@JUDGMENTTAG-ORDER
Shah, J.@mdashThe petitioner is a citizen of India and is resident of Jaisingpur in Taluka Shirol, District Kolhapur and is a tax payer and is in
service at Jaisingpur. The petitioner has come to this Court by way of a public interest litigation by filing this petition wherein he has challenged the
order of the State of Maharashtra (respondent No. 2 herein) passed on 6th November, 1984 (Annexure-B to the petition) whereby respondent
No. 2 has cancelled its earlier order dated 30th September, 1983 and has ordered to allot Government land admeasuring 1115.4 sq. meters
bearing C.T.S. Nos. 2256 and 2257 situated at Jaisingpur to Raosaheb Dhanpal Patil (respondent No. 3 herein) as a special case for Motor
Mechanical Servicing Centre without auction for Rs. 78,078/- as occupancy price. This order has been passed by respondent No. 2 u/s 40 of the
Maharashtra Land Revenue Code, 1966 (for short ""the Code"")- This order, as said above, is under challenge in this petition. The petitioner has
also challenged the consequential order passed by the Collector, Kolhapur (respondent No. 1 herein) on 3rd January, 1985 wherein certain terms
and conditions of the allotment of the land have been specified. These orders are challenged as arbitrary and in violation of the Rules pertaining to
the disposal of Government lands and thus the orders are alleged to be violative of Article 14 of the Constitution.
2. Later on, the petitioner by amending the petition has also challenged the vires of Sections 20, 31 and 40 of the Code. We may mention here that
at the hearing Mr. Rane, the learned Counsel for the petitioner, confined the challenge to the vires only in respect of Sec. 40 of the Code.
3. The facts of the case insofar as they are relevant for the present judgment may be stated as follows.
4. Around 11th October, 1981 respondent No. 3 made an application to the Collector, Kolhapur for the grant of land bearing C.T.S. Nos. 2256
and 2257 admeasuring 1115.4 sq. meters situated at Jaisingpur (to be referred to hereinafter as ""(his land"") for starting a Motor Mechanical
Servicing Centre. On that application, the Assistant Director of Town Planning made valuation of the land at Rs. 55/- per sq. meter. That was so
done in December, 1981. On 22nd May, 1982 one Sagarmal Laxmichand Choradia also applied to the Collector for the grant of this land for
starting a tobacco shop. The Collector, Kolhapur processed the application of respondent No. 3 as also of Choradia and reported the matter to
the State Government under this letter dated 4th July, 1983 recommending the case of respondent No. 3 for the grant of this land to him.
However, respondent No. 2 (State of Maharashtra) on 30th September, 1983, disagreeing with the proposal made by the Collector, Kolhapur,
took a decision, and directed that this land should be disposed of by auction after fixing the upset price with reference to the current market value
to be got determined by the Assistant Director of Town Planning. That order of the State Government is at Annexure-A to the petition. That order
needs to be reproduced in extenso. It reads as follows :
No. LND-3883/30940-G8
Revenue & Forests Dept.
Mantralaya, Bombay-400 032
Dated 30th September, 1983.
Sub : Lands Kolhapur.
CTS No. 2256 and 2257 of Jaisingpur
allotment to Shri Raosaheb Dhanpal
Patil for location of Motor Mechanical
Service Centre.
Reference your letter No. Desk III R.R.C. 1446, dated 4-7-1983 on the above subject.
2. In this case the applicants have demanded the land in question for commercial purpose. Hence the disposal of the land in question has to be by
public auction. In this case, Government has, therefore, taken a decision that the land in question should be disposed of by public auction after
fixing the upset price with reference to the current market value to be got determined from the A.D.T.P. I am, therefore, directed to request you to
take further action in the matter accordingly.
3. The request of Sarvashri Raosaheb Dhanpal Patil and Sagarmal Laxmichand Choradia for allotment of land in question to them directly cannot,
therefore, it is regretted, be granted. The applicants may, therefore, be given a suitable reply.
4. The case papers received along with your letter under reference are returned herewith.
5. It appears that within about 7 days of the passing of the aforesaid order dated 30th September, 1983, the State Government stayed the
operation of that order and later on passed the impugned order dated 6th November, 1994 (Annexure-B to the petition) cancelling the earlier
order (Annexure-A to the petition) and allotting this land to respondent No. 3, as stated hereinabove, without auction as a special case for the
occupancy price fixed at Rs. 78,078/-. That order (Annexure-B) reads as follows :
No. LND-3883/30940-CR 1065--G.8(2)
Revenue & Forests Dept.
Manlralaya, Bombay-32
Dated 6-11-1984.
Sub : Lands Kolhapur.
Description of land CTS Nos. 2256 and
2257 of Jaisingpur, Taluka Shirol.
ORDER :
With reference to the letter of the Collector. Kolhapur bearing No. DESK 3. RRC 1446 dated 4-7-1983 on the above subject he is informed that
the order of the Revenue and Forest Dept. bearing No. LND 3883/30947 G8, dated 30-9-1983 is hereby cancelled and the land bearing CTS
Nos. 2256 and 2257 measuring 1115.4 sq.mts. (one thousand one hundred and fifteen and point four square meters) situated at Jaisingpur Taluka
Shirol, Dist. Kolhapur is allotted to Shri Raosaheb Dhanpal Patil as a special case for motor mechanical servicing centre without auction for Rs.
78,078/- (Seventy-eight thousand seventy-eight) as the occupancy price being recovered, the Govt. of Mah. grants permission u/s 40 of the
Maharashtra Land Revenue Code.
2. The said sanction is granted on usual conditions and the terms and conditions as the Dist. Collector, Kolhapur may impose as deemed fit and
proper.
3. The order is being issued in consultation of Revenue and Forest Dept. under Ref. No. CR. 1370/84 Y2, dated 2-11-1984.
In the name and order of the Government of Mah.
Sd/- Asst. Secretary,
Govt. of Mah., Revenue & Forest
Dept.
6. Pursuant to the order (Annexure-B to the petition) quoted above just now, respondent No. 1, Collector of Kolhapur passed a consequential
order dated 3rd January, 1985 which is Annexure-C to the petition. That order incorporates certain terms and conditions on which this land has
been granted to respondent No. 3.
7. These orders (Annexure-B and C to the petition), as stated above, are the subject-matter of challenge in the petition. According to the
petitioner, he is a citizen of India, a resident of Jaisingpur and a tax payer and is serving at Jaisingpur. According to the petitioner, the market value
of this land has been assessed by the Government Authorities at Rs. 145/- per sq. meter though the real market value of this land is about Rs.
300/-per sq. meter. In the petition, the petitioner has referred to the application of Choradia made to the Collector, Kolhapur for the grant of this
land to him. In the petition, it is also averred that respondent No. 3 owns other land in Jaisingpur and other family property in Jaisingpur and he has
a motor mechanic workshop in the other land. He has then referred to the State Government''s order dated 30th September, 1983 annexed to the
petition by which the Government had directed to dispose of the land by way of public auction. According to him, once the Government having
taken the decision that this land should be disposed of by public auction, the same was required to be disposed of accordingly, and in no other
manner. His further contention is that in view of the Government''s decision dated 30th September, 1983, he was expecting an advertisement to be
issued by the Government for disposing of this land by public auction. However, he did not notice any such public advertisement, and to his
dismay, around February; 1985 he found that respondent No. 3 had started construction of the compound wall around this land. On inquiries
being made by him, the petitioner learnt that the orders allotting this land to respondent No. 3 had been passed. As stated by the petitioner, he had
learnt that an educational institution by name Jaisingpur Shikshan Prasarak Mandal, Jaisingpur had also applied to the Chief Minister of State of
Maharashtra on 20th March, 1984 for the allotment of this land for starting a secondary school and on that application, the Government valuer had
valued the land at Rs. 145/-per sq. meter. He has also averred in the petition and his rejoinder affidavit that he had learnt that Choradia had filed
Writ Petition No. 957 of 1985 before this Court on 5th March, 1985 challenging the order granting this land to respondent No. 3 and for a
direction to the Government to dispose of this land by public auction. However, later on he came to know that Choradia had withdrawn that writ
petition which was accordingly rejected as withdrawn on 27th March, 1985. He has, therefore, filed this petition in this Court for the reliefs
aforestated on 18th June, 1985. His contention is that once the Government having passed the order on 30th September, 1983 directing to
dispose of this land by public auction, there was no reason for the Government to cancel that order and to have granted the land to respondent
No. 3 without auction, and that too as a special case. His contention is that the Government memorandum or order dated 6th November, 1984
(Exhibit-B to the petition) does not indicate any reason as to why the Government was compelled to take the decision of allotting this land to
respondent No. 3 as a special case. It is the contention of the petitioner that respondent No. 3 does not fall within the categories of persons
mentioned in the Rules to whom allotment of Government land could be made without auction, and as a special case. He contends that the decision
of the Government (Annexure-B to the petition) is arbitrary and not in accordance with the Rules framed by the Government for the disposal of the
Government lands. He, therefore, contends that the orders allotting this land to respondent No. 3 are violative of Article 14 of the Constitution.
According to him, even by the Government valuer this land was valued at Rs. 145/- per sq. meter though the real market value of the land at the
relevant time was Rs. 300 / - per sq. meter, and if this land had been sold by public auction it would have fetched a price of not less than Rs. 3
lakhs. Thus what the petitioner contends is that by granting the land to respondent No. 3, the Government has been put to monetary loss. It is the
case of the petitioner that the impugned orders are discriminatory, arbitrary, capricious and, therefore, violative of Article 14 of the Constitution
and should, therefore, be quashed and set aside. He has further contended that respondent No. 3 is an influential person, and by exercising his
influence he has manoeuvered to get the Government land at much lesser value than the market value thereof.
8. As said above, after filing the petition, by way of amendment thereto, the petitioner has also challenged the vires of Ss. 20, 31 and 40 of the
Code. However, at the hearing of the petition, that challenge was confined only to Section 40 of the Code.
9. On behalf of respondents Nos. 1 and 2, affidavits have been filed. An affidavit has also been filed by respondent No. 3. The respondents have
tried to support the impugned orders and have tried to defend the vires of Section 40 of the Code.
10. It is the clear case of respondents Nos. 1 and 2 that the impugned order (Exhibit-B to the petition) dated 6th November, 1984 has been
passed by the State of Maharashtra in exercise of the powers vested in the State of Maharashtra under Sec. 40 of the Code. Section 40 of the
Code reads as follows :
Nothing contained in any provision of this Code shall derogate from the right of the State Government to dispose of any land, the property of
Government, on such terms and conditions as it deems fit.
According to the petitioner, this section confers upon the State Government unbridled, uncanalised and unguided power to dispose of the
Government property in a manner deemed fit by it. The power conferred upon the Government, according to the petitioner, is wholly uncontrolled
and for all these reasons the right given to the Government u/s 40 is absolutely arbitrary which is capable of being used in an arbitrary manner and,
therefore, Sec. 40 of the Code should be struck down as ultra vires.
11. Respondent No. 3 in his first affidavit sworn some time in June, 1985 has tried to resist the petition firstly by contending that it suffers from
delay and laches. He has further contended that he has spent substantial amount for putting up the Motor Mechanical Servicing Centre on this land.
He has also contended that as Choradia''s earlier writ petition has been rejected as withdrawn and no new points have been taken by the present
petitioner, the present petition is liable to be rejected. He has also contended that the petitioner has no locus standi to file the present petition as a
public interest litigation. He has stated that the decision to allot this land to him is quite legal and proper. He has denied the allegation that he is an
influential person. He has contended that he has good experience in motor mechanics.
12. On behalf of respondents Nos. 1 and 2, the Assistant Secretary Mr. Deshpande has filed an affidavit in reply to the petition. It is stated therein
that the order (Annexure-A to the petition) dated 30th September, 1983 by which the Government had communicated to the Collector, Kolhapur
its decision to dispose of this land by public auction was stayed immediately on 7th October, 1983 and thereafter the matter was reconsidered by
the Government in view of the fact that respondent No. 3''s request was bona fide and had been supported by the Collector, Kolhapur. It is stated
by Mr. Deshpande in his affidavit that there were only two applicants, Respondent No. 3 and Choradia, and as respondent No. 3 is a promising
young man having good knowledge of motor mechanism, and it was he who had first moved the Collector, Kolhapur for the purpose of getting this
land, the matter was reconsidered by the Government and ultimately the council of ministers i.e. the Cabinet took a decision to allot this land to
respondent No. 3 in exercise of their powers conferred by Sec. 40 of the Code as a special case. Mr. Deshpande has further stated in his affidavit
that around November, 1981, the Assistant Director of Town Planning, Kolhapur had valued this land at Rs. 55/- per sq. meter and since more
than 2 years had elapsed after the said valuation was done by the Town Planning Department, the current market value of the land was taken at
Rs. 70/- per sq. meter. It is further stated in this affidavit that around July 1985 the chitnis to the Collector of Kolhapur had phoned that Jaisingpur
Shikshan Prasarak Mandal had applied for this land in March, 1984 and in that connection the Town Planning Department had valued this land at
Rs. 145/ - per sq. meter. That fact, however, was not communicated to the Government before the impugned order (Annexure-B to the petition)
was passed and that fact was not on the record of the present case when it came before the Government for reconsideration. Even Mr.
Deshpande has challenged the petitioner''s locus to file the present petition.
13. In the further affidavit filed by Mr. Deshpande, he has emphasised that the impugned orders have been issued in accordance with Section 40 of
the Code. In his further affidavit, it is revealed that the Assistant Director of Town Planning, Kolhapur had valued this land at Rs. 145/- per sq.
meter and that was done in December, 1984, that is to say that was done subsequent to the passing of the impugned order (Annexure-B to the
petition). However, according to him, the Government was not aware of this valuation made by the Assistant Director of Town Planning till the writ
petition came to be filed.
14. On behalf of the respondents, firstly it was contended that the petitioner has no locus standi to file this petition and that this petition is not
maintainable as a public interest litigation. Mrs. Agarwal, the learned Counsel for respondent No. 3 very vehemently submitted that the petitioner is
not entitled to maintain this petition as a public interest litigation. She nextly submitted that the petition suffers from delay and laches. She further
submitted that the present petition has. been filed only after Choradia withdrew his petition and, therefore, the present petition is not maintainable.
In our opinion, none of these submissions so vehemently made by Mrs. Agarwal, the learned Counsel for respondent No. 3, can be accepted.
Firstly, coming to the delay and laches part of the submission, suffice it would be to say that the impugned order (Annexure-B to the petition), by
which this land has been allotted to respondent No. 3, has been passed by respondent No. 2-State of Maharashtra on 6th November, 1984.
According to the petitioner, as stated by him in the petition, around February, 1985 he noticed that respondent No. 3 was putting up a compound
wall around this land. He also came to know on inquiry that the impugned orders were passed by the State Government and the Collector.
However, Choradia had on 5th March, 1985 challenged those orders by Writ Petition No. 957 of 1985 and had sought a direction that this land
should be sold by public auction. Now even the petitioner''s only anxiety in the present petition is that this land should have been sold by the
Government by public auction and not by private allotment as has been done under the impugned orders. However, he further learnt that Choradia
had around 27th March, 1985 withdrawn his petition. He, therefore, on his own filed the present petition on 18th June, 1985. We do not think that
the petition is in any manner delayed or that it suffers from laches. The petitioner''s anxiety was to see that the Government land is disposed of by
public auction as was decided by the Government under the order dated 30th September, 1983 (Annexure-A to the petition) so that it could fetch
the maximum price. His anxiety was shared by the petition filed by Choradia who had already filed a writ petition being Writ Petition No. 957 of
1985. He would obviously believe that Choradia would carry his petition to its logical end. He would never have, even remotely, thought that
Choradia would withdrew his petition. But for reasons which the petitioner obviously could not fathom, Choradia withdrew his petition on 27th
March, 1985. The petitioner was, therefore, left with no alternative but to file the present petition which he has filed soon on the reopening of the
summer vacation of the year 1985 on 18th June, 1985. On these facts, the argument about delay and laches so vehemently submitted by Mrs.
Agarwal is required to be rejected.
15. The argument of Mrs. Agarwal that respondent No. 3 has by now spent sizeable amount by putting up a Motor Mechanical Servicing Centre
and, therefore, the impugned orders should not be disturbed, is again required to be rejected on two counts. Firstly, this Court by an interim order,
at the time of the consideration of the grant of interim relief to the petitioner, has said as follows :
Heard both sides on the interim relief. Any construction or expenditure or investment shall be at the risk of respondent No. 3. If the petition is
allowed, then it will be no excuse for denying the relief nor the construction, expenditure or investment, if any, will confer any additional right on
respondent No. 3, the allottee. Everything will be done by respondent No. 3 at his own risk as to costs and consequences and demolition of the
structure at his cost.
Thus when on 8th July, 1985 this Court passed the aforesaid order, it was made explicitly clear to respondent No. 3 that whatever he would do
would be at his own costs and consequences and the fact that he has put up construction or incurred expenditure or made investment would be no
excuse for not granting the relief to the petitioner if otherwise the petition is entitled to succeed. Therefore, now it is too late in the day for Mrs.
Agarwal to contend that respondent No. 3 has invested and spent large sums of money on this land for the construction of Motor Mechanical
Servicing Centre.
16. Even otherwise the argument of Mrs. Agarwal is required to be rejected for the same principle as has been enunciated by Their Lordships of
the Supreme Court in the case of Sriniketan Co-operative Group Housing Society Ltd. and Others Vs. Vikas Vihar Cooperative Group Housing
Society Ltd. and Others, . In para 33 of that judgment this is what Their Lordships of the Supreme Court have held :
A burden song of all the allottee societies was that if the allotment orders in their favour are quashed, their members would stand almost
permanently deprived of the opportunity to own a flat in Delhi because it is next to impossible for them to seek fresh allotment of land hereafter. It
was also stated that the members had invested their life-savings and many of them had even borrowed moneys to meet the cost of the land and
these amounts had been lying with the Government for a number of years and it would, therefore, be most inequitable to tell them that they should
go without a flat for their residence in Delhi. Some of the societies also stated that they had spent considerable sums of money in levelling and
fencing the land and in employing watch and ward staff and architects. There is no denying the fact that the members of the nine societies would be
affected by the cancellation of the allotment order but this cannot legitimise the allotment order passed by the Government in an arbitrary and
discriminatory manner.
In that case it was held that there was no denying the fact that the members of the 9 Societies would be affected by the cancellation of the allotment
order, but that would not legitimise the allotment order passed by the Government in an arbitrary and discriminatory manner. Thus on the principle
laid down in the aforesaid judgment, if otherwise the impugned orders are liable to be quashed and set aside, they cannot be salvaged or saved
merely on the ground that respondent No. 3 has spent sizeable amount for putting up a Motor Mechanical Servicing Centre.
17. Then it was contended on behalf of the respondents that the petitioner has no locus standi to file this petition. This argument also should not
detain us any longer for now the scope of public interest litigation has been expanded by the judicial pronouncements. Several judgments were
cited before us on both the sides on the question of petitioner''s locus standi to file the present petition. However, we do not think it is necessary
for us to refer to all of them. The petitioner before us is the resident of Jaisingpur. He is a tax payer. He is a citizen of India. In the case of
Municipal Council, Ratlam Vs. Vardichan and Others, , and quite a large number of judgments on that line, it has now been well settled that a rate
payer of a local authority can also challenge an illegal action of that authority. Being a tax payer he is closely connected and directly interested in
proper administration of the local authority. Applying the same principle here, the petitioner being a citizen of India and a resident of State of
Maharashtra is clearly entitled to see to it that the State of Maharashtra in its actions behave in a manner which is warranted by the Constitution
and the laws and if it violates the Constitution or the laws he would have every right to draw the attention of the Court, by filing a PIL to those
illegalities committed by the State of Maharashtra.
17. It is again well settled that there may be cases where the State or the Public Authority may act in violation of a constitutional or statutory
obligation or fail to carry out such obligation resulting in injury to public interest or what may conveniently be termed as ''public injury'' as distinct
from private injury. If no one can maintain ail action for redress of such public wrong or public injury, it would be disastrous for the rule of law for it
would be open to the State or a public authority to act with impunity beyond the scope of its power or in breach of a public duty owed by it. The
Courts cannot countenance such a situation where the observance of the law is left to the sweet will of the authority bound by it without any
redress if the law is contravened, Therefore, whenever a public wrong or public injury is caused by an act or omission of the State or a public
authority, which is contrary to the Constitution or the laws, any member of the public acting bona fide and having sufficient interest can maintain an
action for redressal of such public wrong or public injury. If none one can have standing to maintain an action for judicial redress in respect of a
public wrong or public injury, not only will the cause of legality suffer but the people not having any judicial remedy to redress such public wrong or
public injury may turn to the street and in that process the rule of law will be seriously impaired. It is absolutely essential that the rule of law must
wean the people away from the lawless street and win them for the Court of law.
The above principles are now very well settled as a result of a catena of decisions starting from S.P. Gupta Vs. President of India and Others, . It
has also been held in the judgments of the Apex Court that the judicial function is primarily aimed at preserving legal order by confining the
legislative and executive organs of the Government within their powers in the interest of public at large. The traditional concept of locus standi being
the impediment to the said object cannot be strictly applied.
18. Shivajirao Nilangekar Patil Vs. Dr Mahesh Madhav Gosavi and Others, , was the litigation which was filed by Dr. Mahesh Madhav Gosavi
essentially to ventilate his grievances and in that proceedings it was pointed out that the affairs of the Bombay University were lamentable. In this
connection in paragraph 36 of the judgment this is what Their Lordships of the Supreme Court have said :
The allegations made in the petition disclose a lamentable state of affairs in one of the premier Universities of India. The petitioner might have
moved in his private interest but enquiry into the conduct of the examiners of the Bombay University in one of the highest medical degrees was a
matter of public interest. Such state of affairs having been brought to the notice of the Court, it was the duty of the Court to the public that the truth
and the validity of the allegations made be inquired into. It was in furtherance of public interest that an enquiry into the state of affairs of public
institution becomes necessary and private litigations assumes the character of public interest litigation and such an enquiry cannot be avoided if it is
necessary and essential for the administration of justice.
19. In the case of Janata Dal Vs. H.S. Chowdhary and Others, , this is what Their Lordships of the Supreme Court have observed in paras 61, 62
and 66 of the judgment.
61. The traditional syntax of law in regard to locus standi for specific judicial redress, sought by an individual person or determined class or
identifiable group of persons, is available only to that person or class or group of persons who has or have suffered a legal injury by reasons of
violation of his or their legal right or a right legally protected, the invasion of which gives rise to action ability within the categories of law. In a
private action, the litigation is bipolar; two opposed parties are locked in a confrontational controversy which pertains to the determination of the
legal consequences of past events unlike in public action. The character of such litigation is essentially that of vindicating private rights, proceedings
being brought by the persons in whom the right personally inhere or their legally constituted representatives who are thus obviously most competent
to commence the litigation.
62. In contrast, the strict rule of locus standi applicable to private litigation is relaxed and a broad rule is evolved which gives the right of locus
standi to any member of the public acting bona fide and having sufficient interest in instituting an action for redressal of public wrong or public
inquiry, but who is not a mere busybody or meddlesome interloper; since the dominant object of PIL is to ensure observance of the provisions of
the Constitution or the law which can be best achieved to advance the cause of community or disadvantaged groups and individuals or public
interest by permitting any person, having no personal gain or private motivation or any other oblique consideration but acting bona fide and having
sufficient interest in maintaining an action for judicial redress for public injury to put the judicial machinery in motion like actio popularises of Roman
Law whereby any citizen could bring such an action in respect of a public delict.
66. Though we have, in our country, recognised a departure from the strict rule of locus standi as applicable to a person in private action and
broadened and liberalised the rule of standing and thereby permitted a member of the public, having no personal gain or oblique motive to
approach the Court for enforcement of the constitutional or legal rights of socially or economically disadvantaged persons who on account of their
poverty or total ignorance of their fundamental rights are unable to enter the portals of the Courts for judicial redress, yet no precise and inflexible
working definition has been evolved in respect of locus standi of an individual seeking judicial remedy and various activities in the field of PIL.
Probably, some reservation and diversity of approach to the philosophy of PIL among some of the Judges of this Court as reflected from the
various decisions of this Court, is one of the reasons for this Court finding it difficult to evolve a consistent jurisprudence in the field of PIL. True, in
defining the rule of locus standi no ''rigid litmus test'' can be applied since the broad contours of PIL are still developing apace seemingly with
divergent views on several aspects of the concept of this newly developed law and discovered jurisdiction leading to a rapid transformation of
judicial activism with a far-reaching change both in the nature and form of the judicial process.
The above proposition clearly spelt out by Their Lordships of the Supreme Court would show that the petitioner has more than ample locus to file
the present petition. He is not shown to have been motivated by any oblique motive. He is not shown to have come to this Court for ventilating his
own personal grievance. He is not shown to be in any manner inimical to Respondent No. 3. He has come to the Court simply for the purpose of
contending that this land should be sold by public auction for allotment thereof to Respondent No. 3 without auction has resulted in financial loss to
the State and he being a resident of the State would like the State to act in a manner which is in public interest. He being a resident of the State, in
our opinion, has sufficient interest in this litigation. He has only to draw the attention of the Court to the illegalities committed by the Respondents
and once that is done it would be the matter between the Court and the Respondents and it would be for the Court to find out if the Respondents
have acted in a manner not warranted by the Constitution or the laws. He has, by this petition, pointed out his finger to what, we will presently
point, is gross illegality committed by Respondent No. 1 in allotting this land to Respondent No. 3. His duty ended there. He has not in these
proceedings shown any over zeal which would cast doubt about his bona fides. Therefore, the contention of the Respondents that the petitioner
has no locus standi, in our opinion, is required to be rejected.
20. The petitioner contends that Section 40 of the Code is ultra vires for it confers upon the State Government uncanalised, unbridled, uncontrolled
and unguided powers to dispose of the Government lands on such terms and conditions as it deems fit. In support of this submission, the Petitioner
has placed heavy reliance on the case of The State of Punjab and Another Vs. Khan Chand, . Mr. Rane, the learned counsel for the petitioner very
strenuously argued that we should strike down Section 40 as unconstitutional. However, in the view of the matter on facts that we are inclined to
take, as will be apparent just now, and in view of the recent Division Bench decision of this Court in Writ Petition No. 1520 of 1988 rendered on
28th November, 1995 by a Bench of which one of us (K. G. Shah, J.) was a member, we do not think that we should go into the wider question
of vires of Section 40 of the Code.
21. As we will presently point out, the impugned orders (Annexures-B and C to the petition) are liable to be quashed and set aside. Therefore,
strictly speaking, it is not necessary for us to go into the question of vires of Section 40 of the Code.
22. In Writ Petition No. 1520 of 1988 a question similar to the one which has arisen in the case before us was posed for the Court''s
consideration. There the State of Maharashtra had made allotment of some 8000 sq. ft. of land in favour of Mrs. Shardabai Chimanrao Kadam
(Respondent No. 4 in that petition) who happened to be the wife of Shri S. S. alias Chaimanrao Kadam (Respondent No. 5 to that petition). That
Chimanrao Kadam was at the relevant time a sitting MLA in the State Assembly. The contention was that it was he who had managed with the
Government to get the prime land allotted to his wife illegally and unconstitutionally. In that petition, of course the vires of Section 40 of the Code
was not directly in issue. However, Section 40 of the Code was required to be considered in that case because the order allotting the land to
Respondent No. 4 purported to have been passed u/s 40 of the Code. In that context, in connection with Section 40 of the Code, this is what the
Division Bench observed :
The reliance, in our opinion, placed on Section 40 of the Code is not at all well placed. Although the said provision empowers the State
Government to dispose of any land on such terms and conditions as it deems fit, the said discretion, in our opinion, given to the State Government
is not an absolute or unbridled discretion. The same has to be exercised in a just, fair and reasonable manner. The excerpt from the decision of the
Supreme Court in the case of Ramana Dayaram Shetty, reproduced earlier, makes it very clear that no State can claim unlimited powers to
dispose of its properties and assets or to distribute its largess in whatever manner it likes.
Proceeding further the Division Bench in that case again observed as follows :
It is true that at the first blush, provisions of Section 40 of the Code appear to give complete discretion to the State. However, when the
Legislature does not lay down standards, the State can seek to lay down standards, which is done in the present case by using its powers of
delegated legislation. Thus, we have the Maharashtra Land Revenue (Disposal of Government Land) Rules, 1971 which are enacted in exercise of
powers conferred upon the State inter alia under clauses (iv) and (x) of sub-rule of (sic) Section 328 of the Code read with inter alia Sections 20,
31 and 40 of the Code. The said Rules lay down the ''criteria'' with respect to which the discretion apparently given u/s 40 of the Code is to be
exercised. The said Rules, in our opinion, are made for prudent disposal of Government lands for receiving the maximum benefit for the
community.
Of course Section 328 of the Code which empowers the State Government to make Rules not inconsistent with the provisions of the Code for the
purpose of carrying into effect the provisions of the Code, when it particularise without prejudice to the generality of the provisions contained in
Section 328(1) of the Code, the matters in respect of which Rules may be framed does not refer to Section 40 of the Code, though it does refer to
Sections 20 and 31 of the Code. Furthermore, even Section 40 of the Code does not say that the exercise of the right saved in favour of the Slate
Government by that section shall be subject to the Rules framed by the State Government. It merely says ""Nothing contained in the provisions of
this Code shall derogate from the right of the State Government to dispose of any land, the property of the Government on such terms and
conditions as it deems fit."" If we compare this Section 40 with Section 31 of the Code, which speaks about the Collector''s power to grant the
Government land, it becomes clear that the powers of the Government u/s 31 are subject to the rule as may be made from time to time by the
State Government .To this extent, as observed by the Division Bench of this Court in Writ Petition No. 1520 of 1988 at the first blush, the
provisions of Section 40 might appear to give complete discretion to the State. Even so, the Division Bench in that case has observed that the
discretion of the State Government u/s 40 is not an absolute or unbridled discretion.
23. We are conscious of the fact that in Writ Petition No. 1520 of 1988 the vires of Section 40 was not at issue. Even so while considering the
scope of the right or power of the State Government u/s 40 of the Code, this Court has made observations as aforesaid. In the present case, on
facts, as we will presently point out, the petition is entitled to succeed. Therefore, we do not propose to go into the wider question of vires of
Section 40 insofar as the present case is concerned. We would make it clear that the observations which we have made hereinabove should in no
manner be construed to indicate our opinion either way on the vires of Section 40 of the Code. We leave that question open for future
determination as and when occasion once again arises.
24. Coming to the challenge to the impugned orders, we are more than convinced that those orders cannot be sustained.
25. In the present case, Respondent No. 2 has allotted or granted the Government land to Respondent No. 3 without public auction and as a
special case. It is that action of Respondent No. 2 which is called in question before us. Now to recapitulate the facts, on or about 11th October,
1981 Respondent No. 3 applied to the State Government through the Collector, Kolhapur for the grant of this land in his favour. On that
application, the Assistant Director of Town Planning valued the land at that time at Rs. 55/- per sq. meter. On 22nd May, 1982 Choradia applied
for the grant of this land. The Collector, Kolhapur on 4th July, 1983 reported the matter to the State Government and recommended the case of
Respondent No. 3 for allotment of this land. However, the State Government disagreeing with the Collector passed the order (Annexure-A to the
petition) clearly deciding that the two applicants, viz. Respondent No. 3 and Choradia, had demanded the land in question for commercial
purpose. Hence the disposal of the land in question had to be by a public auction. The Government''s decision, therefore, was that the land in
question should be disposed of by public auction after fixing the upset price with reference to the current market value to be got determined from
the Assistant Director of Town Planning. With this as the Government''s decision, the Collector was directed to take further action. It was stated
that the request of Respondent No. 3 as also of Choradia for the allotment of this land in question to them directly could not, therefore, be granted
and that suitable reply be given to them.
Thus the Government''s decision was clear and unambiguous. The demand for the land was for commercial purpose. The Government, therefore,
decided, and very rightly, that this land should be disposed of by public auction and that too after fixing the upset price with reference to the current
market value which was required to be got determined from the Assistant Director of Town Planning. It may be recapitulated here that the
application of Respondent No. 3 for allotment of this land was dated 11th October, 1981 and in December, 1981 the Assistant Director of Town,
Planning had valued the land at Rs. 55/- per.sq. meter. When the Government took decision (Annexure-A to the petition) on 30th September,
1983, about 2 years had elapsed since the valuation of the land was done by the Assistant Director of Town Planning. The Government, therefore,
in Annexure-A to the petition on 30th September, 1983 clearly postulated that the auction should be held after fixing the upset price with reference
to the current market value to be gpt determined by the Assistant Director of Town Planning. This was quite in conformity with the public interest
which the State was bound to protect. This was quite in conformity with the law bearing on the point as enunciated by various judgments which
clearly lay down that the State action has to be informed by public interest. This decision was taken by 30th September, 1983. However, we are
now asked to believe that within 7 days of this decision, on 7th October, 1983 this decision was stayed by the Government and then about a year
later on 6th November, 1984 the Government passed the impugned order (Annexure-B to the petition) granting this land to Respondent No. 3
without auction and as a special case and, as we will presently point out, without getting the current market value of the land determined from the
Assistant Director of Town Planning.
26. When the matter was being argued, we found it necessary to know the reason why the decision taken by the Government vide Annexure-A
dated 30th September, 1983 was required to be stayed so soon on 7th October, 1983, Though in the affidavits filed on behalf of Respondents
Nos. 1 and 2 it was stated that the decision Annexure-A taken on 30th September, 1983 was stayed on 7th October, 1983, reason why it was
stayed has not been disclosed in those affidavits. We, therefore, called upon Mr. N. B. Shah, the learned counsel for Respondents Nos. 1 and 2 to
produce before us the file and he readily produced that file for our perusal and from the file we find that the decision to stay the order as per
Annexure-A was taken in a manner which clearly betrays that extraneous considerations have weighed with the Government in staying that
decision. The order Annexure-A was passed on 30th September, 1983 and from the file produced by the Government''s counsel it was pointed
out to us that though the matter pertained to the Revenue and Forest Department, on 5th October, 1983, i.e. within 5 days from the passing of the
order. Shri Avade, the Minister for Industries and Energy wrote a note or letter to the Hon''ble Revenue Minister stating therein that the Collector,
Kolhapur had recommended the case of of Respondent No. 3 for the grant of this land to him. Shri Avade then wrote in that letter that the request
of Respondent No. 3 was just and proper. He also then stated in that letter that the decision has been taken rejecting the request of Respondent
No. 3 and directing to sell this land by public auction. Shri Avade then in that letter requested that the request of Respondent No. 3 may be
considered and the orders about auction of the land be stayed and that this land be granted to Respondent No. 3.
This note or letter, as stated earlier, was written by Shri Avade, the Minister for Industries and Energy to the Minister for Revenue and Forests on
5th October, 1983. On the same day, the Minister for Revenue passed orders staying the auction and calling for the file, and that is how by a
telegram dated 7th October, 1983 the Authorities were directed to stay the auction. Shri Avade was not at all concerned with the decision to be
taken in this matter. The decision in the matter had already been taken by the concerned Minister as per Annexure-A to the petition and it was
decided to reject the request of Respondent No. 3 as also of Choradia to grant the land to them directly and to dispose of the land by public
auction after fixing the upset price of the land after getting the current market value of the land determined from the Assistant Director of Town
Planning. That decision was stayed merely upon the note of Shri Avade, the Minister in another department who was not concerned in this matter.
What prompted Shri Avade to write this note to the Revenue Minister on 5th October, 1983 would obviously be not a matter of record, but
legitimate inferences would not be impermissible. However we do not want to spell out those legitimate inferences. As we will presently point out,
with reference to the decided cases that in such a case the only proper action for the State to take is to decide to dispose of the land by public
auction for that would fetch the higher value and that would be the only thing in the public interest. That course was adopted by a decision
(Annexure-A to the petition) and soon then Shri Avade having come to know about it wrote a letter to the Revenue Minister and the Revenue
Minister was quite obliging he stayed the earlier order. These facts speak for themselves about the impropriety on the part of the Government in
dealing with this matter.
27. This is not all. Thereafter it appears from the file that without any further inquiry the Revenue Minister on 17th November, 1983 passed orders
granting this land to Respondent No. 3. However, as the value was in excess of Rs. 50,000/-, under the rules of business the matter was required
to go to the Cabinet or the Council of Ministers and the process thereof took some time. On the file there are office notings made by the
Government Secretary advising the Council of Ministers against the grant of land to Respondent No. 3. When the matter was required to go to the
Council of Ministers, the Government Secretary clearly pointed out that the land should be disposed of by public auction. It was also pointed out
by the Government Secretary that Respondent No. 3 was already running a workshop along with his brother in some other land. It was also
pointed out that the demand of the land by Respondent No. 3 and Choradia was for commercial purpose. The Secretary pointed out that the lands
for such purposes are to be disposed of at the current market value and the best mode of determining the current market value is disposal by
public auction. The Secretary also drew the attention of the Council of Ministers to the judgment of Justice Gandhi in Misc. Petition No. 519 of
1974 where it was posited as follows :
The position of the State Government is analogous to that of a Trustee, as the State Government have to look to the interest of the State to whom
the property belongs. It is, therefore, an implied obligation to ascertain and to realise the Market Price, while disposing of the property of the State
Government, and the known methods to ascertain the Market Price are public auction or inviting Public Tenders, after proper publicity and by
ascertaining the Market Value of property in the similar locality as provided under the Land Acquisition Act. While disposing of Government
property the executive must, therefore, act in the interest of the State and cannot act for subserving any private purpose.
The Secretary after inviting the attention of the Council of Ministers to the aforesaid proposition laid down by Justice Gandhi in Misc. Petition No.
519 of 1974 also pointed out that in the industrially developed town like Jaisingpur there are competitive demands for the land and if the
Government land in question is put to auction, it would fetch much more price to the Government. It was in view of this, as pointed out by the
Secretary, that the Government had earlier taken a decision to reject the request of the two applicants and to dispose of the land by public auction
wherein the applicants also would get a chance to offer higher bid, and to claim the land. Of course in this note, the Secretary pointed out that
Respondent No. 3 was a promising young man having very good knowledge of motor mechanic and needed to be encouraged. In para. 4 of the
note, the Secretary also pointed out as follows :
Even though the land in question is proposed to be granted to Shri Patil on payment of occupancy price amounting to Rs. 78,078/-, if the said
land is disposed of by public auction, it is likely to fetch much more price than the occupancy price based on the current market value and to that
extent there is a loss of revenue to Government in this case.
28. Thus even the Council of Ministers was apprised of the fact that the grant of this land to Respondent No. 3 without public auction would result
in loss of revenue to the Government and that if the land is disposed of by public auction it would fetch much higher price, and as the land was
demanded for commercial purpose, earlier Government''s decision was to dispose it of by public auction in conformity with the law laid down by
the Courts. Even in face of these aspects of the matter so clearly brought to the notice of the Council of Ministers, the Council of Ministers ignoring
the caveat entered by the Secretary just granted this land to Respondent No. 3 and passed the impugned order (Annexure-B to the petition).
29. The question on these facts is whether the action of the Government would be justified.
30. In Ramana Dayaram Shetty Vs. International Airport Authority of India and Others, , the following propositions have been laid down by the
Apex Court. In para. 10 of the judgment it has been posited as follows :
Today with tremendous expansion of welfare and social service functions increasing control of material and economic resources and large scale
assumption of industrial and commercial activities by the State, the power of the executive Government to affect the lives of the people is steadily
growing. The attainment of socio-economic justice being a conscious end of State policy, there is a vast and inevitable increase in the frequency
with which ordinary citizens come into relationship of direct encounter with State power-holders. This renders it necessary to structure and restrict
the power of the executive Government so as to prevent its arbitrary application or exercise.
Once again towards the end of para. 10 of the judgment, the Apex Court after quoting the observations of Mathew, J. in his article on ""The
Welfare State, Rule of Law and Natural Justice"" observed as follows :
It is indeed unthinkable that in a democracy governed by the rule of law the executive Government or any of its officers should possess arbitrary
power over the interests of the individual. Every action of the executive Government must be informed with reason and should be free from
arbitrariness. That is the very essence of the rule of law and its bare minimal requirement. And to the application of this principle it makes no
difference whether the exercise of the power involves affection of some right or denial of some privilege.
Towards the end of para. 11 of the judgment, this is what their Lordships have enunciated :
The Government is the still Government when it acts in the matter of granting large''ss and it cannot act arbitrarily. It does not stand in the same
position as a private individual.
In para. 12 of the judgment, the Supreme Court agreed with the observations of Mathew, J. in V. Punnen Thomas Vs. State of Kerala, to the
following effect :
The Government is not and should not be as free as an individual in selecting the recipients for its largess. Whatever its activity, the Government is
still the Government and will be subject to restraints, inherent in its position in a democratic society. A democratic Government cannot lay down
arbitrary and capricious standards for the choice of persons with whom alone it will deal.
In the same para. 12, later on this is what has been laid down :
The activities of the Government have a public element and, therefore, there should be fairness and equality. The State need not enter into any
contract with anyone, but if it does so, it must do so fairly without discrimination and without unfair procedure.
Again it has been laid down as follows:
It must, therefore, be taken to be the law that where the Government is dealing with the public, whether by way of giving jobs or entering into
contracts, quotas or licences or granting other forms of largess, the Government cannot act arbitrarily at its sweet will and, like a private individual,
deal with any person it pleases, but its action must be in conformity with standard or norm which is not arbitrary, irrational or irrelevant. The power
or discretion of the Government in the matter of grant of largess including award of jobs, contracts, quotas, licences etc. must be confined and
structured by rational, relevant and non-discriminatory standard or norm and if the Government departs from such standard or norm in any
particular case or cases, the action of the Government would be liable to be struck down, unless it can be shown by the Government that the
departure was not arbitrary, but was based on some valid principle which in itself was not irrational, unreasonable or discriminatory.
In para. 21 of the judgment, this is what the Supreme Court has observed :
Article 14 strikes at arbitrariness in State action and ensures fairness and equality of treatment. It requires that State action must not be arbitrary
but must be based on some rational and relevant principle which is non-discriminatory; it must not be guided by any extraneous or irrelevant
consideration, because that would be denial of equality. The principle of reasonableness and rationality which is legally as well as philosophically an
essential element of equality or non-arbitrariness is projected by Article 14 and it must characterise every State action, whether it be under
authority of law or in exercise of executive power without making of law. The State cannot, therefore act arbitrarily in entering into relationship,
contractual or otherwise, with a third party, but its action must conform to some standard or norm which is rational and non-discriminatory.
In the last line of para, 25 at page 1645 of the judgment, the Supreme Court has observed thus.
It was also not disputed that these privileges could be sold by public auction. Public auctions are held to get the best possible price.
31. In Kasturi Lal Lakshmi Reddy, Represented by its Partner Shri Kasturi Lal, Jammu and Others Vs. State of Jammu and Kashmir and Another,
, the Supreme Court after referring to the earlier judgment in the case of Ramana Shetty (supra) at the end of para. 10 said that there are two
limitations imposed by law which structure and control the discretion of the Government in this behalf. The first is in regard to the terms on which
largess may be granted and the other, in regard to the persons who may be recipients of such largess. Then the Supreme Court in paras. 11 and 14
of the judgment made the following pertinent observations :
11. So far as the first limitation is concerned, it flows directly from the thesis that, unlike a private individual, the State cannot act as it pleases in
the matter of giving largess. Though ordinarily a private individual would be guided by economic considerations of self-gain in any action taken by
him, it is always open to him under the law to act contrary to his self-interest or to oblige another in entering into a contract or dealing with his
property. But the Government is not free to act as it likes in granting largess such as awarding a contract or selling or leasing out its property.
Whatever be its activity, the Government is still the Government and is, subject to restraints inherent in its position in a democratic society. The
constitutional power conferred on the Government cannot be exercised by it arbitrarily or capriciously or in an unprincipled manner; it has to be
exercised for the public good. Every activity of the Government has a public element in it and it must, therefore, be informed with reason and
guided by public interest. Every action taken by the Government must be in public interest; the Government cannot act arbitrarily and without
reason and if it does, its action would be liable to be invalidated. If the Government awards a contract or leases out or otherwise deals with its
property or grants any other largess, it would be liable to be tested for its validity on the touch-stone of reasonableness and public interest and if it
fails to satisfy either test, it would be unconstitutional and invalid.
14. Where any Governmental action fails to satisfy the test of reasonableness and public interest discussed above and is found to be wanting in the
quality of reasonableness or lacking in the element of public interest, it would be liable to be struck down as invalid. It must follow as a necessary
corollary from this proposition that the Government cannot act in a manner which would benefit a private party at the cost of the State; such an
action would be both unreasonable and contrary to public interest. The Government, therefore, cannot, for example, give a contract or sell or lease
out its property for a consideration less than the highest that can be obtained for it, unless of course there are other considerations which render it
reasonable and in public interest to do so. Such considerations may be that some Directive Principle is sought to be advanced or implemented or
that the contract or the property is given not with a view to earning revenue but for the purpose of carrying out a welfare scheme for the benefit of
a particular group or section of people deserving it or that the person who has offered a higher consideration is not otherwise fit to be given the
contract or the property...... The Court cannot lightly assume that the action taken by the Government is unreasonable or without public interest
because, as we said above, there are a large number of policy considerations which must necessarily weigh with the Government in taking action,
therefore, the Court would not strike down Governmental action as invalid on this ground, unless it is clearly satisfied that the action is
unreasonable or not in public interest. But where it is so satisfied, it would be the plainest duty of the Court under the Constitution to invalidate the
Governmental action. This is one of the most important functions of the Court and also one of the most essential for preservation of the rule of law.
It is imperative in a democracy governed by the rule of law that Governmental action must be kept within the limits of the law and if there is any
transgression, the Court must be ready to condemn it. It is a matter of historical experience that there is a tendency in every Government to assume
more and more powers and since it is not an uncommon phenomenon, in some countries that the legislative check is getting diluted, it is left to the
Court as the only other reviewing authority under the Constitution to be increasingly vigilant to ensure observance with the rule of law and in this
task, the Court must not flinch or falter. It may be pointed out that this ground of invalidity, namely, that the Governmental action is unreasonable or
lacking in the quality of public interest, is different from that of mala fides though it may, in a given case, furnish evidence of mala fides.
Thus what is held by the Supreme Court in para. 14 of Kasturi Lal Lakshmi Reddy, Represented by its Partner Shri Kasturi Lal, Jammu and
Others Vs. State of Jammu and Kashmir and Another, makes it abundantly clear that the Government cannot act in a manner which would benefit
a private party at the cost of the State; such an action would be both unreasonable and contrary to the public interest. In Kasturi Lal''s case, the
Supreme Court has posited that the Government action has to be in public interest.
32. In Ram and Shyam Company Vs. State of Haryana and Others, , the Supreme Court relied upon the decisions in the case of Ramana
Dayaram Shetty Vs. International Airport Authority of India and Others, and Kasturi Lal Lakshmi Reddy, Represented by its Partner Shri Kasturi
Lal, Jammu and Others Vs. State of Jammu and Kashmir and Another, and in para. 12 of the judgment observed thus :
On the other hand, disposal of public property partakes the character of a trust in that in its disposal there should be nothing hanky panky and that
it must be done at the best price so that larger revenue coming into the coffers of the State administration would serve public purpose viz. the
welfare State may be able to expand its beneficent activities by the availability of larger funds. This is subject to one important limitation that
socialist property may be disposed at a price lower than the market price or even for a token price to achieve some defined constitutionally
recognised public purpose, one such being to achieve the goals set out in Part IV of the Constitution. But where disposal is for augmentation of
revenue and nothing else, the State is under an obligation to secure the best market price available in a market economy.
The Supreme Court in the said para. 12 further observed thus :
A welfare State exists for the largest good of the largest number more so when it proclaims to be a socialist State dedicated to eradication of
poverty. All its attempt must be to obtain the best available price while disposing of its property because the greater the revenue, the welfare
activities will get a fillip and shot in the arm. Financial constraint may weaken the tempo of activities. Such an approach serve the larger public
purpose of expanding welfare activities primarily for which the Constitution envisages the setting up of a welfare State.
Referring to the case of Ramana Shetty in Ram and Shyam Company''s case, the Supreme Court noticed that at another place it was observed that
the Government must act in a public interest, it cannot act arbitrarily or without reason and if it does so, its action would be liable to be invalidated.
The Court also noticed the view expressed in Ramana Shetty''s case to the effect that the object of holding the auction is generally to raise the
highest revenue.
33. In Shri Sachidanand Pandey and Another Vs. The State of West Bengal and Others, , of the judgment this is what Their Lordships of the
Supreme Court have held :
On a consideration of the relevant cases cited at the bar the following propositions may be taken as welt as established: State-owned or public-
owned property is not to be dealt with at the absolute discretion of the executive. Certain precepts and principles have to be observed. Public
interest is the paramount consideration. One of the methods of securing the public interest, when it is considered necessary to dispose of a
property, is to sell the property by public auction or by inviting tenders. Though that is the ordinary rule, it is not an invariable rule. There may be
situations where there are compelling reasons necessitating departure from the rule but then the reasons for the departure must be rational and
should not be suggestive of discrimination. Appearance of public justice is as important as doing justice. Nothing should be done which gives an
appearance of bias, jobbery or nepotism.
34. In Haji T.M. Hassan Rawther Vs. Kerala Financial Corporation, , this is what has been held in para. 14 of the judgment :
The public property owned by the State or by any instrumentality of the State should be generally sold by public auction or by inviting tenders.
This Court has been insisting upon that rule, not only to get the highest price for the property but also to ensure fairness in the activities of the State
and public authorities. They should undoubtedly act fairly. Their actions should be legitimate. Their dealings should be above board. Their
transactions should be without aversion or affection. Nothing should be suggestive of discrimination. Nothing should be done by them which gives
an impression of bias, favouritism or nepotism. Ordinarily these factors would be absent if the matter is brought to public auction or sale by
tenders. That is why the Court repeatedly stated and reiterated that the State owned properties are required to be disposed of publicly. But that is
not the only rule. As O. Chinnappa Reddy, J. observed ""that though that is the ordinary rule, it is not an invariable rule."" There may be situations
necessitating departure from the rule, but then such instances must be justified by compulsions and not by compromise. It must be justified by
compelling reasons and not by just convenience.
35. The above referred judgments of the Supreme Court make it abundantly clear that when the State has to dispose of its property, the normal
rule is that it should be disposed of by public auction. That would bring in the highest revenue. Exception could be made if some directive principle
contained in Part IV of the Constitution is sought to be achieved. Here it is not the case of the Respondents that they have in granting this land to
Respondent No. 3 been guided by the provisions of achieving any of the directive principles. Here Respondent No. 3 is not an educated
unemployed person as the undisputed facts show that he and his family members have another motor repairing garage nearby this land. The further
affidavit shows that he has some other property as well. The only ground which has been advanced in the affidavits in reply to justify the grant of
this land to Respondent No. 3 is that he is a promising young man having very good knowledge of motor mechanism. Now this fact was within the
knowledge of the State Government even before the first order (Annexure-A to the petition) was passed. It was no secret that Respondent No. 3
wanted this land for setting up a Motor Mechanical Servicing Centre. He had another motor servicing centre about half a kilometer from this land.
Of course he runs that along his family members and even then when the first order (Annexure-A to the petition) was passed, the Government
went by the well accepted standards and decided to reject the request of Respondent No. 3 as also of Choradia and to sell this land by public
auction after fixing the upset price after getting the current market value of the land determined from the Assistant Director of Town Planning. But
soon after this decision was taken, the Minister for Industries and Energy, who had nothing to do with this, pleaded the case of Respondent No. 3
and requested the Revenue Minister for stay of the order (Annexure-A to the petition) and recommended that this land be granted to Respondent
No. 3. The Revenue Minister readily agreed, even in face of the fact that the Secretary had pointed out that the proper course was to sell the land
by public auction. The matter, under the rules of business was required to be taken to the Council of Ministers. There again the Secretary
succinctly pointed out the desirability of disposing this land by public auction and drew the attention of (sic) the powers those be that auctioning the
land would fetch much higher revenue than even the market price and that giving the land to Respondent No. 3 in the manner it was proposed to
be done would cause loss to the revenue, and yet the Council of Ministers granted the land to Respondent No. 3 as per Annexure-B to the
petition. These facts leave no room for doubt, in our mind, for saying the State Government had acted quite contrary to its obligation to protect the
public interest. The Ministers were not dealing with their personal property, which they could have given away for song to whom they like. They
were dealing with the public property. The authorities referred to hereinabove clearly point out that in such a case public auction of a property is
the best method to be followed by the State or State authorities unless of course some directive principle of the State Policy is sought to be
achieved. Here that is not the case. Here Mr. Avade, the Minister for Industries and Energy took up the case of Respondent No. 3 quite
unjustifiably and that is the reason why the State Government changed its earlier decision which was just and proper decision, namely to sell this
land by public auction. Neither in the affidavit nor in the file we find any material justifying any departure from the decision contained in Annexure-
A of the petition dated 30th September, 1983 wherein the request of Respondent No. 3 as also of Choradia to grant this land to them was
rejected and the land was decided to be disposed of by public auction.
36. One thing more may be noticed that this land has been given to Respondent No. 3 at the rate of Rs. 70/- per sq. meter. The order (Annexure-
B) is dated 6th November, 1984. In the petition the petitioner has stated that Jaisingpur Shikshan Prasarak Mandai, Jaisingpur had on 20th March,
1984 applied to the Chief Minister for allotment of this land to them for starting a secondary school. This averment contained in the petition has not
been controverted by the Respondents. It is clear from the record that upon this application of Shikshan Prasarak Mandai, Jaisingpur, the Assistant
Town Development Officer had valued the land albeit in December, 1984 at Rs. 145/- per sq. meter. The contention of the Respondents that the
Government was not aware of this demand of the land by Jaisingpur Shikshan Prasarak Mandai just cannot be accepted for the averment in the
petition that the application was made by that Mandai to the Chief Minister on 20th March, 1984 has not been controverted. The Chief Minister
must be in know of that application. He must be presumed to be in know of the fact that that file was under process and yet in November, 1984
the land has been granted to Respondent No. 3 at Rs. 70/ - per sq. meter as against the valuation of the land made by Assistant Town
Development Officer in December, 1984 at Rs. 145/- per sq. meter, that is to say more than double the rate at which the land has been granted to
Respondent No. 3. We fail to see what business or justification could the Council of Ministers have to give away this land to Respondent No. 3 at
a price which was less than half the market value of the land evaluated around the time the order Annexure-B was passed. This was not the private
property of any of the Minister which he could have given away to anybody at the price lesser than the market price. Again it is required to be
noticed that when the Government passed the first order (Annexure-A to the petition) and decided to sell the land by public auction after fixing the
upset price with reference to the current market value to be determined from the Assistant Director of Town Planning, it was clear that the
Government wanted the land to be reassessed for the purpose of valuation by the ADTP before it was disposed of and unexplainably that idea
was also given a goby. It is not the case of the Respondents that before the impugned order Annexure-B was passed, any attempts were made to
have the valuation of the land done by the ADTP. What was done was that the valuation of the land done in December, 1981 at Rs. 55/- per sq.
meter was taken as the basis and some Rs. 15/- per sq. meter was added for the fact that about 3 years had elapsed. This was just, not proper or
reasonable for the Government to have done. Once having taken a decision that the land should go by public auction after fixing the upset price
with reference to the current market value to be got determined from the ADTP, no other course was permissible to the Government. This decision
was breached on many a point. Auction was dispensed with. Valuation by the ADTP was dispensed with. The land came to be granted to
Respondent No. 3 for less than half the market value and the only alibi of Respondents Nos. 1 and 2 is that they have done so as a special case.
Now what that special case is has nowhere been explained. As indicated by us hereinabove, the case of Respondent No. 3 could never fall, and it
is not the case of the Respondents that it fell within the achievement of the directive principles contained in Part IV of the Constitution. If the case
did not fall within the exceptional category, the only course open to Respondent No. 2 was to have stuck to the original decision Annexure-A by
which the land was decided to be sold by public auction. All these things have been thrown to winds and we are sure merely because Mr. Avade,
the Minister for Industries and Energy, who had nothing to do with the revenue, strongly pleaded the case of Respondent No. 3 after the first
decision (Annexure-A) was taken on 30th September, 1983. The action of the Government in having acceded to that plea was wholly contrary to
the constitutional obligations of the State to act in public interest.
37. Even at the cost of repetition, we would again refer to what their Lordships of the Supreme Court have in para. 14 of the judgment in Haji
T.M. Hassan Rawther Vs. Kerala Financial Corporation, observed with respect to the obligation of the State in such matters. Speaking about the
obligation of the State in such matters, the Supreme Court said that they should undoubtedly act fairly. Their actions should be legitimate. Their
dealings should be above-board. Their transactions should be without aversion or affection. Nothing should be suggestive of discrimination.
Nothing should be done by them which gives an impression of bias, favouritism or nepotism, Here we have the case where favouritism and
nepotism is writ large on record. Respondent No. 3 has been favoured by Mr. Avade, the Minister for Industries and Energy who had nothing to
do with the Revenue Ministry. Because Mr. Avade favoured Respondent No. 3, the Minister for Revenue as also the Council of Ministers
favoured Respondent No: 3 and in deviation of the first decision (Annexure-A to the petition) allotted this land to Respondent No. 3 at a price
which is less than half the market price without auction and without there being any special case made out in the specious name of a special case.
38. In view of the foregoing discussion, the orders contained in Annexure-B dated 6th November, 1984 and the consequential orders passed by
the Collector on 3rd January, 1985 (Annexure-C to the petition) are required to be quashed and set aside. They are accordingly quashed and set
aside. The allotment of the land in question in this petition, in favour of Respondent No. 3 is set aside. Respondents Nos. 1 and 2 are hereby
ordered and directed to take necessary steps to take back the possession of land in question from Respondent No. 3 and Respondent No. 3 is
directed to hand over the possession of that land to Respondents Nos. 1 and 2 on or before 22nd July, 1996, failing which appropriate action shall
be taken by Respondents Nos. 1 and 2 as aforesaid. It is made clear that Respondent No. 3 shall hand over possession of the land to
Respondents Nos. 1 and 2 as aforesaid after , removing the structure that he might have put up and he shall not be entitled to any compensation for
that structure. Rule is made absolute in the aforesaid terms.
Respondent No. 2 is directed to pay to the petitioner the cost of the petition quantified at Rs, 2000/-.
We direct that from the file that has been produced, the copies of the two documents, viz. (1) letter written by Mr. Avade to the . _Revenue
Minister on 5th October, 1983 with all endorsements thereon, and (2) note of the Revenue Secretary dated 19th September, 1984 for the
Cabinet, should be placed on record of this case before the file is returned to Respondent No. 2.
Ordered accordingly.