article 14 of the Constitution.

11. He further submitted that the respondent No. 3 being a Company of international repute, had already offered to the State Government to develop hotel business, Convention Centre, and owing to its past experience, the deal was finalized, for a valuable consideration, on the basis of negotiation, and therefore, it would not be appropriate to say that the land in question was settled at a throw-away price.

12. Learned Counsel further submitted that allotment of land in favour of respondent No. 3 is not necessarily for purposes of setting up a hotel. The primary object of allotment is to build a Convention Centre which actively is in the nature of infrastructural project and not a commercial viable activity. The role of the allottee, respondent No. 3, thus would be of various nature to cater the need of the society and the nation. Learned Counsel further submitted that the decision was not taken by the authorities proposing to allot the land in question in favour of this respondent in a clandestine manner nor it is a case of consideration in isolation. The BIDI is the highest policy-making Committee constituted under the Rules of Executive Business framed under Article 166 of the Constitution headed by the Chief Minister as its Chairman, other ministers and several civil servants as its members. The matter was presented before the BIDI and after investigation and screening of the matter, the appropriate decision for allotment of land was taken, and therefore, such allotment made in favour of respondent No. 3, cannot be said to be discriminatory, violative of the provisions of law or the principles of natural justice as the settlement was made after proper negotiation with respondent No. 3. He further submitted that single window clearance system is also permissible where the deal is finalized after negotiations.

13. Mr. Bharat Vyas and Mr. Alok Sharma, learned Counsel appearing on behalf of the respondents, in support of their contentions, relied upon decisions of the Apex Court in the cases of M/s. Kasturi Lal Lakshmi Reddy v. State of Jammu and Kashmir and Anr. : [1980]3SCR1338 ; M.P. Oil Extraction and Anr. v. State of M.P. and Ors. : (1997)7SCC592 and of this Court in the case of Ajay Chhabra v. State of Rajasthan (D.B. Civil Writ Petition (PIL) No. 7672/2003), Mohan Lal Sharma v. Union of India and Ors. , and Poonam Chand Bhandari v. State of Raj. and Ors. 2007 (3) WLC (Raj.) 420 : 2008(1) RLW (Raj.) 885.

14. In view of the arguments of the counsel for the parties and their pleadings, the moot question which has fallen for decision is as to whether the land in question could have been settled in favour of respondent No. 3 by way of negotiation and not by inviting tenders and also as to whether the action of the authorities would be arbitrary, violative of the principles of natural justice and discriminatory.

15. By various judgments of the Apex Court, this question has been set at rest and it has been held that to ensure, fair-play and transparency in State action, distribution of largesse by inviting open tenders or public auction, is a rule, but at the same time, it cannot be held that in no case distribution of such largess by negotiation is permissible. In the case of M/s. Kasturi Lal Lakshmi Reddy v. State of Jammu and Kashmir (supra), a Constitutional Bench of the Apex Court, while dealing with almost a similar situation, observed as under:

22. ...for the purpose of encouraging setting up of industries within the State, 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 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 1 will first advertise, see whether any other offers are forthcoming and then after considering all offers, decide whether I should let you set up the industry.' It would be most unrealistic to insist on such a procedure, particularly in an area like Jammu and Kashmir which on account of historical, political and other reasons, is not yet industrially developed and where entrepreneurs have to be offered attractive terms in order to persuade them to set up an industry. The State must be free in such a case to negotiate with a private entrepreneur with a view to inducing him to set up an industry within the State and if the State enters into a contract with such entrepreneur for providing resources and other facilities for setting up an industry, the contract cannot be assailed as invalid so long as the State has acted bona fide, reasonably and in public interest.....

16. In the case of M.P. Oil Extraction v. State of M.P. (supra), the Apex Court held as under:

45. Although to ensure fair play and transparency in State action, distribution of largesse by inviting open tenders or by public auction is desirable, it cannot be held that in no case distribution of such largesse by negotiation is permissible. In the instant case, as a policy decision protective measure by entering into agreements with selected industrial units for assured supply of sal seeds at concessional rate gas been taken by the government. The rate of royalty has also been fixed on some accepted principle of pricing formula as will be indicated hereafter. Hence, distribution or allotment of sal seeds at the determined royalty to the respondents and other units covered by the agreements cannot be assailed. It is to be appreciated that in this case, distribution by public auction or by open tender may not achieve the purpose of the policy of protective measure by way of supply of sale seeds at concessional rate of royalty to the industrial units covered by the agreements on being selected on valid and objective considerations.

17. A Bench of this Court, in the case of Ajay Chhabra v. The State of Rajasthan and Ors. (supra) held as under:

13. Undoubtedly, the information technology has vast vistas and possibilities for fast development. The reply of the State shows that it has been making all the efforts to attract big and well known players in the field. In order to two big players in the IT sector, it may be necessary for the State Government to give reasonable concessions, incentives and provide facilities to them. In order to give fillip to the investment in IT sector, the State Government has framed a policy which is called Rajasthan Information Technology Policy, 2000. Its preamble contains the mission statement and its objectives. As per this policy, the creation and upgradation of the IT Infrastructures and development of core human resources and information technology in the State are its main objectives. The policy also envisaged providing several concessions, incentives and facility to the investors, besides making projects to be set up the investors free from red-tapism and removal of the stumbling blocks in their way. The High Powered Committee viz., the BIDI reflects the importance being attached to the State to this sector. The allotment of land in question to respondent No. 4 on concessional rates with other facilities and incentives has been made by the High Powered body in accordance with the said policy. It is pertinent to mention here that the petitioner himself has not levelled any allegation of malafides or corruption against this body or any of its members.

18. In the case of Poonam Chand Bhandari v. The State of Rajasthan and Ors.(supra), a Bench of this Court held that public auction for the disposal of the government land is the ordinary rule but it is not invariable. In order to ensure, fair play and transparency in State action, distribution of largess by inviting open tenders or public auction is desirable but it cannot be held that in no case distribution of such largess by negotiation is permissible.

19. The present writ petitioner had earlier also come up before this Court by way of PIL application titled 'Mohan Lal Sharma v. Union of India and Ors. (D.B. Civil Writ Petition (PIL) No. 2207/2007) questioning the allotment of 1600 bighas of land and proposal to further allot the same amount of land to M/s. Mahindra World City (Jaipur) and Mahendra & Mahendra Ltd. for setting up a Special Economical zone (SEZ) in Jaipur. Allotment in that case too was made by the JDA pursuant to the decision of BIDI. Apart from other arguments, argument with regard to competence of the State Government and/or BIDI with reference to Section 90 of the JDA Act and Rule 15B of the Rules of 1974 were also raised therein. It was argued that there should have been auction or advertisement before allotment of the land and that the land has been allotted at a throw away price. Division Bench dismissed the writ petition holding that the decision to allot the land was taken by the JDA in public interest as SEZ was being set up for economic growth of the country with a view to attract investment and generate foreign exchange through export of goods and services. All the aforesaid arguments with regard to the competence of the BIDI were rejected, while Division Bench observing as under:

Even otherwise the record would indicate that the respondents have acted in a transparent manner before allotting the land for setting up SEZ. The matter has been scrutinized at different levels in the government. Initially it was examined by the Inter-departmental Steering Committee headed by the Chief Secretary. The BIDI, which is the highest policy making body of the State Government for deciding upon the issues relating to economic development and investment promotion in the State, also upon scrutiny cleared the proposal. This body is headed by the Chief Minister with Ministers from various major departments of the State as its members and Chief Secretary of the Government as Member-secretary and then finally it was approved by the State Cabinet.

20. In the case of Chairman & M.D. BPL Ltd. v. S.P. Gururaja : AIR2003SC4536 , the Apex Court, while dealing with almost a similar case, in Para 18 observed thus:

18. Similar considerations were made in respect of colour television picture tube of the Company and manufacture of batteries. The matter relating to allotment of land is a statutory function on the part of the Board. In terms of the provisions of the Act, consultations with the State Government are required if Regulation 13 of the Regulations in place of Regulation 7 is to be taken recourse to.? Does it mean that consultations must be held in a particular manner i.e. by exchange of correspondence and in no other? Answer to the said question must be rendered in the negative. The High-Level Committee was chaired by the Minister who in terms of the Rules of Executive Business framed under Article 166 of the Constitution of India was entitled to represent the State. Once a consultation takes place by mutual discussions and a consensus is arrived at between different authorities performing different functions under the statutes, the purpose for which consultation was to be made would stand satisfied. Under the Act or the Regulations framed thereunder, no procedure for holding such consultations had been laid down. In that situation it was open to the competent authorities to evolve their own procedure. Such a procedure of taking a decision upon deliberations does not fall foul of Article 14 of the Constitution of India. No malice of fact has been alleged in the instant case....

21. Having noticed the legal propositions, as referred to above, it would be pertinent to mention that BIDI is a collective body headed by Chief Minister of the State under the Rules of Executive Business to take decision of major infrastructure projects including the decision to give customized package to an entrepreneur willing to invest in the State. This may also include the decision as to allotment of land and rate on which the land may be allotted. In the present day economic scenario, when different State Governments are vying with each other to offer attractive incentives to potential investors for ensuring infrastructural and industrial development of their State, such decision of BIDI cannot be so lightly interfered with unless the same is shown to be either lacking in authority or otherwise based on extraneous considerations.

22. The writ petitioner has not pleaded any malice against the BIDI nor has taken a plea that the land in question was decided to be settled with respondent No. 3 on account of extraneous considerations.

23. Having considered the rival submissions and pleadings of the parties, it is held that the provisions of law pertaining to the JDA Act and the Rules of 1974 were fully observed, and thus, the decision was taken on the basis of recommendation of BIDI which is the highest policy-making body of the State.

24. In view of the overwhelming decisions, as referred to above, permitting the settlement of land by negotiation through single window clearance system without any advertisement of the same for auction, it is held that the settlement of the land made in favour of respondent No. 3 was permissible in law. In that view of the matter, it would not be necessary to discuss the judgments relied upon by Mr. Bapna, learned Counsel for the petitioner.

25. For the reasons aforementioned, we do not find any merit in this PIL application. It is accordingly dismissed, but without costs.