Reportable

IN THE SUPREME COURT OF INDIA

CIVIL APPELLATE JURISDICTION

CIVIL APPEAL NOS.  281-282  OF 2012 (Arising out of S.L.P. (civil) Nos. 5810-5811 of 2011)

Collector, Distt. Gwalior and another ... Appellants

Versus

Cine Exhibitors P. Ltd. and another     ... Respondents

J U D G M E N T   

Dipak Misra, J.

Special leave granted in both the petitions.

2. In  these  two  appeals,  the  defensibility  and  

legal  pregnability  of  the  judgment  and  order  dated  28th  

March, 2010 passed by the Division Bench of High Court of  

Judicature of Madhya Pradesh, Jabalpur, Bench at Gwalior  

in Writ Appeal No. 234 of 2007 and the order dated 22nd

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September,  2010  in  R.P.  No.  83  of  2010  whereby  the  

Division  Bench  has  dislodged  the  order  passed  by  the  

learned  Single  Judge  in  Writ  Petition  No.  1718  of  2002  

wherein the  writ  court  had declined to interfere  with the  

order dated 9.8.2002 passed by the Chief Executive Officer,  

Gwalior Development Authority (for short “ the GDA”), who,  

by  the  said  order,  had  terminated  the  lease  of  the  first  

respondent  herein  and  directed  it  to  surrender  the  

possession of the property within seven days, failing which  

appropriate action to be taken against it in accordance with  

law, is called in question.

3. The succinct expose’ of facts are that the GDA  

issued  an  advertisement  for  allotment  of  plot  No.  1  

admeasuring 40160 sq. feet situated in the locality known  

as  Mayur  Market  for  the  purpose  of  construction  of  a  

cinema house and, in the public auction, the respondent-

company, the first respondent herein, became the highest  

bidder and accordingly, a lease agreement was executed on  

27.5.1978 between the GDA and the respondent company.  

The said lease agreement was for a period of thirty years  

with the stipulation of a right of renewal subject to certain

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conditions.  It was asserted in the writ petition that after  

execution  of  the  lease  deed,  the  respondent  company  

constructed a  cinema hall  and commenced the  business.  

As  certain  disputes  arose  between  the  directors  of  the  

company,  it  was  eventually  resolved  that  the  licence  for  

running  the  cinema  should  be  surrendered  and  in  

consonance with the resolution, a letter was issued to the  

Collector concerned, who cancelled the licence for running  

the cinema hall.  After closure of the cinema hall, the GDA,  

by communication dated 2.8.2002, terminated the lease and  

directed for handing over possession of the land in question.

4. It  was  contended  before  the  learned  Single  

Judge  that  the  notice  for  cancellation  of  lease  was  not  

served  on  it  and  the  allegations  that  there  had  been  

violation of the terms and conditions of the agreement were  

absolutely unsustainable and, therefore, the eventual act of  

termination was sensitively susceptible.  It was also urged  

that  as  permission  was  granted  for  raising  permanent  

construction,  the lease had the character of  a permanent  

lease and could not have been terminated by the GDA.  The  

GDA  combated  the  aforesaid  stand  put  forth  by  the

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respondent-company  and  countered  the  same  by  

contending, inter alia, that there had been violation of the  

terms and conditions of the agreement; that the stance of  

putting the lease on the pedestal of a permanent lease was  

sans  substance;  that  the  plea  that  the  notice  for  

cancellation  of  lease  was  not  served was  contrary  to  the  

documents brought on record; that reminders were served  

on the respondent-company; that the lease was granted for  

a specific purpose and when the said purpose had totally  

melted into extinction, it was within the legal province of the  

GDA  to  cancel  the  lease  and  take  appropriate  steps  for  

eviction.

5. The  learned  Single  Judge  took  note  of  the  

proponements  canvassed  by  the  learned  counsel  for  the  

parties and posed the question whether the GDA had the  

right to terminate the lease of the petitioner and, thereafter,  

scanning  the  terms  and  conditions  of  the  lease  deed,  

expressed the view that as there has been cancellation of  

the licence of the cinema hall, the order of termination of  

the  lease  was  valid  and  the  petitioner  would  have  an  

opportunity  of  hearing  before  steps  are  taken  for  its

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dispossession.   Being of  this  view,  he  dismissed the  writ  

petition.   Be it  noted, a contention was raised before the  

learned Single Judge that the land in question is owned by  

the State but the same was granted on lease by the GDA,  

which  is  absolutely  impermissible,  however,  the  learned  

Single Judge did not think it appropriate to dwell upon the  

same  on  the  foundation  that  the  said  question  will  be  

decided  when  the  State  Government  takes  any  action  

against the petitioner by the respondent GDA.

6. Being dissatisfied with the aforesaid order, the  

first  respondent  preferred a  writ  appeal  and the  Division  

Bench in the intra-court appeal expressed the opinion that  

no notice of termination of lease was given despite the same  

being imperative and secondly, there was no commission of  

breach  of  the  express  conditions  of  the  lease  deed  and  

hence,  the  cancellation  was  totally  unsustainable.   With  

regard to taking over possession, the Division Bench opined  

that the authority cannot assume the jurisdiction of taking  

possession without taking recourse to law.  It is apt to note  

that  on  behalf  of  the  State,  a  stand  was  vigorously  

canvassed that when there has been no transfer of the land

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by the State in favour of the GDA, the grant of lease by the  

GDA in favour of the first respondent-company is  ab initio   

void and,  therefore,  no  right  flows  in  favour  of  the  said  

respondent to retain the possession.  The learned Judges  

repelled the said stand on the base that when the GDA had  

granted lease in the auction that was conducted with the  

knowledge of the State, it is estopped from raising the plea  

that  the  land  had  not  been  transferred  to  the  GDA.  

Expressing  this  view,  the  appeal  was  dismissed  in  the  

ultimate eventuality.

7. Mr.  B.S. Banthia,  learned counsel  appearing  

for  the  appellants,  questioning  the  sustainability  of  the  

impugned orders, has raised the following contentions: -

(a) When an issue was raised before the High Court that  

the State had not transferred the land in favour of the  

GDA and, therefore, the GDA had no authority to deal  

with the land in any manner whatsoever, the said facet  

should have been dealt with in proper perspective and  

not brushed aside on the ground of estoppel.

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(b) The concept of promissory estoppel does not have any  

play when no competent authority of the Government  

had transferred the land in favour of the GDA as per  

the  requisite  procedure and as  a  sequitur,  any step  

taken by the GDA even in the presence of an officer  

will not debar the State to raise the plea as regards its  

right, title and interest within the period of limitation.

(c) The grant of lease being per se wholly vulnerable, the  

basic  infrastructure  collapses  and  once  the  

infrastructure  is  foundered,  the  super  structure  is  

bound to be razed to the ground.  To put it differently,  

when  the  GDA  had  no  right  to  lease  the  land  in  

question,  the  respondent-company  cannot  claim  a  

better right as a lessee than that of a lessor.

(d) It has become a common phenomenon to grab public  

property  by  adopting  maladroit  methodology  and,  

therefore, the Division Bench should not have scuttled  

the right of the State and its authorities on the ground  

of estoppel which, in fact, does not arise remotely.

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(e) The GDA has unequivocally admitted before this Court  

that  the  land in question was not  transferred in  its  

favour.   The  action  taken  by  the  State  Government  

should be given the stamp of approval.  

8. Mr.  Dhruv  Mehta,  learned  senior  counsel  

appearing for the respondent No. 1, countering the aforesaid  

submissions, submitted that the approach of the High Court  

in the writ appeal cannot be found fault with inasmuch as  

the scope of the writ petition out of which the writ appeal  

emerged  was  limited,  i.e.,  whether  the  lease  could  be  

cancelled by the GDA.  It is canvassed by him that there  

may be a cavil between the GDA and the State Government  

but by any stretch of imagination, the same cannot create  

any  kind  of  concavity  or  dent  in  the  right  of  the  first  

respondent to enjoy the benefit of the lease.  It is his further  

submission that  when the State  Government has become  

totally  oblivious  of  its  right,  if  any,  it  cannot  rise  like  a  

phoenix  and  put  forth  its  claim  to  the  property.   It  is  

highlighted by him that under the M.P. Town Improvement  

Trust  Act,  1960  (for  short  “the  1960  Act”),  and  Madhya  

Pradesh Nagar Tatha Gramin Adhiniyam, 1973 (for brevity

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“the 1973 Act”) the schemes having come into existence, the  

property had vested in the GDA and, therefore, the State  

Government has no right to interfere and in that backdrop,  

the finding recorded in the intra-court appeal that there has  

been lack of notice prior to the cancellation of the lease and  

further  no  violation  of  any  of  the  postulates  of  the  lease  

agreement cannot be flawed.

9. Mr. Neeraj Sharma, learned counsel appearing  

for the 2nd respondent, the GDA, contended that the land  

was  recorded  as  'Nazul’  meant  for  the  Public  Works  

Department and was never transferred to the GDA and in  

that background, the question of estoppel or acquiescence  

by the State Government does not arise.  In fact, submits  

the  learned counsel,  by  a  total  mistaken impression,  the  

land was put to auction and the lease deed was executed in  

favour  of  the  first  respondent.   Additionally,  it  is  

propounded by him that if any dispute has arisen, there is  

an arbitration clause which would enable the respondent-  

company to agitate its grievances barring eviction especially  

when the grant of lease is a void one.

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10. The  seminal  issue  that  emanates  for  

consideration is whether the Division Bench is justified in  

stating  in  a  sweeping  manner  that  when  the  GDA  had  

granted  the  lease  of  the  land  in  auction  within  the  

knowledge of the State, the State is estopped from raising  

any such ground that the land had not been transferred to  

the GDA after lapse of thirty years.  It is not disputed before  

us that the first respondent had not perfected its right, title  

and interest by way of adverse possession as it could not  

have been.  Evidently, the High Court has proceeded on the  

basis of the doctrine of promissory estoppel.  It is settled in  

law that the said doctrine is founded on the principles of  

equity and to avoid injustice.  The said principle cannot be  

soundly  embedded  or  treated  to  be  sacrosanct  when  a  

public authority carries out a representation or a promise  

which is prohibited by law or is devoid of the authority of  

law.   In  Union of India and others vs.  Godfrey Philips  

India  Ltd.,1 a  three  Judge  Bench  of  this  Court  has  

crystallised the principle thus:-

“....that  there  can  be  no  promissory  estoppel  against  the  legislature  in  the  exercise  of  its  

1 AIR 1986 SC 806

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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”

11.  In  Dr. Ashok Kumar Maheshwari vs.  State  

of  U.P.  and another  2  ,  a  two-Judge  Bench of  this  Court,  

after referring to the decision in Rishabh Kumar vs.  State  

of U.P. 3, proceeded to state as follows: -

“21. This  principle  was  reiterated in Union of India v. R.C. D’Souza AIR  1987  SC  1172  :  (1987)  2  SCC  211,  where  a  retired  army  officer  was  recruited  as  Assistant  Commandant on temporary basis and was called  upon  to  exercise  his  option  for  regularisation  contrary to the statutory rules.  It was held that it  would  not  amount  to  estoppel  against  the  Department.

22. Whether  a  Promissory  Estoppel, which is based on a ‘promise’ contrary  to  law  can  be  invoked  has  already  been  considered by this Court in Kasinka Trading v.  Union  of  India,  (1995)  1  SCC 274 :  (1995 AIR  SCW 680) as also in Shabi Construction Co. Ltd.  v.  City  &  Industrial  Development  Corporation  (1995) 4 SCC 301 wherein it is laid down that the  Rules of “Promissory Estoppel” cannot be invoked  for  the  enforcement  of  a  ‘promise’  or  a  

2 AIR 1998 SC 966 3 AIR 1987 SC1576

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‘declaration’  which is contrary to law or outside  the authority or power of the Government or the  person making that promise.”

In this context,  we may profitably refer to the decision of  

this Court in  M/s. Sharma Transport vs.  Government of  

A.P. and others  4   , wherein a three-Judge Bench opined that  

it is equally settled law that promissory estoppel cannot be  

used compelling the Government or a public authority  to  

carry out a representation or promise which is prohibited by  

law  or  which  is  devoid  of  the  authority  or  power  of  the  

officer of the Government or the public authority to make.  

In this regard, we may also usefully refer to the observations  

made in S. Sethuraman vs. R. Venkataraman and others  5    

which is to the effect that if jurisdiction cannot be conferred  

by consent,  it  cannot clothe the authority to exercise the  

same  in  an  illegal  manner.   Recently,  in  Rajendra  

Agricultural  University vs.  Ashok  Kumar  Prasad  and  

others6, it has been laid down that non-compliance with the  

mandatory statutory requirement will make the act invalid  

and cannot be regarded as a representation held out by the  

Government  creating  any  right  to  seek  the  benefit  by  4 AIR 2002 SC 322 5 AIR 2007SC 2499 6 (2010) 1 SCC 730

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inviting  the  doctrine  of  promissory  estoppel  against  the  

government.

12. In the case at hand, admittedly,  the land is  

nazul land meant for the Public Works Department.  It had  

been urged before the High Court that the land in question  

was not transferred in favour of the GDA.  The submission  

of Mr. Mehta, learned senior counsel for the respondent No.  

1, is that the land had vested with the Town Improvement  

Trust, Gwalior constituted under the 1960 Act and the said  

vesting continued under the 1973 Act.  To appreciate the  

said submission, we may analyse the scheme of the 1960  

Act.  The said Act was enacted to consolidate and amend  

the law relating to the establishment of improvement trust  

for the purpose of making and executing town improvement  

scheme in certain towns of Madhya Pradesh.  Chapter II of  

the Act deals with the Constitution of the Trust. Chapter III  

provides for  conduct  of  business.   Chapter  IV deals  with  

improvement  schemes.   Various  schemes  are  being  

enumerated under various provisions in the said chapter.  

Section 52 which occurs in Chapter IV provides for issuance  

of  notification  of  sanction  of  improvement  schemes  and

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order regarding vesting a property in the Trust.  The said  

provision being relevant is reproduced below : -

“52. Notification  of  sanction  of  improvement  

scheme and order regarding vesting of property in the  

Trust. – (1) Whenever the State Government sanctions an  

improvement scheme, it –

(a) shall announce the fact by notification and  except  in  the  case  of  a  deferred  street  scheme,  development  scheme,  or  town  expansion scheme, the Trust shall forthwith  proceed to execute the same; and

(b) may  order  that  any  street,  square,  park,  open space or other land, or any other part  thereof,  which  is  the  property  of  the  Government  and  managed  by  the  Central  Government or the State Government shall,  subject to such condition as it may impose,  vest  in  the  Trust  for  the  purpose  of  the  scheme.

(2) The  publication  of  a  notification under sub-section (1)  in respect of  any scheme shall be conclusive evidence that the  scheme has been duly framed and sanctioned.”

On scanning of the aforesaid provision, it is luminous that  

sub-Section (2) of Section 52 postulates that publication of  

a notification under sub-section (1) in respect of any scheme

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shall be conclusive evidence that the scheme has been duly  

framed and sanctioned.  

13.   Chapter V of the Act deals with acquisition  

and disposal  of  land.   Section 67 empowers the Trust to  

acquire by purchase, lease or exchange any land within the  

area comprised in a sanctioned scheme for many persons  

under an agreement with such person.  Section 68 provides  

for  notice  of  acquisition  of  land.   As  the  learned  senior  

counsel for the respondent has placed heavy reliance on the  

said provision, the same is reproduced below :-    

“68.  Notice  acquisition  of  land- (1)  If  in  the  opinion of the Trust any land is required for the  purposes of any scheme sanctioned by the State  Government under Section 51, the Trust shall by  a  notice  published in  the  Gazette  and in  such  other  manner  may  be  prescribed,  signify  its  intention to acquire such land.  Such notice shall  specify  the  place  where  and  the  hours  during  with  the  maps  and  specifications  of  the  land  proposed to be acquired may be inspected.   

(2) The  owner  of  the  land  which has been notified under sub-section (1)  or  any other person interested therein may object to  the acquisition of such land within 80 days after  the publication of the notice in the Gazette.  

(3) Every objection under sub-section (2) shall be  made to the Trust in writing and the Trust shall  give the objector an opportunity of being heard in  person or by a duly authorised agent or pleader

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and shall  after  hearing all  such objections and  making such further inquiry, if may, as may be  necessary,”  take such decision as it  may deem  fit.”  

On a plain reading of the aforesaid provision, it  is clear as  

noon  day  that  if  in  the  opinion  of  the  Trust  any  land  is  

required for  the  purpose  of  any scheme sanctioned by  the  

State Government under Section 51, the Trust shall by notice  

published in the Gazette and by any such other manner as  

may be prescribed, signify its intention to acquire such land.  

Such notice, as stipulated therein, shall specify the place etc.  

The rest of the provision is, in a way, procedural in nature.  

Section  69  makes  a  provision  whereunder  the  Trust  may  

apply  to  the  State  Government  for  sanction to  acquire  the  

land.   Section  70  provides  for  procedure  for  sanction  of  

acquisition.  Section 71 provides for notification of acquisition  

and vesting of land in the Trust.   

14. Mr. Mehta has drawn immense inspiration  

from Section 71 which is as follows:-  

“71.  Notification of acquisition and vesting of  land in Trust – (1) After the acquisition of land is  sanctioned  by  the  State  Government  under  Section 70 the Trust may acquire such land by

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publishing in the Gazette a notice stating that it  had decided to acquire the land and has obtained  the  sanction  of  the  State  Government  for  the  acquisition thereof.

(2) When  a  notice  under  sub-section (1)  is  published in  the  Gazette  the  land  shall,  on  and  from  the  date  of  such  publication, vest absolutely in the Trust free from  all encumbrance.  

(3) Where any land is vested  in  the  Trust  under  sub-section   (2),  the  Trust  may by notice in writing , order any person who  may be in possession of the land to surrender or  deliver  possession  thereof  to  the  Trust  or  any  person duly authorised by it in this behalf within  thirty days of the service of the notice.   

(4) If any person refuses or fails to comply with  an order made under sub-section (3), the Trust  may take possession of the land and may for that  purpose cause to be sued such force as may be  necessary.”   

15. On  a  closer  scrutiny  of  the  schematic  

conception of the Act, especially the provisions contained in  

Chapter 5 of the 1960 Act dealing with the acquisition of  

land belonging to private persons, it is demonstrable that  

the  various  provisions  deal  with  the  acquisition  and  

improvement of the area under the planned schemes.     It  

is  seemly to  note  that  the  type  of  improvement  schemes  

being  delineated  under  Section  31  of  the  1960  Act  are

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fundamentally  general  improvement  schemes,  re-building  

scheme,  re-housing  schemes,  a  street  scheme,  deferred  

street  scheme,  development  scheme,  housing  

accommodation scheme, town expansion scheme, drainage  

or  drainage  including  sewage  disposal  scheme;  and  

playground, stadium and recreation ground scheme.  The  

aforesaid has nothing to do with the land belonging to the  

State Government.  Any land coming under the scheme or  

covered under it has to be governed by the procedure and  

guidelines  for  improvement.   It  is  a  different  concept  

altogether.  

16.  We will  be failing in our duty if  we do not  

refer to certain provisions,  namely, Sections 38 and 87 of  

the  1973  Act  as  our  attention  has  been  drawn  by  Mr.  

Mehta,   learned counsel  for  the respondent No.  1.   They  

read as follows:   

“38. Establishment  of  Town  and  Country  Development  Authority.  –  (1)  The  State  Government may,  by notification,  establish a  Town and Country Development Authority by  such  name  and  for  such  area  as  may  be  specified in the notification.

(2) The  duty  of  implementing  the  proposal  in  the  development  plan,  preparing

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one or more town development schemes and  acquisition  and  development  of  land  for  the  purpose  of  expansion or  improvement  of  the  area  specified  in  the  notification  under  sub- section  (1)  shall,  subject  to  the  provision  of  this  Act  vest  in  the  Town  and  Country  Development Authority established for the said  area.

Provided  that  the  duty  imposed  on  the  Town  and  Country  Development  Authority  shall, till that authority is established for any  area  under  sub-section  (1),  be  performed by  the  local  authority  having  jurisdiction  over  such area as if  it  were a Town and Country  Development Authority established under this  Act.

(3) On the  establishment  of  the  Town  and  Country  Development  Authority  for  the  area  to  which  the  proviso  to  sub-section  (2)  applies,  the  following  consequences  shall  ensue in relation to that area, namely : -

(i) all  assets  and  liabilities  acquired  and  incurred  by  the  local  authority  in  the  discharge of the duty under the proviso to sub- section (2) shall belong to and be demand to be  the  assets  and  liabilities  of  the  Town  and  Country Development Authority established in  place of such local authority;

(ii) all records and papers belonging to  the local authority referred to in clause (i) shall  vest  in  and  be  transferred  to  the  Town and  Country Development Authority established in  its place.

xxx xxx xxx xxx

87. Repeal,  Savings  and  construction  of  references. (1) As from the date of, -

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(a) the coming into force of the provisions of  Chapter II  the reference to Chief  Town   Planner in any enactment for  the time   being in force, shall  be construed as a   reference to the Director;

(b) the Constitution of a planning area, the   following  consequences  shall  ensue,   namely –

(i) The Madhya Pradesh Town Planning   Act, 1948 (No. 17 of 1948), shall stand   repealed in such area;

(ii) any land use map, draft development  or development plan prepared under the  said Act, shall be deemed to have been   prepared under this Act and all papers   relating thereto shall stand transferred to  the Director;

(C)  the  establishment  of  the  Town  and   Country Development  Authority for any  area  the  following  consequences  shall   ensue in relation to that, area, namely –

(i)  the  Madhya  Pradesh  Town   Improvement Trust Act, 1960 (No. 14 of  

1961), shall stand repealed in its application   to the said area,

(ii)  the  Town  Improvement  Trust   functioning within the jurisdiction of the  Town  and  Country  Development   Authority  so  established  shall  stand   dissolved  and  any  Town  Improvement   Scheme  prepared  under  the  said  Act,   shall in so far as it is not inconsistent   with the provisions of this Act be deemed  to have been prepared under this Act,

(iii) all assets and liabilities of the Town  Improvement Trusts shall belong to and  be deemed to be the assets and liabilities

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of  the Town and Country Development   Authority  established  in  place  of  such   Town Improvement Trust under Section   38;

iii-a)  grants and contributions payable to the  Town Improvement Trust shall continue   to be payable to the Town and Country   Development  Authority  established  in   place of such Town Improvement Trust   under Section 38;

(iv) all employees belonging to or under   the  control  of  the  Town  Improvement   Trust  referred  to  in  sub-clause  (ii)   immediately  before  the  date  aforesaid   shall be deemed to be the employees of   the  Town  and  Country  Development   Authority established for such area under  Section 38;

Provided that the terms and conditions of  service of  such employees shall  be the same  until  altered  by  the  Town  and  Country  Development  Authority  with  the  previous  sanction of the State Government :

Provided further that no sanction under  the foregoing proviso shall be accorded by the  State  Government  until  the  person  affected  thereby  is  given a  reasonable  opportunity  of  being heard;

(v)  all  records  and  papers  belonging  to  the  Town Improvement Trusts referred to in sub- clause (ii) shall vest in and be transferred  to  the Town and Country Development  Authority established in its place  under  Section 38.

(2) Notwithstanding the repeal of the Madhya  Pradesh Town Improvement Trusts Act,   1960  (No.  14  of  1961)  (hereinafter   referred to as the repealed Act),  under  

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sub-clause (i) of clause (c) of sub-section  (1), -

(a) all cases relating to compensation in  respect of acquisition and vesting of land  in the  Town Improvement Trust  under   Section  71  of  the  repealed  Act  and   pending  before  the  Town Improvement   Trust or the Tribunal or the Court of the  District  Judge  or  the  High  Court   immediately  before  the  date  of  such   repeal shall be dealt with and disposed of  by –

(i)  the Town and Country Development   Authority  established  in  place  of  such   Town Improvement Trust under Section   38;

(ii) the Tribunal to be constituted under  Section 73 of the repealed Act after the   commencement of the Madhya Pradesh   Nagar Tatha Gram Nivesh (Sanshodhan)  Adhiniyam, 1979;

(iii) the Court of the District Judge;

(iv) the High Court;

As the case may be, in accordance with  the provisions of the repealed Act, as if   this Act had not been passed;

(b) the Town and Country Development   Authority, the Tribunal, the Court of the  District Judge or the High Court, as the  case may be, may proceed to deal with   and disposed of the same from the stage  at which such cases were left over at the t ime of repeal.”

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17. If  we  have  correctly  understood  the  

submission of  Mr.  Mehta, learned senior counsel,  he has  

placed reliance on the said provisions solely for the purpose  

that  the  right  created  in  favour  of  the  GDA  remained  

unaffected and, in fact, was protected under the 1973 Act.  

There is no cavil over the said proposition of law.  But, a  

pregnant one, the crux of the matter is whether the land  

that was recorded as Nazul land meant for the Public Works  

Department got transferred to the GDA so that its right got  

concretized.    

18. It is apt to note that the lands belonging to the  

State  Government  are  dealt  with  in  the  Revenue  Book  

Circular and nazul lands are specifically adverted to in Part  

IV  of  the  said  Circular.   It  deals  with  management  and  

disposal  of  nazul  lands  within  the  limits  of  Municipal  

Corporation, municipal towns and notified areas.  Under the  

heading ‘What is Nazul’, it has been stated thus: -

“‘Nazul’ and ‘Milkiyat Sarkar’ Land which is the  property of Government and which –

(a) is not included in a holding in a village;

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(b) is not recorded as Banjar, scrub jungle, hills  and  rocks,  rivers,  village-forest  or  Government-forest;

(c) is  not  recorded  as  village  roads,  Gothan,  grazing land Abadi and pastures;

(d) is not reserved for any communal purpose  for the Nistar of the village; and

(e) is not service land;

falls under two classes viz. “Nazul” and “Milkiyat  Sarkar”.  Nazul includes such Government land  as  is  used  either  for  building  purposes  or  purposes of public convenience such as markets,  or  recreation  grounds  or  which  is  likely  to  be  used for such purposes in future.

Government  land  in  the  occupation or on the books of  a department of  the  State  Government  or  of  the  Central  Government  are  not  to  be  excluded  from  the  classification and will be recorded as “Nazul” or  “Milkiyat Sarkar”, as the case may be.  In brief, it  may be stated that “Nazul” is that land which has  a site value as opposed to an agricultural value.”

Clause  12 of  Section IV provides how nazul  land can be  

disposed of.  It reads as follows: -

“12. Nazul  land  can  be  disposed of in the following ways: -

(1) by permanent lease;

(2) by temporary lease;

(3) on no-claim agreement;

(4) on annual licence; and

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(5) transfer  in  favour  of  a  department  of  the  State  Government  or  other  State  Governments  or  the  Government  of  India  and vesting in favour of a local body.”

Clause 13 deals with the manner in which permanent leases  

are granted and Clause 14 deals with reservation of special  

plots.  For the sake of completeness, both the Clauses are  

reproduced below: -

“13. Permanent  leases –  (i)  Permanent  leases  are  granted  either  through  auction or without auction.

(ii) Permanent lease may be  granted without auction in the following cases: -

(1) When the land in question is adjacent  to  the  land of  the  applicant  and will  not be of any use to any person other  than the applicant.

(2) When  it  is  decided  to  condone  the  encroachment of an encroacher and to  grant  the  encroached  area  to  the  encroacher on permanent lease.

(3) When the land in question will be used  for  religious  charitable,  educational,  co-operative, public or social purposes.

(4) Plots  given to very poor persons in a  locality where only poor persons live.

(5) Any  other  land  for  which  there  are  adequate  reasons  for  foregoing  auction,  e.g.,  land  required  by  the  Madhya  Pradesh  Electricity  Board,  State Road Transport Corporation, etc.

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14. Reservation  of  special  plots. –  At  regular  settlement  all  Government  plots or sites which are likely to be valuable for  any special reason, such as their situation near a  line of railway or the like, or which in any scheme  of development have been set aside as specially  valuable or as being required for a public purpose  are  marked  of  by  the  Settlement  Officer  in  consultation with the Collector as reserved and  the disposal of all  such plots will  be subject to  the sanction of the State Government upon such  special terms as may be decided for each plot.

All  land within a  radius  of  100  yards  of  a  railway  station  and  all  land  within  40  yards  of  a  railway  station  boundary  should be reserved.

There will necessarily be  exceptions such as for instance where there is a  lay  out  already  sanctioned  by  Government  the  Collector will  maintain a list of  these plots and  with the  approval  of  the  State  Government will  alter  it  as  the  changing  circumstances  of  the  town may demand.”

19. The  Revenue  Book  Circular  also  stipulates  

that  the  classification  of  land  is  done  at  the  time  of  

settlement.  The Collector of the district has been bestowed  

with  the  power  to  make  alterations  in  the  settlement  

classifications on the ground that they have been incorrectly  

made or that the purpose for which the land was used had  

changed in the settlement.  In such type of cases, 'Abadi’

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lands  are  recorded  as  nazul  lands  and,  accordingly,  the  

vacant  spaces  are  administered  as  nazul  lands.   The  

aforesaid  schematic  concept  read  with  the  language  

employed in the 1960 Act and the 1973 Act would clearly  

reveal  that  nazul  land,  unless  notified,  does  not  

automatically get vested in any authority or trust.  The State  

Government,  from  time  to  time,  has  been  issuing  

notifications to the effect of vesting or transferring of nazul  

land to be part  of  improvement trust  and giving advance  

possession to the Town Improvement Trust.  That apart, the  

State  Government  has  issued  notifications  framing  

guidelines for distribution of the Nazul plots.

20. It is not out of place to mention here that this  

Court in  Akhil Bhartiya Upbhokta Congress vs.  State of  

Madhya Pradesh and Ors  7  .    had not approved the manner  

in  which  the  State  Government  had  granted  the   land  

belonging to  the  State  in  favour of  the  appellant  therein.  

After  referring  to  the  Revenue  Book  Circular,  this  Court  

decried the action of the State Authorities in allotment of  

Nazul land without following the criteria and by treating it  

7 AIR 2011 SC 1834

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as State largesse wherein the public has an interest.  After  

the said decision was rendered on 06.04.2011, the State of  

Madhya  Pradesh,  Department  of  Revenue,  has  issued  

Circular  No.  6-53/2011-Nazul  dated  8.8.2011  describing  

certain guidelines in the distribution of Nazul land.  In the  

said circular, it has been stated that the said circular shall  

be  treated  as  a  part  of  Section  1  of  the  Revenue  Book  

Circular.     

21. We have referred to these aspects singularly to  

highlight  that  unless  affirmative  steps  are  taken  by  the  

State  Government  by  issuing  a  notification  changing  the  

character of  the land and transferring it  in favour of  any  

authority, corporation or municipality, it maintains its own  

character, i.e., nazul land.  In the case at hand, the land is  

recorded as nazul land for the Public Works Department.  

Nothing has been brought on record that it had ever been  

notified for transfer in favour of the GDA.  Thus analysed,  

the GDA never became the owner of  the land or had the  

authority to deal with the land and, therefore, it could not  

have put the land to auction for any purpose whatsoever.  

Ergo,  the  first  respondent  cannot  assert  any  right  or

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advance  any  claim to  remain  in  possession  and  run the  

cinema hall  and that too after cancellation of the licence,  

solely  on  the  basis  of  a  lease  granted  by  its  lessor,  a  

statutory authority,  who had no right on the land for the  

simon pure reason that the ownership still remained with  

the State Government.  When no right lies with the GDA in  

respect of the land in view of the conditions precedent as  

stipulated in the Revenue Book Circular  not  having been  

satisfied  and  the  nature  of  the  land  has  remained  in  a  

sustained state,  no  legal  sanctity  can be  attached to  the  

lease executed by it in favour of the Ist respondent.  The  

grant  is  fundamentally  ultra  vires  and  hence,  the  

respondent-company has to meet its Waterloo.

22. Quite  apart from the above,  it  is  condign to  

note that in a case of the present nature, the common law  

doctrine of public policy can be invoked.  The said doctrine  

becomes  enforceable  when  an  action  affects  or  offends  

public  interest  or  where  injury  to  the  public  at  large  is  

manifest.  As is perceptible, the GDA could not have granted  

the lease of the property belonging to the State Government  

as  it  was  Nazul  land  meant  for  the  Public  Works

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Department.  The collective interest in the property could  

not have been jeopardised by usurpation of power/authority  

by the GDA.  Such assumption of power by the GDA makes  

the  whole  action sans  substratum and thereby a  nullity.  

Needless to say, any grant has to have legal sanctity and  

legitimacy.      

23. For the reasons aforementioned, the appeals  

are allowed and the orders passed in the writ appeal and  

the  application  for  review,  being  unsustainable,  are  set  

aside.  The State Government and its functionaries are at  

liberty  to  proceed  against  the  first  respondent  for  its  

eviction.  It is open to the first respondent to take recourse  

to the arbitration clause against the GDA for any other relief  

as advised in law.  There shall be no order as to costs.

.....................................J.       [Dalveer Bhandari]

.....................................J.       [Dipak Misra]

New Delhi; January 11, 2012.