Jasbir
Singh Chhabra & Ors. Vs. State of Punjab & Ors. [2010] INSC 177 (9
March 2010)
Judgment
CIVIL
APPELLATE JURISDICTION CIVIL APPEAL NO.2228 OF 2010 (Arising out of S.L.P. (C)
No.1969 of 2006) Jasbir Singh Chhabra and others ... Appellants Versus State of
Punjab and others ... Respondents With Civil Appeal No.2229 of 2010 [Arising
out of SLP(C) No.2786 of 2006] Civil Appeal No. 2230 of 2010 [Arising out of
SLP(C) No.3874 of 2006] Civil Appeal No. 2231 of 2010 [Arising out of SLP(C)
No.4761 of 2006] Civil Appeal No.2232 of 2010 [Arising out of SLP(C) No.14133
of 2006] Civil Appeal No. 2233 of 2010 [Arising out of SLP(C) No.15967 of 2006]
Civil Appeal No. 2234 of 2010 [Arising out of SLP(C) No.13609 of 2007]
G.S.
Singhvi, J.
1.
Leave granted.
2.
Whether the appellants in these appeals except the appeal arising
out of SLP(C) No. 14133/2006 are entitled to allotment of residential plots in
2 Phases VIII-A and VIII-B, Mohali, Punjab developed by the Punjab Small
Industries and Export Corporation Ltd. (for short, `the Corporation') and
whether the State Government's refusal to sanction change of land use from
industrial to residential is vitiated by arbitrariness and malafides are the
questions which arise for determination in these appeals filed against orders
dated 23.9.2005 and 28.7.2006 passed by the Division Bench of the Punjab and
Haryana High Court.
3.
The Corporation is a government company within the meaning of
Section 617 of the Companies
Act, 1956. It was created for developing
infrastructure necessary for industrialization of the identified areas of the
State. Between 1994 and 1996, the State Government acquired land in Phases
VIII-A and VIII-B, Mohali and handed over the same to the Corporation. After
carrying out necessary development, the Corporation allotted the plots to
industrial entrepreneurs. As there was no provision in the extant industrial
policy for earmarking some land in the focal points/growth centres developed by
the Corporation, which could be allotted to the industrial entrepreneurs and
the workers employed in the industries, the Corporation submitted a proposal to
the State Government to allow it to earmark 20-30% area in the existing/coming
up focal points/growth centres for Industrial Housing. After due deliberations,
the State Government 3 approved the proposal. This was conveyed to the
Corporation vide Memo No.1/2001-61B/5329 dated 26.12.2001, paragraph 2 whereof
reads as under:
"Government
agrees to your proposal to earmark 20-30% area for Industrial Housing as matter
of policy in the existing/coming up focal points and growth centres developed
by PSIEC, depending upon circumstances of each area for facilitating speedy
growth especially in industrial backward area."
4.
Although, the above mentioned decision of the State Government did
not provide for change of land use from industrial to residential, the
Corporation, on its own, framed a policy for disposal of residential plots in
the existing and up-coming industrial focal points/industrial estates/growth
centres. The relevant portions of that policy are extracted below:
"1.
PROCEDURE FOR INVITING APPLICATIONS:
Application
for allotment of plots of free hold basis be invited by PSIEC through press
advertisement. In case number of eligible applicants exceed those of available
plots in respect size/category, allotment will be made through draw of lots.
2.
ELIGIBILITY:
Any
Indian or NRI who have not been allotted any residential plot in any Urban
Complex developed by the GOVT./GOVT. undertaking in Punjab is eligible to
apply.
5.
PREFERENCE:
Preference
in allotment of plots shall be in following order in respective focal
point/growth center/industrial Estate: - a) Allottees of industrial plots whose
units are under production in the respective area 4 b) Allottees of industrial
plots whose units are under construction in the respective area c)
Workers/Employees employed in the units under production and set up in
respective area.
The
reservation for different categories for allotment of residential plots will be
followed as under:
a)
Scheduled caste 10% b) Backward Class 5% c) Ex-Service men/war widows 5% d) Non
resident Indian 5% If the number of eligible application are less than those of
available plots under the specified reserve category(s). The unallotted plots,
thereof, will be transferred for allotment under General Category."
5.
Thereafter, the Corporation advertised 138 freehold plots in focal
point, Mohali and allotted the same to those who were declared successful in
the draw held on 8.10.2002.
6.
Some of the industrial entrepreneurs to whom large plots were
allotted in focal point, Mohali could not fully utilize the same and
surrendered the surplus land. In Phase VIII-B, the demand for industrial plots
was less than what was anticipated by the Corporation. The issue relating to
disposal of surplus land in Phases VIII-A and VIII-B, focal point, Mohali was
considered in the meeting of Plan Approval Committee of the Corporation held on
15.12.2003 and it was decided that such land may be utilized for 5 carving out
residential pockets. This was subject to approval of change of land use under
the Punjab Regional and Town Planning and Development Act, 1995 (for short,
`the Act'). The relevant portions of the decision taken in that meeting are
reproduced below:- "Lay-out plans of 3 residential pockets in Phase VIIIA
and B, Indl. Focal Point, Mohali were discussed in details and following
decisions were taken:
1. Pocket
consisting of Business center Phase-VIIIB, Mohali:
It was
explained by STP, PSIEC that originally pocket comprising of about 11.83 Acres
was earmarked for proposed business center in Phase VIII B, Mohali. However,
due to inadequate demand for commercial sites, it is proposed to reduce the
area of business center to 2.33 acres. Balance about 9.50 acres is proposed to
be sub-divided into residential plots of one kanal each. Green buffers of 90
ft. width has been provided around the plots to segregate from Industrial
plots.
Lay out
plan was discussed in details and it was proposed by the committee that open
space opposite Indl. Plot No.D-174 to D-177 may be sub-divided into plots so as
to avoid encroachment by the allottees at a later stage. The lay out plan was
approved after incorporating the proposed modification.
2. 30
Acres plot No.A-43 surrendered by the allotee:
It was
explained by the STP that two categories of plots i.e. 16 marla and 10 marla
have been planned by sub-dividing 30 acres plot. The green buffer of 100 ft.
width has been provided between ICI paint factory and proposed residential
plots. The lay out plan was discussed in details and it was observed by the
committee that open space at both the end corners abutting 80 ft. wide road and
adjacent to Indl. Plot No.C-165 and D-179 may not be left as such for the
similar reasons that the same may not be encroached upon and instead plot of 16
marla category may be planned in this open space. In 6 lieu of above, a sizable
open space in the center of the pocket may be provided by suitably amending the
lay out plan. The lay out plan was thus unanimously approved with above
modification duly incorporated.
With the
provision of residential plots in above 2 pockets, total percentage of
residential area in Phase-VIII B comes to about 17% which is well within
percentage approved by the Govt.
About 43
acres land surrendered by M/s. Ranbaxy in Phase-VIII A, Mohali.
It was
explained by the STP, PSIEC that plots of 2 categories i.e. one kanal and 16
marla have been planned in this pocket. Besides this, a small commercial area
to cater to the needs of the residential population as well as Indl. Area on
V-4 road and a site measuring 3.75 acres has also been planned for School. It
was observed by the Committee that the service lane along 100 ft. sector road
dividing Sector 75 (VIII-A) and Sector 76 may be provided and plots of one
kanal categories may be opened on the service land. Secondly, site for School
may not be provided as PUDA has made ample provision of School sites in the
adjoining sectors developed by PUDA. Instead plots of one kanal size may be
planned in this pocket. Lay out plan was approved after making suitable
modifications as proposed above.
It was
pointed out by Sh. Rajinder Sharma, STP o/o Chief Town Planner, Punjab that as
per Punjab Regional and Town Planning and Development Act 1995, permission for
change of land use from industrial to residential/non industrial use is
required to be taken from the competent authority.
However,
STP, PSIEC explained that the proposal to earmark 20% to 30% for Housing as a
matter a policy in the existing as well as coming up Indl. Focal points/Growth
centers developed by PSIEC stands approved by the Govt. and the area earmarked
for housing in Phase-VIII A and B, Mohali is well within the prescribed norms.
Layout plans were approved subject to approval of change of land use under the
PRTPD Act."
(emphasis
supplied) 7
7.
The matter was then considered in the meeting of the Allotment
Committee under `Off-The-Shelf Scheme' (hereinafter referred to as, `the
Allotment Committee') held on 5.2.2004 under the Chairmanship of Chief
Secretary (the meeting was also attended by Shri Arun Goel, the then Managing
Director of the Corporation) and the following recommendations were made:
"Before
taking up the regular agenda items, the Committee discussed the agenda notes on
policy issues circulated by Industries Department vide their letter dated
27.1.2004 and made following recommendations:- (i) Industrial Policy 2003 -
Amendments to facilitate investment in Industrial Infrastructure.
Detail
given in the background note were perused and provisions of Industrial Policy
2003 with regard to development of Industrial Park and status of Multiplex
Complexes were discussed at length. After detailed discussions following
recommendations were made:- a) Industrial Parks/Estates/Agro Parks/IT Parks
fulfilling the criteria for such parks as prescribed in Government of India's
scheme may be considered for allotment of land in Industrial Focal Points.
b)
Multiplex Complexes constitute a distinct category and may not be equated with
Industrial Park for allotment of land.
c) Price
for allotment of land for Industrial parks etc. may be fixed at level that
gives a return of 20% to the developer on his investment.
d) For
Multiplex Complexes price calculated as per criteria at (c) above should be
treated as reserved price and allotment of land may be made through auction.
e)
Existing allottees of industrial land may be permitted to change land use upto
three acres for Multiplex on payment of the difference between the prevailing allotment
price for the 8 industry and five times that of price for allotment of
developed industrial plots. There may not be any concession in price for sick
units. However, payment schedule may be relaxed in case of sick units.
It was
recommended that Industrial Policy may be got amended by the Department at
appropriate level to incorporate above provisions in the Policy.
(ii)
Availability of Industrial land in Mohali Position indicated in the background
note was perused.
It was
felt that in view of limited availability of land with PSIEC, the available
land should be utilized for setting up of industrial units/industrial parks
which can generate more revenue and employment for the State instead of housing
activity which will neither generate employment nor revenue for the State
exchequer. The financial needs of PSIEC can be met by allotting the land for
industrial parks/Multiplex complexes which will generate greater revenue in
view of higher allotment price for such land as indicated at (i) above. It was,
therefore, recommended that no allotment may be made by PSIEC for housing
purposes.
(emphasis
supplied) The Allotment Committee then considered regular agenda items and took
the following decisions:
"Item
No. 21.1 Confirmation of Minutes of 20th meeting of Allotment Committee held on
23.12.2003.
Confirmed.
Item No.
21.2 Allotment of 46 Acres of land to M/s Quark at Focal Point, Phase VIII,
Extension, Mohali.
9 It was
decided to allot 46 acres of land at Mohali to M/s. Quark for setting up an
industrial Park, in view of approval of their project as mega project by the
Empowered Committee under Industrial Policy 2003 and thereafter by the Cabinet.
Contents of letter No. Spl./114/SHUD dated 4.2.2004 from Secretary, Housing
Urban Development highlighting the possible implications of the restraint
orders of Punjab and Haryana High Court regarding `Change in Land Use' were
also brought to the notice of the Committee. It was decided that allotment to
M/s. Quark will be subject to legal advice to be obtained by the Housing
Department.
The
allotment will also be subject to fulfillment of following conditions:- i) M/s.
Quark were allotted 5 acres of land in Phase VIII-B, Mohali by PSIEC and they
are defaulter in making payment of cost enhancement amounting to Rs.1.18 crore
and applicable interest. The company will make payment of this amount before
fresh allotment is made.
ii)
Punjab Infotec Corporation will get the formal approval for change in land use
for the area proposed to be allotted to the company from competent authority.
iii)
Zoning and building by-laws of PSIEC as applicable in that area will apply.
iv) No
polluting industry will be set up in the industrial zone as the park will also
comprise of residential and commercial area.
Item No.
21.3 Allotment of 40-50 Acres of land at Mohali to M/s.
A.B.
Motions (Pvt.) Ltd.
Item No.
21.4 Payment terms in respect of allotment to M/s. A.B.
10
Motions (Pvt.) Ltd.
It was
decided to defer these items till amendment in Industrial Policy as recommended
by the Committee at (i) above."
8.
The State Government accepted the recommendation of the Allotment
Committee in respect of the land at Mohali and decided not to allow change of
land use from industrial to residential. This is evident from the contents of
Memo dated 5.8.2004, which reads as under:
"To
The Managing Director, Punjab Small Industries & Export Corporation
Limited, Udyog Bhawan, Sector 17, Chandigarh.
Memo
No.US/CO(PSIEC)/2500 Dated Chandigarh, the 5th August, 2004 Subject: Change of
Land Use from Industrial to Housing.
The
matter regarding conversion of industrial land into residential use in Mohali,
by Punjab Small Industries & Export Corporation has been considered by the
Government. It has been decided that in the overall interest of the State, it
would not be desirable to change the land use from industrial to residential.
The Corporation should, therefore, immediately withdraw the scheme for allotment
of residential plots and refund the application money of the applicants so that
there are no legal complications.
Sd/-"
9.
About two months prior to consideration of the issue relating to
disposal of surplus land by Plan Approval Committee of the Corporation, an
advertisement was issued, which was published in `The Tribune' dated 20.10.2003
inviting applications for 280 residential plots in Phases VIII-A and VIII-B,
focal point, Mohali under the Industrial Housing Scheme. In the application
form issued by the Corporation, the following stipulation was incorporated:
"The
acceptance of application form and earnest money does not place the corporation
under any obligation to allot you a plot."
10.
About 3500 persons including those who filed writ petitions before
the High Court applied for allotment of residential plots in Mohali. After five
months, another advertisement was issued on 23.3.2004 under the authority of
the Managing Director of the Corporation-cum-Chairman, Allotment Committee
informing the applicants that draw of lots for allotment of residential plots
in Phases VIII-A and VIII-B, Mohali, focal point, Patiala and Phase VIII
(Jeevan Nagar), Ludhiana will be held on 31.3.2004. That advertisement carried
the following note:
"The
above draw of lots for allotment of residential plots under Industrial Housing
Scheme in Phase VIII A and B at Focal Point, Mohali is being held provisionally
and the applicants declared successful will be placed on a provisional list for
12 allotment of plots subject to the final decision on the aforesaid Industrial
Housing Scheme at Focal Point, Mohali. It is clarified that placement of
successful applicants on the provisional list for allotment of plots will not
confer any legal right either to claim interest on the earnest money remaining
with the Corporation or for the allotment of residential plots on the basis of
their having been declared successful in the draw of lots and no claim in this
behalf shall be entertainable on any account whatsoever. It is further clarified
that any applicant found successful in the draw of lots and not agreeable to
above conditions, may seek refund of their earnest money any time till the
letter of allotment is issued by PSIEC."
(emphasis
supplied)
11.
All the writ petitioners were declared successful in the draw and
their names were placed in the provisional list of successful applicants.
However, allotment letters were issued only to those who had applied for plots
in focal point, Patiala and Phase VIII (Jeevan Nagar), Ludhiana. Some of the
petitioners, who had applied for the plots in focal point, Mohali filed Writ
Petition No.12396/2004 with the complaint that they have been arbitrarily
discriminated in the matter of allotment of plots. However, they withdrew the
writ petition with liberty to challenge the stipulation contained in the
advertisement that the acceptance of application form or earnest money will not
place the Corporation under an obligation to allot a plot to the applicant.
Thereafter,
a batch of writ petitions was filed questioning the legality of the stipulation
contained in the application form, note incorporated in 13 advertisement dated
23.3.2004 and the decision contained in Memo dated 5.8.2004. The writ
petitioners invoked the doctrines of promissory estoppel and legitimate
expectation and pleaded that on being declared successful in the draw of lots,
they have acquired a right to be allotted plots in focal point, Mohali and the
Corporation is bound to fulfill the promise made by issuing advertisement dated
20.10.2003. They pleaded that the State Government does not have the power to
direct the Corporation to abandon the policy of allotting residential plots in
the industrial focal points and the decision contained in Memo dated 5.8.2004
is vitiated due to malafides because the same was designed to favour some
individuals who wanted to utilize the land for commercial purpose by building
multiplex complexes. They further pleaded that the Corporation's failure to
issue allotment letters has resulted in discrimination and violation of their
fundamental right to equality guaranteed under Article 14 of the Constitution.
In the written statements filed on behalf of the State Government and the
Corporation, it was pleased that the decision contained in Memo dated 5.8.2004
was in consonance with policy of the State Government to promote
industrialization of the State, which was expected to give impetus to the
economy of different areas and generate employment. It was further pleaded that
in its capacity as owner of the land, the State Government was entitled to take
appropriate policy decision and the writ petitioners are not entitled to claim
allotment of plots 14 merely because they had applied pursuant to advertisement
dated 20.10.2003 or their names were included in the provisional list of
successful applicants.
The
Corporation relied upon Article 90 of its Memorandum of Association and pleaded
that the State Government is empowered to issue directions on policy matters
and its refusal to sanction change of land use in Phases VIII- A and VIII-B,
Mohali falls within the ambit of Article 90. According to the Corporation,
advertisement dated 23.3.2004 was issued for holding draw of lots because the
Government's decision on the proposal for change of land use from industrial to
residential was getting delayed and it was felt that the earnest money
deposited by those who may be ultimately unsuccessful should not be retained
for a long time. The parties filed further pleadings in the form of rejoinder
and supplementary affidavits reiterating their respective stand.
12.
After adverting to the pleadings of the parties and arguments of
the learned counsel, the Division Bench of the High Court framed the following
questions:
"a)
Whether the holding of a draw of lots for allotment of residential plots
confers a right on the petitioners for the allotment of the plots on the
principle of promissory estoppel and legitimate expectations? 15 b) Whether in
any case a concluded contract has come into existence between the parties and
if so, whether the petitioners can enforce the same by way of writ petition? c)
What is the power of the State Government to issue directive to the PSIEC in
terms of Article 90 of the Memorandum of Association of the PSIEC and if so,
what is its binding effect? Besides, whether only the governor can issue such
directive in his personal capacity and not the State Government? d) What is the
scope of judicial review of the policy decision of the State Government whereby
it has vide its impugned decision dated 5.8.2004 (Annexure P-12), decided not
to be desirable to change the land use from industrial to residential and
whether such policy decision is amenable to the writ jurisdiction of this
Court?"
13.
The Division Bench of the High Court first considered whether the
writ petitioners were entitled to invoke the doctrines of legitimate
expectation and promissory estoppel, referred to the judgments of this Court in
Food Corporation of India v. M/s. Kamdhenu Cattle Feed Industries (1993) 1 SCC
71, Union of India v. Hindustan Development Corporation and others (1993) 1 SCC
499, National Building Construction Corporation v. S. Raghunathan (1998) 7 SCC
66, Pawan Alloys and Casting Private Limited v. U.P. State Electricity Board
and others (1997) 7 SCC 251, Kasinka Trading and another v. Union of India and
16 another (1995) 1 SCC 274 and held that even though the State Government and
the Corporation, which is an instrumentality of the State, are expected to act
fairly and reasonably in their dealing with the members of public, mere
inviting of applications and draw of lots by the Corporation did not create a
right in favour of the writ petitioners and they cannot invoke the doctrines of
legitimate expectation and promissory estoppel for compelling the Corporation
to allot plots to them in Phases VIII-A and VIII-B, focal point, Mohali because
in the format of application, it was clearly mentioned that acceptance of the
application form and earnest money will not place the Corporation under an
obligation to allot plot to the applicant.
14.
The Division Bench then referred to Article 90 of the Memorandum
of Association of the Corporation, noticed the judgments of this Court in
Rakesh Ranjan Verma and others v. State of Bihar and others (1992) Supp. 2 SCC
343, Gujarat Housing Board Engineers Association and another v. State of
Gujarat and others (1994) 2 SCC 24, Chittoor Zilla Vyavasayadarula Sangham v.
A.P. State Electricity Board and others (2001) 1 SCC 396, Chairman and MD, BPL
Limited v. S.P. Gururaja and others (2003) 8 SCC 567 and two judgments of the
High Court in CWP No.9626 of 2002 - Punjab State Industries and Export
Corporation v.
17 State
of Punjab decided on 14.5.2004 and Punjab Financial Corporation Employees
Welfare Association v. Punjab Financial Corporation 2004 (2) ILR (P & H)
113 and held the decision of the Government not to sanction change of land use
from industrial to residential was in the nature of a direction which could be
issued under Article 90 of the Memorandum of Association of the Corporation.
15.
The Division Bench finally considered the question whether the
policy decision contained in Memo dated 5.8.2004 is arbitrary, irrational and
illogical or is vitiated due to malafides. After noticing the broad parameters
of judicial review of policy decisions, the Division Bench referred to minutes
of the meeting of the Allotment Committee held on 5.2.2004, notings dated
9.6.2004 and 20.6.2004 recorded by Principal Secretary, Industries and Commerce
that the possibility of using the land in a manner which may generate maximum
revenue may be explored rather than choosing the easy way out of changing land
use to residential and held that the apprehension expressed by learned counsel
for the petitioners that the policy has been changed only to accommodate M/s. A.B.
Motions (Pvt.) Limited which was intending to set up multiplexes on the land in
question is not entirely without basis. The Division Bench opined that the 18
recommendations made by the Allotment Committee on 5.2.2004 have direct bearing
on the final decision taken and conveyed vide Memo dated 5.8.2004 and,
therefore, the same is liable to be quashed.
16.
Shri P.S. Patwalia and Shri C.A. Sundaram, senior advocates and
other learned counsel appearing for the writ petitioners-appellants extensively
referred to the pleadings of the parties and documents produced by them and
argued that the High Court committed an error by declining to invoke the
doctrine of legitimate expectation despite the fact that the policy decision
contained in Memo dated 26.12.2001 for earmarking 20-30% area for Industrial
Housing was acted upon more than once by carving out residential plots in
different focal points and allotting the same to the successful applicants.
Learned counsel relied upon the ratio of judgments in Food Corporation of India
v. M/s. Kamdhenu Cattle Feed Industries (supra) and Union of India v. Hindustan
Development Corporation and others (supra) and argued that refusal of the State
Government to approve utilization of some portions of land in focal point, Mohali
for carving out residential pockets was wholly arbitrary and the Division Bench
was not at all justified in declining relief to the writ petitioners only on
the ground that at the time of submitting applications, they knew that the
Corporation will 19 not be obliged to allot plots to the successful applicants
and that draw of lots was held with a clear indication that the same would be
provisional.
Learned
senior counsel emphasized that residential pockets were carved out by the
Corporation in focal point, Mohali in consonance with the policy contained in
Memo dated 26.12.2001 and when the Division Bench held that the decision
contained in Memo dated 5.8.2004 is vitiated due to malafides, a direction
ought to have been given for allotment of residential plots to the successful
applicants. Learned counsel further argued that even though the draw held in
furtherance of advertisement dated 23.3.2004 was provisional, after having
treated the same as final and allotted residential plots to those who had
applied for plots in focal points at Patiala and Ludhiana, the Corporation
cannot refuse to fulfill its promise of allotting plots to those who had
applied for the plots in focal point, Mohali.
17.
Learned counsel appearing for the State and the Corporation argued
that the writ petitioners are not entitled to invoke the doctrines of
promissory estoppel and legitimate expectation because at the time of
submitting applications, they were very much aware of the stipulation contained
in the format of application that the Corporation will not be obliged to allot
plots to them and this was made more explicit by incorporating a note in 20
advertisement dated 23.3.2004 that the draw of lots will be provisional and the
same would not confer any right upon the successful applicants to claim
allotment of plot or interest on the earnest money. Learned counsel submitted
that inclusion of the writ petitioners' name in the provisional list of the
successful applicants did not confer a right upon them to seek allotment of
plots because the decision of Plan Approval Committee of the Corporation to
approve the layouts of residential pockets in Phases VIII-A and VIII-B, Mohali
was subject to sanction of change of land use and the Allotment Committee had
categorically opined that no allotment may be made by the Corporation for
housing purposes. Learned counsel then submitted that the State Government's
decision to approve the Corporation's proposal for earmarking 20-30% land for
Industrial Housing did not result in change of the land use which continued to
be industrial and the Corporation had no right to suo motu change the land use
from industrial to residential.
Learned
counsel submitted that any change of land use is required to be approved by the
competent authority constituted under the 1995 Act and the State Government
rightly declined to approve change of land use from industrial to residential
because the same would have seriously undermined the object of
industrialization of different parts of the State. Learned counsel assailed the
quashing of the decision contained in Memo dated 5.8.2004 by arguing that the
Division Bench committed serious error in declaring that the 21 said decision
is vitiated due to malafides merely because the Allotment Committee had
considered the possibility of utilizing land in Phases VIII-A and VIII-B,
Mohali for commercial purposes including construction of multiplexes. Learned
counsel laid considerable emphasis on the fact that the State Government had
not accepted the recommendations made by the Plan Approval Committee of the
Corporation or the Allotment Committee and submitted that this, by itself, was
indicative of the fact that ultimate decision of the Government was not
influenced by any extraneous consideration.
Learned
counsel lastly argued that the Corporation cannot, on its own, allot land in
any focal point for a purpose other than industrial and, in any case, land use
cannot be changed from industrial to residential without complying with the
relevant provisions of the 1995 Act.
18.
We have considered the respective arguments/submissions and
scrutinized the records. We shall first consider whether the State Government's
refusal to sanction change of land use from industrial to residential is
vitiated due to malafides or arbitrary exercise of power. The Division Bench of
the High Court answered this question in negative by relying upon notings dated
9.6.2004 and 20.6.2004 recorded by Principal Secretary, Industries and
Commerce, minutes of the meeting of Allotment Committee held on 5.2.2004 wherein
a conditional decision was taken to 22 allot 46 acres of land at Mohali to M/s.
Quark and proposal for allotment of 40-50 acres of land to M/s. A.B. Motions
(Pvt.) Limited was considered. In the opinion of the Division Bench, refusal of
the Government to sanction change of land use had close link/nexus with the
decision taken and/or recommendations made by the Allotment Committee, which
gave an impression that the State Government wanted to favour those who were
intending to set up multiplex complexes.
19.
In our view, the aforesaid conclusion of the Division Bench of the
High Court is not based on correct appreciation of the factual matrix and the
background in which the Government declined to sanction change of land use from
industrial to residential. It is not in dispute that the State Government
acquired land and handed over the same to the Corporation which, as mentioned
above, was created for developing infrastructure necessary for
industrialization of different areas of the State. The land placed at the
disposal of the Corporation was meant to be used for industrial purposes. After
carrying out necessary development, the Corporation allotted land to those
interested in setting up industrial units. In December 2001, the State
Government approved the proposal of the Corporation for earmarking 20-30% of
the land for Industrial Housing in the existing and coming up focal points and
growth centres developed by the Corporation.
20.
23 The object underlying this policy decision was to provide some
land for residential purpose to those who had set up or were intending to set
up industrial units and the workers already employed or to be employed in such
units. It was felt that the availability of residential facility within the
focal point or growth centre will help in accelerating industrialization of the
area.
This is
the reason why the phrase `Industrial Housing' was used in contrast to the term
`residential' in Memo dated 26.10.2001. This is also the reason why Plan
Approval Committee of the Corporation had, while approving layouts of
residential pockets in Phases VIII-A and VIII-B had made it subject to approval
of change of land use under the 1995 Act. In its meeting held on 5.2.2004, the
Allotment Committee did recommend amendments in Industrial Policy 2003 to
facilitate development of industrial parks/estates/agro-parks/I.T. parks and
multiplex complexes, but unequivocally opposed the idea of allotment of land
for housing purposes.
The issue
was then considered by the State Government and an unequivocal decision was
taken not to allow change of land use from industrial to residential. The
record produced before the High Court and the documents produced before this
Court do not show that the State Government had sanctioned change of land use
in Phases VIII-A and VIII-B, Mohali from industrial to commercial and allowed
setting up of multiplex complexes within the focal points or growth centres.
The writ petitioners have also not 24 placed any material before this Court to
show that the State Government had approved conditional allotment of land to
M/s. Quark by the Allotment Committee or accepted the tentative recommendation
made by it for allotment of land to M/s. A.B. Motion (Pvt.) Ltd.. Rather, the
events which followed the State Government's refusal to sanction change of land
use from industrial to residential demonstrate that the said decision was in
consonance with the policy of industrialization which was unquestionably in public
interest. In August 2004, the Corporation issued an advertisement which was
published in `The Tribune' dated 13.8.2004, inviting applications for 65
industrial plots. In its meting held on 13.12.2005, the Allotment Committee
decided to allot 39.3 acres land in Phase VIII-A, focal point, Mohali to M/s.
Wipro
Limited for setting up its unit of Software and I.T. Enabled Services because
the same was expected to attract investment of Rs.1336 crores and generate
employment opportunities for more than 9000 people. The Committee also decided
to allot 25 acres land to M/s. Tata Consultancy Services for setting up their
Software Development Centre by making an investment of Rs.25 crores with an
employment potential of 575 persons.
The High
Court appears to have been unduly influenced by the fact that the Allotment
Committee had considered a proposal for allotment of land to M/s. A.B. Motions
(Pvt.) Ltd.. However, in the absence of any tangible or substantive evidence to
show that the State Government had taken a 25 conscious decision to allot the
surplus land in Phases VIII-A and VIII-B, Mohali for construction of multiplex
complexes or for any purpose other than industrial, the Division Bench of the
High Court was not at all justified in recording a finding that the decision
contained in Memo dated 5.8.2004 is vitiated due to malafides.
20. It is
trite to say that while exercising power of judicial review, the superior
courts should not readily accept the charge of malus animus laid against the
State and its functionaries. The burden to prove the charge of malafides is
always on the person who moves the Court for invalidation of the action of the
State and/or its agencies and instrumentalities on the ground that the same is
vitiated due to malafides and the courts should resist the temptation of
drawing dubious inferences of malafides or bad faith on the basis of vague and
bald allegations or inchoate pleadings. In such cases, wisdom would demand that
the Court should insist upon furnishing of some tangible evidence by the
petitioner in support of his/her allegations. It must always be remembered that
in a democratic polity like ours, the functions of the Government are carried
out by different individuals at different levels.
The
issues and policy matters which are required to be decided by the Government
are dealt with by several functionaries some of whom may record notings on the
files favouring a particular person or group of persons.
26
Someone may suggest a particular line of action, which may not be conducive to
public interest and others may suggest adoption of a different mode in larger
public interest. However, the final decision is required to be taken by the
designated authority keeping in view the larger public interest.
The
notings recorded in the files cannot be made basis for recording a finding that
the ultimate decision taken by the Government is tainted by malafides or is
influenced by extraneous considerations. The Court is duty bound to carefully
take note of the same. In this context, reference can usefully be made to the
decision of the Constitution Bench in E.P. Royappa v. State of Tamil Nadu
(1974) 4 SCC 3. In that case, the petitioner, who was, at one time holding the
post of Chief Secretary of the State, questioned the decision of the Government
to post him as an Officer-on-Special Duty.
One of
the grounds on which he attacked the decision of the Government was that the
Chief Minister of the State, Shri K. Karunanidhi was ill- disposed against him.
While dealing with the question whether the transfer and posting of the
petitioner was vitiated due to malafides, Bhagwati, J.
speaking
for self and Y.V. Chandrachud and V.R. Krishna Iyer, JJ., observed:
"Now,
when we examine this contention we must bear in mind two important
considerations. In the first place, we must make it clear, despite a very
strenuous argument to the contrary, that we are not called upon to investigate
into acts of maladministration by the political Government headed by the 27
second respondent. It is not within our province to embark on a far-flung
inquiry into acts of commission and omission charged against the second
respondent in the administration of the affairs of Tamil Nadu. That is not the
scope of the inquiry before us and we must decline to enter upon any such inquiry.
It is one thing to say that the second respondent was guilty of misrule and
another to say that he had malus animus against the petitioner which was the
operative cause of the displacement of the petitioner from the post of Chief
Secretary. We are concerned only with the latter limited issue, not with the
former popular issue. We cannot permit the petitioner to side track the issue
and escape the burden of establishing hostility and malus animus on the part of
the second respondent by diverting our attention to incidents of suspicious
exercise of executive power.
That
would be nothing short of drawing a red herring across the trail. The only
question before us is whether the action taken by the respondents includes any
component of mala fides; whether hostility and malus animus against the
petitioner were the operational cause of the transfer of the petitioner from
the post of Chief Secretary.
Secondly,
we must not also overlook that the burden of establishing mala fides is very
heavy on the person who alleges it. The allegations of mala fides are often
more easily made than proved, and the very seriousness of such allegations
demands proof of a high order of credibility. Here the petitioner, who was
himself once the Chief Secretary, has flung a series of charges of oblique
conduct against the Chief Minister. That is in itself a rather extraordinary
and unusual occurrence and if these charges are true, they are bound to shake
the confidence of the people in the political custodians of power in the State,
and therefore, the anxiety of the Court should be all the greater to insist on
a high degree of proof. In this context it may be noted that top administrators
are often required to do acts which affect others adversely but which are
necessary in the execution of their duties. These acts may lend themselves to
misconstruction and suspicion as to the bona fides of their author when the
full facts and surrounding circumstances are not known. The Court would,
therefore, be slow to draw dubious inferences from incomplete facts placed
before it by a party, particularly when the imputations are grave and they are
made against the holder of an office which has a high responsibility in the
administration. Such is the judicial perspective in evaluating charge of unworthy
conduct against ministers and other high authorities, not because of any
special status which they are supposed to enjoy, nor because they are highly
placed in social life or administrative set up--these considerations are wholly
irrelevant in judicial approach--but 28 because otherwise, functioning
effectively would become difficult in a democracy."
(Emphasis
supplied)
21.
The issue deserves to be considered from another angle. Section 79
of the 1995 Act, the applicability of which to the case in hand has not been
questioned by the writ petitioners-appellants, mandates that after coming into
operation of any Master Plan in any area, no person shall use or permit to be
used any land or carry out development in that area otherwise than in
conformity with such Master Plan. Proviso to this section empowers the
competent authority to allow continuance of any use of any land for a maximum
period of 10 years for the purpose for which it was being used on the date of
enforcement of the Master Plan. Section 81 of that Act lays down the procedure
for change of land use. In terms of sub-section (2) of Section 81, even a
department of the State Government or the Central Government or a local
authority is required to notify to the competent authority of its intention to
carry out any development in respect of any land or change of use. The
competent authority can object to such development or change of land use. In
that event, the matter is required to be considered and decided by the State
Government. In view of these provisions, the State Government was well within
its power to take appropriate decision on the proposal made by the Corporation
to change the land use from industrial to 29 residential and we do not find any
fault with its decision not to sanction such change.
22.
We shall now deal with the question whether the writ petitioners
are entitled to allotment of residential plots in Phases VIII-A and VIII-B,
Mohali. As noted herein above, the writ petitioners had invoked the doctrines
of promissory estoppel and legitimate expectation and urged that even though
the application form contained a stipulation that acceptance of application and
earnest money will not put the Corporation under an obligation to allot a plot
to the applicant, they were reasonably sure of getting residential plots
because in 2002 the Corporation had undertaken a similar exercise and allotted
138 freehold plots in focal point, Mohali by inviting applications and holding
draw of lots.
23.
We are in complete agreement with the Division Bench of the High
Court that no promise much less an enforceable promise was made by the
Corporation to the prospective applicants that by making an application
pursuant to the advertisement and on being declared successful in the draw of
lots, they will get residential plots. Rather, being conscious of the fact that
in terms of the approval accorded by the State Government vide Memo 30 dated
26.12.2001, it could utilize 20-30% area of the focal point only for Industrial
Housing, the Corporation had made it clear to the prospective applicants that
there is no certainty of their getting residential plots in Phases VIII-A and
VIII-B, Mohali. The decision taken by Plan Approval Committee of the
Corporation to approve the layouts of residential pockets in Phases VIII-A and
VIII-B, Mohali was not final. The same was subject to sanction of change of
land use in accordance with the provisions of the 1995 Act. The Allotment
Committee made a clear recommendation against utilization of surplus land for
housing purposes. The writ petitioners were very much aware of the tentative
character of the initial advertisement as also the advertisement issued for
holding draw of lots. By incorporating note in the second advertisement, which
has been reproduced herein above, the Corporation had made it known to every
one that the entire exercise was provisional and those who did not want to
participate in that exercise were at liberty to seek refund of the earnest
money. To put it differently, the Corporation did not make any representation
to the prospective applicants which induced them to part with their money or
adversely change their position. Therefore, the High Court rightly refused to
invoke the doctrine of promissory estoppel in favour of the writ petitioners.
24.
In Motilal Padampat Sugar Mills Co. Ltd. v. State of U.P., (1979)
2 SCC 409, a two-Judge Bench of this Court discussed the doctrine of promissory
estoppel in great detail and laid down the various propositions including the
following:
"The
true principle of promissory estoppel, therefore, seems to be that where one
party has by his words or conduct made to the other a clear and unequivocal
promise which is intended to create legal relations or affect a legal
relationship to arise in the future, knowing or intending that it would be
acted upon by the other party to whom the promise is made and it is in fact so
acted upon by the other party, the promise would be binding on the party making
it and he would not be entitled to go back upon it, if it would be inequitable
to allow him to do so having regard to the dealings which have taken place
between the parties, and this would be so irrespective of whether there is any
pre-existing relationship between the parties or not."
[extracts
from paragraph 8] "The law may, therefore, now be taken to be settled as a
result of this decision, that where the Government makes a promise knowing or
intending that it would be acted on by the promisee and, in fact, the promisee,
acting in reliance on it, alters his position, the Government would be held
bound by the promise and the promise would be enforceable against the
Government at the instance of the promisee, notwithstanding that there is no
consideration for the promise and the promise is not recorded in the form of a
formal contract as required by Article 299 of the Constitution."
[extracts
from paragraph 15]
25.
A contrary view was expressed by another two-Judge Bench in Jit
Ram v. State of Haryana (1981) 1 SCC 11, but the law laid down in 32 Motilal
Padampat Sugar Mills Co. Ltd. v. State of U.P. (supra) was reiterated in Union
of India v. Godfrey Philips India Ltd. (1985) 4 SCC 369, which was decided by a
three-Judge Bench. Bhagwati, C.J. with whom the other two members of the Bench
agreed on the exposition of law relating to the doctrine of promissory
estoppel, observed:
"Of
course we must make it clear, and that is also laid down in Motilal Sugar Mills
case that there can be no promissory estoppel against the Legislature in the
exercise of its legislative functions nor can the Government or public
authority be debarred by promissory estoppel from enforcing a statutory
prohibition. It is equally true that promissory estoppel cannot be used to
compel the Government or a public authority to carry out a representation or
promise which is contrary to law or which was outside the authority or, power
of the officer of the Government or of the public authority to make. We may
also point out that the doctrine of promissory estoppel being an equitable
doctrine, it must yield when the equity so requires; if it can be shown by the
Government or public authority that having regard to the facts as they have
transpired, it would be inequitable to hold the Government or public authority
to the promise or representation made by it, the Court would not raise an
equity in favour of the person to whom the promise or representation is made
and enforce the promise or representation against the Government or public
authority. The doctrine of promissory estoppel would be displaced in such a
case, because on the facts, equity would not require that the Government or
public authority should be held bound by the promise or representation made by
it. This aspect has been dealt with fully in Motilal Sugar Mills case and we
find ourselves wholly in agreement with what has been said in that decision on
this point."
26.
In Hira Tikoo v. Union Territory, Chandigarh (2004) 6 SCC 765,
this Court considered whether the High Court was justified in refusing to
invoke the doctrine of promissory estoppel for issuing a mandamus to the
respondent-Chandigarh Administration to allot industrial plots to the
petitioners, who had applied in response to an advertisement issued in 1981.
The Court
noted that some of the successful applicants were given possession of the plots
but majority of them were not given allotment letters on the ground that the
land formed part of the reserved forest and partially approved the decision of
the High Court by making the following observations:
"Surely,
the doctrine of estoppel cannot be applied against public authorities when
their mistaken advice or representation is found to be in breach of a statute
and therefore, against general public interest. The question, however, is
whether the parties or individuals, who had suffered because of the mistake and
negligence on the part of the statutory public authorities, would have any
remedy of redressal for the loss they have suffered. The "rules of
fairness" by which every public authority is bound, require them to
compensate loss occasioned to private parties or citizens who were misled in
acting on such mistaken or negligent advice of the public authority. There are
no allegations and material in these cases to come to a conclusion that the
action of the authorities was mala fide. It may be held to be careless or
negligent. In some of the English cases, the view taken is that the public
authorities cannot be absolved of their liability to provide adequate monetary
compensation to the parties who are adversely affected by their erroneous
decisions and actions. But in these cases, any directions to the public
authorities to pay monetary compensation or damages would also indirectly harm
general 34 public interest. The public authorities are entrusted with public
fund raised from public money. The funds are in trust with them for utilisation
in public interest and strictly for the purposes of the statute under which
they are created with specific statutory duties imposed on them. In such a
situation when a party or citizen has relied, to his detriment, on an erroneous
representation made by public authorities and suffered loss and where the
doctrine of "estoppel" will not be invoked to his aid, directing
administrative redressal would be a more appropriate remedy than payment of
monetary compensation for the loss caused by non-delivery of the possession of
the plots and consequent delay caused in setting up industries by the
allottees."
27.
The plea of the writ petitioners that they had legitimate
expectation of being allotted residential plots in Phases VIII-A and VIII-B in
Mohali because in 2002 138 plots were allotted to the successful applicants
sans merit. At the cost of repetition, it is necessary to mention that the writ
petitioners had submitted applications knowing fully well that the same would
not obligate the Corporation to allot plots to them. It is rather intriguing
that even though approval of the layouts of residential pockets in Phases
VIII-A and VIII-B, Mohali by Plan Approval Committee of the Corporation was
subject to approval being accorded by the competent authority under the 1995
Act for change of land use from industrial to residential, and the Allotment
Committee in which Managing Director of the Corporation had taken part, made a
negative recommendation in the matter of allotment of land for housing
purposes, the same officer authorized issue 35 of advertisement dated 23.3.2004
for holding provisional draw of lots. In our view, this exercise was wholly
unnecessary and uncalled for. If the concerned officer had not acted in haste
and waited for the decision of the competent authority on the issue of change
of land use, the parties may not have been forced to fight this unwarranted
litigation. Be that as it may, the writ petitioners cannot, by any stretch of
imagination, claim that they had a legitimate expectation in the matter of
allotment of plots despite the fact that change of land use was yet to be
sanctioned.
28.
The doctrine of legitimate expectation has been described in
Halsbury's Laws of England 4th Edn. in the following words:
"A
person may have a legitimate expectation of being treated in a certain way by
an administrative authority even though he has no legal right in private law to
receive such treatment. The expectation may arise either from a representation
or promise made by the authority, including an implied representation, or from
consistent past practice."
29.
In Food Corporation of India v. Kamdhenu Cattle Feed Industries
(supra), this Court considered whether by submitting tender in response to
notice issued by the Food Corporation of India for sale of stocks of damaged
food grains, the respondent had acquired a right to have its tender accepted
and the appellant was not entitled to reject the same. While approving the 36
view expressed by the High Court that rejection of the highest tender of the
writ petitioner-respondent was legally correct, this Court observed:
"The
mere reasonable or legitimate expectation of a citizen, in such a situation,
may not by itself be a distinct enforceable right, but failure to consider and
give due weight to it may render the decision arbitrary, and this is how the
requirement of due consideration of a legitimate expectation forms part of the
principle of non-arbitrariness, a necessary concomitant of the rule of law.
Every legitimate expectation is a relevant factor requiring due consideration
in a fair decision-making process.
Whether
the expectation of the claimant is reasonable or legitimate in the context is a
question of fact in each case.
Whenever
the question arises, it is to be determined not according to the claimant's
perception but in larger public interest wherein other more important
considerations may outweigh what would otherwise have been the legitimate
expectation of the claimant. A bona fide decision of the public authority
reached in this manner would satisfy the requirement of non-arbitrariness and
withstand judicial scrutiny. The doctrine of legitimate expectation gets
assimilated in the rule of law and operates in our legal system in this manner
and to this extent."
30.
In Union of India v. Hindustan Development Corporation (supra),
the doctrine of legitimate expectation was explained in the following words:
".
... For legal purposes, the expectation cannot be the same as anticipation. It
is different from a wish, a desire or a hope nor can it amount to a claim or
demand on the ground of a right.
However
earnest and sincere a wish, a desire or a hope may be and however confidently
one may look to them to be fulfilled, they by themselves cannot amount to an
assertable expectation and a mere disappointment does not attract legal
consequences.
A pious
hope even leading to a moral obligation cannot amount to a legitimate
expectation. The legitimacy of an expectation can be inferred only if it is
founded on the sanction of law or 37 custom or an established procedure
followed in regular and natural sequence. Again it is distinguishable from a
genuine expectation. Such expectation should be justifiably legitimate and protectable.
Every such legitimate expectation does not by itself fructify into a right and
therefore it does not amount to a right in the conventional sense."
31.
The same principle has been stated and reiterated in Punjab
Communications Ltd. v. Union of India (1999) 4 SCC 727, Dr. Chanchal Goyal v.
State of Rajasthan (2003) 3 SCC 485, J.P. Bansal v. State of Rajasthan (2003) 5
SCC 134, State of Karnataka v. Uma Devi (2006) 4 SCC 1, Kuldeep Singh v.
Government of NCT of Delhi (2006) 5 SCC 702, Ram Pravesh Singh v. State of
Bihar (2006) 8 SCC 381 and Sethi Auto Service Station v. DDA (2009) 1 SCC 180.
In the last mentioned judgment, the Court referred to various precedents and
observed:
"..................the
golden thread running through all these decisions is that a case for
applicability of the doctrine of legitimate expectation, now accepted in the
subjective sense as part of our legal jurisprudence, arises when an
administrative body by reason of a representation or by past practice or
conduct aroused an expectation which it would be within its powers to fulfil
unless some overriding public interest comes in the way. However, a person who
bases his claim on the doctrine of legitimate expectation, in the first
instance, has to satisfy that he has relied on the said representation and the
denial of that expectation has worked to his detriment. The Court could
interfere only if the decision taken by the authority was found to be
arbitrary, unreasonable or in gross abuse of power or in violation of principles
of natural justice and not taken in public interest. But a claim based on mere
legitimate expectation 38 without anything more cannot ipso facto give a right
to invoke these principles."
32.
The plea of discrimination raised by the appellants is being mentioned
only to be rejected because no similarity has been pointed out between their
cases and the cases of those who had applied for allotment of plots in focal
point, Patiala and Phase VIII (Jeevan Nagar), Ludhiana except that a common
draw was held in furtherance of advertisement dated 23.3.2004. In any case, in
view of our interpretation of the policy decision contained in Memo dated
26.12.2001, the allotment made in two other focal points, cannot enure to the
appellants' advantage and a mandamus cannot be issued in their favour because
that would result in compelling the competent authority to sanction change of
land use from industrial to residential in contravention of the policy decision
taken by the State Government.
33.
In the result, the appeals arising out SLP(C) Nos.1969/2006,
2786/2006, 3874/2006, 4761/2006, 15967/2006 and 13609/2007 are dismissed and
the one arising out of SLP (C) No.14133/2006 filed by the State of Punjab is
allowed. Consequently, all the writ petitions filed before the High Court shall
stand dismissed. The parties are left to bear their own costs.
.............................J. [ G.S. Singhvi ]
.............................J. [ Dr. B.S. Chauhan]
New Delhi,
March 09, 2010.
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