DIPAK BABARIA Vs STATE OF GUJARAT .
Bench: H.L. GOKHALE,J. CHELAMESWAR
Case number: C.A. No.-000836-000836 / 2014
Diary number: 37909 / 2012
Advocates: ANIRUDH SHARMA Vs
VISHAL GUPTA
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REPORTABLE
IN THE SUPREME COURT OF INDIA CIVIL APPELLATE JURISDICTION
CIVIL APPEAL N. 836 OF 2014 (@ out of SPECIAL LEAVE PETITION (CIVIL) NO.36738/2012)
Dipak Babaria & Anr. … Appellants
Versus
State of Gujarat & Ors. … Respondents
J U D G E M E N T
H.L. Gokhale J.
Leave Granted.
2. This appeal by Special Leave seeks to challenge
the judgment and order dated 30.8.2012 rendered by a
Division Bench of the Gujarat High Court dismissing Writ
Petition (PIL) No.44 of 2012 filed by the appellants herein.
The Writ Petition had various prayers, but essentially it
sought to challenge the permission granted by the Collector,
Bhuj, to sell certain parcels of agricultural land situated in
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district Kutch, which were said to have been purchased
earlier by the respondent No.4 herein, one Indigold Refinery
Limited of Mumbai, for industrial purpose in favour of
respondent No.5 i.e. one Alumina Refinery Limited, Navi
Mumbai, as being impermissible under the provisions of the
Gujarat (earlier ‘Bombay’ prior to the amendment in its
application in the State of Gujarat) Tenancy and Agricultural
Lands (Vidarbha Region and Kutch Areas) Act, 1958 (Tenancy
Act, 1958 for short). It was submitted that under Section 89A
of this Act, agricultural land can be permitted to be sold by
an agriculturist to another person for industrial purpose
provided the proposed user is bona-fide. In the event, the
land is not so utilised by such a person for such purpose,
within the period as stipulated under the act, the Collector of
the concerned district has to make an enquiry under sub-
Section 5 thereof, give an opportunity to the purchaser with a
view to ascertain the factual situation, and thereafter pass an
order that the land shall vest in the State Government on
payment of an appropriate compensation to the purchaser
which the Collector may determine. It was contended that
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there was no provision for any further transfer of agricultural
land from one industrial purchaser to any third party, once
again, for industrial purpose when the first purchaser of
agricultural land had defaulted in setting up the industry.
Apart from being in breach of the law, the transaction was
stated to be against public interest, and a mala-fide one
resulting into a serious loss to the public exchequer. The Writ
Petition criticised the role of the Collector and the Revenue
Minister of the State Government, and sought an inquiry
against them in the present case, and also a direction to the
state authorities to resume the concerned land.
3. The impugned judgment and order rejected the
said writ petition on two grounds, firstly that there was delay
in initiating the said Public Interest Litigation (PIL), and that
the writ petitioner had suppressed the material facts before
the Court concerning the investment claimed to have been
made by the respondent No.5.
4. The writ petition, and now this appeal raise the
issues with respect to the underlying policy and purpose
behind the relevant provisions of the Tenancy Act, 1958. In
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that connection, it also raises the issue with respect to the
duties of the revenue officers on the spot, such as the
Collector, the importance of the role of senior administrative
officers of the State Government, and whether a Minister of
the Government can direct the administrative officers and
the Collector to act contrary to the provisions and policy of
the statute. The Secretary of the Department of Revenue of
the Government of Gujarat, and the Collector of District Kutch
at Bhuj are joined as respondent Nos. 2 and 3 to this appeal.
The facts leading to this appeal are as follows:-
5. It is pointed out by the appellants that the
respondent No.4 Indigold Refinery Ltd. (Indigold for short)
which is a company having its office in Mumbai, purchased
eight parcels of land owned by one Virji Jivraj Patel and
Jayaben Virji Patel residing at Bankers Colony, Bhuj,
admeasuring in all 39 acres and 25 gunthas (i.e. roughly 40
acres) by eight sale deeds all dated 30.1.2003, for a
consideration of about Rs.70 lakhs. These eight sale deeds
are supposed to have been signed for respondent No.4
Indigold by one Hanumantrao Vishnu Kharat, its Chairman-
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cum-Managing Director. The lands are situated in villages
Kukma and Moti Reldi in the district of Kutch. The sale deeds
indicated that the purchaser had purchased these lands for
industrial purpose, and that the purchaser will obtain the
permission from the Deputy Collector, Bhuj for purchasing
the said land within one month from the date of those sale
deeds. The respondent No.4 is said to have applied for the
necessary permission under Section 89A of the Tenancy Act,
1958 on 31.1.2003, and the Collector of Bhuj is stated to
have given the requisite certificate of purchase of the lands
under sub-section (3) (c) (i) of the said section. It appears
that thereafter no steps were taken by respondent No.4 to
put up any industry on the said land.
6. Five years later, the respondent No.4 is stated to
have applied on 6.12.2008 to the Deputy Collector at Bhuj for
permission to sell these lands. The Collector of Bhuj sought
the guidance from the Revenue Department, and in view of
the direction of the Revenue Department, the Deputy
Collector granted the permission on 15.1.2010, to sell the
lands to respondent No. 5 treating it as a special case, and
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not to be treated as a precedent. Thereafter, the respondent
No.4 conveyed the concerned lands to respondent No.5 by
sale deed dated 19.1.2010. Respondent No.5 also obtained
permission from the Industries Commissioner on 8.3.2010 for
putting up the industry. Subsequently, the Collector issued
the certificate as required under Section 89A (3) (c) (i) of the
Tenancy Act, 1958, on 21.5.2010, that respondent No.5 had
purchased the land for a bona-fide purpose. The permission
for a non-agricultural user was given to the respondent No.5
on 5.1.2011. The Gujarat Mineral Development Corporation
(GMDC) – which got itself impleaded in this appeal as
respondent No.6 has entered into a Memorandum of
Understanding (MOU for short) on 30.11.2011 with M/s Earth
Refinery Pvt. Ltd. which is the holding company of
respondent No.5 to purchase 26% of equity in a joint venture
company to be set up by them, and which will own the
industry.
7. It appears that a Gujarati Daily “Sandesh” in an
article dated 20.8.2011 reported that there was a huge loss
to the State exchequer in the sale of these lands to a private
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company almost to the tune of Rs.250 crores. The
newspaper reported that although the respondent No.4 had
purchased the concerned lands at village Kukma and Moti
Reildi on 30.1.2003, no industrial activity was started till
2008 as required by the law, and after a long period of five
years the land was to be sold to Alumina Refinery Limited
(Alumina for short). One Mr. Nitin Patel is the Managing
Director of this Alumina, and Mr. Nilesh Patel who is his
brother is its Director (Legal and Human Resources). The
newspaper stated that Alumina had written a letter to the
Chief Minister Mr. Narendra Modi, on 18.6.2009 that the
Government should grant the necessary permission. It is
further stated that on the said proposal being placed before
them, the officers of the Revenue Department had placed
negative remarks, and yet a permission was granted to sell 2
lakh sq. yds. of land at a throw away price when the rate of
land was Rs.3500 – 4000 per sq. yd.. It was alleged that
there was a direct involvement of the Chief Minister in this
scam, and with a view to avoid Lokayukata enquiry, although
a commission was appointed under Hon’ble Mr. Justice M.B.
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Shah, a former Judge of Supreme Court of India to enquire
into a number of other controversial projects, this scam was
excluded therefrom.
8. There was also a news item in another Daily
“Kachchh Mitra” on 1.2.2011 that the Alumina Refinery
Limited was given permission by breaching rules and
regulations. The farmers of the nearby villages were worried,
and some 200 farmers had protested against the proposal as
it would affect their agricultural activities due to pollution. It
was stated that they had sowed plants of tissue-culture
Israeli dry-dates. They had planted lacs of Kesar Mango
trees. They were also cultivating crops of Papaiya, Aranda,
Wheat, Cotton, groundnuts etc. If the refinery work starts in
this area, it will affect the agricultural work badly. There was
also a fear that the blackish and toxic air of the factory will
spoil the plants.
9. All this led the appellants to file the earlier
mentioned writ petition, for the reliefs as prayed. The
petition enclosed the above referred news reports, as also
the information obtained through enquiry under the Right to
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Information Act, 2005 by one Shri Shashikant Mohanlal
Thakker of Madhapur Village of Taluka Bhuj. This information
contained the documents incorporating the file notings of the
revenue department and the orders granting permission.
The aforesaid writ petition was filed on 28.2.2012. An
affidavit in reply to the writ petition was filed by above
referred Nitin Patel on behalf of respondent No.5, and the
appellants filed a rejoinder. Respondent No.5 filed a sur-
rejoinder thereto. The respondent No.1 State of Gujarat filed
an affidavit in reply on 16.8.2012, and the petitioner filed a
rejoinder to the Government’s affidavit on 10.11.2012. After
the writ petition was filed on 28.2.2012 an order of status-
quo was granted on 1.3.2012, and it continued till the
dismissal of the petition on 30.8.2012 when the order of stay
was vacated. However, when the present SLP was filed, an
order of status-quo was granted by this Court on 4.1.2013,
and it has continued till date.
Relevant provisions of the Statute:-
10. In as much as we are concerned with the provisions
contained in Section 89 and Section 89A of the Tenancy Act,
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1958, it is necessary to reproduce the two sections in their
entirety. These two sections appear in Chapter VIII of the
Tenancy Act, 1958. The sections read as follows:-
“CHAPTER VIII RESTRICTIONS ON TRANSFERS OF AGRICULTURAL LANDS
AND ACQUISITION OF HOLDINGS AND LANDS
89 Transfers to non-agriculturists barred.-
Transfers to (1) Save as provided in this Act, non-agricul- turists barred
(a) no sale (including sales in execution of a decree of a Civil Court or for recovery of arrears of land revenue or for sums recoverable as arrears of land revenue), gift exchange or lease of any land or interest therein, or
(b) no mortgage of any land or interest therein, in which the possession of the mortgaged property is delivered to the mortgagee,
shall be valid in favour of a person who is not an agriculturist or who being an agriculturist cultivates personally land not less than three family holdings whether as owner or partly as tenant or who is not an agricultural labourer: Provided that the Collector or an officer authorised by the State Government in this behalf may grant permission for such sale, gift, exchange, lease or mortgage, in such circumstances as may be prescribed:
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[Provided further that no such permission shall be granted, where land is being sold to a person who is not an agriculturists for agricultural purpose, if the annual income of such person from other source exceeds five thousand rupees.] (2) Nothing in this section shall be deemed to prohibit the sale, gift, exchange or lease of a dwelling house or the site thereof or any land appurtenant to it in favour of an agricultural labourer or an artisan. (3) Nothing in this section shall apply to a mortgage of any land or interest therein effected in favour of a co-operative society as security for the land advanced by such society. (4) Nothing in section 90 shall apply to any sale made under sub-section (I).
89A. Sale of land for bonafide industrial purpose permitted in certain cases:-
(1) Nothing in section 89 shall prohibit the sale or the agreement for the sale of land for which no permission is required under sub-section (1) of section 65B of the Bombay Land Revenue Code, 1879 (Bom. V of 1879) in favour of any person for use of such land by such person for a bonafides industrial purpose:
Provided that— (a) the land is not situated within the urban
agglomeration as defined in clause (n) of section 2 of the Urban Land (Ceiling and Regulation) Act, 1976 (33 of 1976),
(b) where the area of the land proposed to be sold exceeds ten hectares, the person to whom the land is proposed to
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be sold in pursuance of this sub-section shall obtain previous permission of the Industries Commissioner, Gujarat State, or such other officer, as the State Government may, by an order in writing, authorise in this behalf.
(c) the area of the land proposed to be sold shall not exceed four times the area on which construction for a bonafide industrial purpose is proposed to be made by the purchaser: Provided that any additional land which may be required for pollution control measures or required under any relevant law for the time being in force and certified as such by the relevant authority under that law shall not be taken into account for the purpose of computing four times the area.
(d) where the land proposed to be sold is owned by a person belonging to the Scheduled Tribe, the sale shall be subject to the provisions of section 73AA of the Bombay Land Revenue Code, 1879 (Bom. V of 1879).
(2) Nothing in the Section 90 shall apply to any sale made in pursuance of subsection (1).
(3) (a) Where the land is sold to a person in pursuance of sub-section (1) (hereinafter referred to as “the purchaser”), he shall within thirty days from the date of purchase of the land for bonafides industrial purpose, send a notice of such purchase in such form alongwith such other particulars as may be prescribed, to the Collector and endorse a copy thereof to the Mamlatdar.
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(b) Where the purchaser fails to send the notice and other particulars to the Collector under clause (a) within the period specified therein, he shall be liable to pay, in addition to the non- agricultural assessment leviable under this Act, such fine not exceeding two thousand rupees as the Collector may subject to rules made under this Act, direct. (c) Where, on receipt of the notice of the date or purchase for the use of land for a bonafides industrial purpose and other particulars sent by the purchaser under clause (a), the Collector, after making such inquiry as he deems fit— (i) is satisfied that the purchaser of such land has validly purchased the land for a bonafide industrial purpose in conformity with the provisions of sub- section (1), he shall issue a certificate to that effect to the purchaser in such form and with in such time as may be prescribed. (ii) is not so satisfied, he shall, after giving the purchaser an opportunity of being heard, refuse to issue such certificate and on such refusal, the sale of land to the purchaser shall be deemed to be in contravention of section 89. (d) (i) The purchaser aggrieved by the refusal to issue a certificate by the Collector under sub-clause (ii) of clause (c) may file an appeal to the State Government or such officer, as it may, by an order in writing, authorise in this behalf.
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(ii) The State Government or the authorised officer shall, after giving the appellant an opportunity of being heard, pass such order on the appeal as it or he deems fit.
(4) The purchaser to whom a certificate is issued under sub-clause (i) of clause (c) of sub-section (3), shall commence industrial activity on such land within three years from the date of such certificate and commence production of goods or providing of services within five years from such date:
Provided that the period of three years or, as the case may be, five years may, on an application made by the purchaser in that behalf, be extended from time to time, by the State Government or such officer, as it may, by an order in writing authorise in this behalf, in such circumstances as may be prescribed.
(5) Where the Collector, after making such inquiry as he deems fit and giving the purchaser an opportunity of being heard, comes to a conclusion that the purchaser has failed to commence industrial activity or production of goods or providing of services within the period specified is clause (b) of sub- section (4), or the period extended under the proviso to that clause, the land shall vest in the State Government free from all encumbrances on payment to the purchaser of such compensation as the Collector may determine, having regard to the price paid by the purchaser and such land shall be
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disposed of by the State Government, having regard to the use of land.”
The pleadings of the parties before the High Court:-
11. The appellants had contended in paragraph 6 of
their Writ Petition that the permission given to Indigold to sell
the land was contrary to the provisions and restrictions
imposed under the law, and contrary to the original
permission granted to them by the Deputy Collector, Bhuj, on
1.5.2003. The market value of the land in question goes into
crores of rupees, and such an act will result in huge loss to
the public exchequer. They had contended that the decision
was malafide. The decision was alleged to have been taken
for a collateral purpose, which was apparently neither legal
nor in the interest of the administration and public interest.
Inasmuch as it was concerning disposal of public property,
the only mode to be adopted was a fair and transparent
procedure which would include holding a public auction
inviting bids, and thereby providing equal opportunity to all
interested or capable industries, in order to promote healthy
competition and to fetch the right market price. The decision
has been taken at the instance of the Hon’ble Revenue
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Minister. It was also submitted that, there were possibilities
that the directors / promoters and the management of
Indigold and Alumina are the same, and if that is so, it would
be a design to defraud the Government. Alumina had
contended that it had signed an MOU with the State
Government during the Vibrant Gujarat Investors’ Summit,
2009. The appellants had submitted that the same cannot be
a ground to grant the permission to sell, contrary to the
mandatory provisions of law. Section 89A makes a contingent
provision in case the land is not used for industrial activity
within the time provided, and such mandatory provisions of
the Act cannot be bypassed merely upon the endorsement
made by the Hon’ble Revenue Minister. The action on the
part of the State is absolutely arbitrary. The State or a public
authority which holds the property for the public, and which
has the authority to grant the largesse, has to act as a
trustee of the people, and therefore to act fairly and
reasonably. The holders of pubic office are ultimately
accountable to the public in whom the sovereignty vests.
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The action of the Government is arbitrary, and therefore
violative of Article 14 of the Constitution of India.
12. Respondent No.5 was the first to file a reply to this
petition in the High Court which was affirmed by Mr. Nitin
Patel on 11.7.2009. In this reply he principally submitted that
it was not correct to say that the land was being given away
at a throwaway price, causing great loss to the public
exchequer to the tune of Rs.250 crores, as alleged. The
State Authorities and the Revenue Minister have not acted in
violation of any mandatory provisions of law. The affidavit
further narrated the various events in the matter leading to
the sale deed dated 19.1.2010 by Indigold in favour of
Alumina, and the permission of the Industries Commissioner
dated 8.3.2010. It was also pointed out that permission had
been granted by the Collector, Bhuj on 5.1.2011. Thereafter,
it was contended that the land has been purchased by the
respondent No.5 way back in January 2010, and the petition,
making frivolous and baseless allegations, has been filed two
years after the said transaction.
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13. Then, it was pointed out that the respondent No.5
was incorporated under the Companies Act in the year 2008,
and that the company is promoted by Earth Refining
Company Pvt. Limited. Respondent No.5 wanted to
manufacture high value added products from bauxite ore
available in Kutch district which ore was currently sold or
exported as it is without any value addition. The intention of
respondent No.5 was in line with and supported by
Government of Gujarat Industries and Mines Policies, 2009.
The project was to be first of its kind in Gujarat, with
technology supplied to it by National Aluminum Company Ltd.
(shortly known as NALCO), a Government of India Enterprise.
A share holding agreement dated 30.11.2011 had been
entered into between GMDC and Earth Refining Company Ltd.
whereby GMDC had agreed to be joint venture partner, and
to subscribe to 26% of the equity share capital of the new
company. NALCO has provided advanced technology for the
project.
14. It was further submitted in para 15 (g) of the reply
that, the opinions of all the subordinate officers are
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“inconsequential and not binding on the Revenue Minister”.
The decision of the Minister cannot be faulted on the basis of
certain notings of a lower authority.
15. One Mr. Hemendera Jayantilal Shah, Additional
Secretary, Revenue Department filed the reply on behalf of
the respondent-State. In paragraph 3.4 it was contended
that the notings from the Government files reflect only the
exchange of views amongst the officers of the departments.
The decision of the State Government to grant permission for
sale of the land could not be said to be arbitrary, malafide or
in the colourable exercise of power. Three reasons were
given in support thereof:-
(i) If the land had been directed to be vested in the State
Government, State would have been required to pay
compensation to M/s Indigold under Section 89A(5) which is
otherwise a long-drawn process involving Chief Town Planner
and State Level Valuation Committee, for the purpose of
determining the valuation of the land, and thereafter for
finding the suitable and interested party to set up an industry
on the land in question.
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(ii) In the sale to Alumina, the State Government’s own
interest through its public sector undertaking had been
involved, and therefore there has been a substantial
compliance of the spirit flowing from the provisions of Section
89A(5).
(iii) The price of the land in question was around Rs.4.35
crores as per the Jantri (i.e. official list of land price) at the
relevant time, and it had come down to Rs.2.08 crores, as per
the revised Jantri rated of 2011. Thus, apart from time being
consumed in the process, perhaps there would have been a
loss to the public exchequer. Thereafter, it was stated in
paragraph 4 of the reply as follows:-
“I further respectfully say that the action of the State Government was bonafide and taking into consideration all the aspects of the matter, viz. (i) the land is being used for the industrial purpose, (ii) a dire need for industrialization in the Kutch District; (iii) MoU arrived at during the Vibrant Summit, 2009, whereby, a ready and interested party was available to start the industry immediately on the land in question; and (iv) GMDC possessing 26% of the share in such interested party, i.e. M/s Alumina Refinery Pvt. Ltd.”
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It is relevant to note that no reply was filed on behalf of
Indigold.
Additional pleadings of the parties in this Court:-
16. As far as this Court is concerned, a counter
affidavit was filed on behalf of the State Government by one
Mr. Ajay Bhatt, Under Secretary, Land Reforms. In his reply,
he stated that in any event in the present process the State
is the beneficiary in permitting this transaction with GMDC
which is a Government Undertaking. It will have 26% stock in
respondent No.5. In paragraph 4(E)(e)(ii) he stated that since
the Government’s own interest was involved, there has been
a substantial compliance of the spirit flowing from the
provisions of Section 89A(5) of the Act.
17. A counter was also filed in this Court by one Mr.
Deepak Hansmukhlal Gor, Vice President of respondent No.5-
Alumina. He pointed out that although the petition in the
High Court was moved as a PIL, the petitioner No.1 was in
fact a leader of the opposition party in the State. In order to
mislead the Court it was stated in the petition that the land
was worth Rs.250 crores. It was further submitted that to
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seek an interim relief a false statement had been made in the
writ petition that no activity had been initiated by respondent
No.5 on the concerned land by the time writ petition was
filed. The respondent No.5 had made substantial investment
and construction on the land, and photographs in that behalf
were placed on record. It was also submitted that the
decision of the State Government was in tune with Mineral
Development Policy, 2008 of the Government of India and
Gujarat Mineral Policy, 2003. It was then pointed out that
apart from other controversies, the present controversy has
also been included for the consideration of Hon’ble Mr. Justice
M.B. Shah, Former Judge of this Court. The sale of land in the
present case was rightly considered as a special one, and the
challenge thereto was highly unjustified and impermissible.
The respondent No.5 filed various documents thereafter,
including the various permissions obtained by respondent
No.5 for the project and the technology supply agreement
entered into between NALCO and M/s Earth Refining
Company Ltd. It was submitted that the Respondent No. 5 is
a bona-fide purchaser of the land, and in any case it should
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not be made to suffer for having invested for industrial
development. It is claimed that Respondent No. 5 has made
an investment to the tune of Rs 6.85 crores as on 31.3.2012
on the project, and moved in some machinery on the site.
18. The appellant No.1 has filed his rejoinder to both
these counters. He has stated that he has not suppressed
that he is a political activist, which is what he has already
stated in the petition. He has maintained his earlier
submissions in the writ petition, and denied the allegations
made in the two counter affidavits.
19. As stated earlier, GMDC has applied for joining as
respondent No.6. In its application it has stated that Alumina
was selected through transparent evaluation. Then, it was
short-listed for setting up the project in Kutch at the Vibrant
Gujarat Summit in 2009. It also defended the Government’s
decision on the ground that it is going to have 26% equity in
respondent No.5.
Points for consideration before this Court:
20. It, therefore, becomes necessary for this Court to
examine whether the decision taken by the Government to
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permit the transfer of the agricultural land from respondent
No. 4 to respondent No. 5, was legal and justified. For that
purpose one may have to consider the developments in this
matter chronologically as disclosed from the above pleadings
of the parties, as well as from the material available from the
Government files placed for the perusal of the Court.
Thereafter, one will have to see the scheme underlying
Sections 89 and 89A, and then examine whether there has
been any breach thereof, and if it is so what should be the
order in the present case?
Material on record and the material disclosed from the files of the Government and the Collector:-
21. The respondents have contended that the sale
transaction between respondent Nos.4 and 5 took place
because of the financial constraints faced by respondent No.4
Indigold Refinery Limited, and that is reflected in their letter
dated 16.6.2009 addressed to the Collector, Bhuj. The letter-
head of the respondent No.4 shows that it claims to have a
gold refinery at Chitradurg in State of Karnataka. This letter
refers to their earlier letter dated 6.12.2008, and letter dated
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12.6.2009 from respondent No.5 Alumina. The relevant
paragraph of letter dated 16.6.2009 reads as follows:-
“…….. • With regret we have hereby to inform you
that due to financial constraints on our part we are unable to execute our proposed refinery project on the said land. We are well aware of the fact that sufficient amount of time has passed from the date of permission granted by the office of Deputy Collector-Bhuj to set up the project. We have tried our level best to set up the industry on the land in question.”
• M/s Alumina Refinery (P) Ltd. having their registered office in Mumbai has shown keen interest to set their Alumina Refinery Project on our above mentioned ownership land.
• A copy of consent letter dated 12.06.2009 has already been sent to your office by M/s Alumina Refinery (P) Ltd., whereby they have applied to avail the permission to purchase our above ownership land u/s 89.
• We appreciate and are thankful to your office and Government of Gujarat for giving us an opportunity to purchase and set up of our then proposed refinery project on the above mentioned agricultural land.
• We would like to confirm that we had a clear intention to set up industry on the above mentioned land, it is only because of non availability of monetary fund we are not in a position to set up our industry on the above mentioned agricultural land. Further, we are also not having any intention to take any undue advantage in form of booking any profit by sale of ownership land to M/s Alumina Refinery (P) Ltd.
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We, hereby request your office to kindly grant the permission to sale all the above land and allow us to execute the Sale Deed for registration with the competent authority…..”
(emphasis supplied)
22. The earlier letter dated 6.12.2008 mentioned in
this letter of 16.6.2009, however, nowhere mentions that
respondent No.4 had any financial constraints because of
which it could not set up the industry and thefore it wanted to
sell the particular land. This letter is seen in the file of the
Collector. This letter reads as follows:-
“INDIGOLD REFINERIES LIMITED 6th December 2008
To, Collector of Kutch, Bhuj, State of Gujarat
Sub:- Permission for the sale of agricultural land admeasuring 39 acres 25 gunthas at Moti Reladi Kukama, Taluka Bhuj, District Kutch, State of Gujarat.
Dear Sir, Reference to above, we have to respectfully inform your good self that we had purchased land as per details here below for setting up of Industrial project:- Sr.no. Name of Village Survey No. Measurement
Acres and
gunthas
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1. Kukama 94/1 4/14 2. Kukama 94/2 2/16 3. Moti Reladi 101/1 9/30 4. “ 106 6/10 5. “ 100/1 2/20 6. “ 107 4/15 7. “ 105/4 5/21 8. “ 110/2/3 4/16 Total 39 acres 25 gunthas
The above piece of land was purchased with the permission granted by Deputy Collector, Bhuj, Kutch, wide letter no. LND/VC/1169/03 dated 2nd May 2003. We further respectfully inform yourself that we are no more interested to put any industrial project in the said land and therefore we are disposing off entire piece of land as per aforesaid details to our prospective client. We, therefore, request your good self to kindly give us your permission for sale, so as to enable us to register the sale deed with the concern competent authority. We hope you will extend your maximum corporation and assistances in this regard and oblige. Thanking you Yours faithfully Sd/- Indigold Refineries Ltd. Hanumantrao V. Kharat”
(emphasis supplied)
23. As stated earlier, the File notings of the Revenue
Department, were obtained through an RTI inquiry, and were
placed on record alongwith the Writ Petition. The learned
counsel for the State of Gujarat was good enough to produce
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Page 28
the original files for our perusal. In the file of the Revenue
Department, there is an Email dated 1.7.2009 from Shri Nitin
Patel, Chairman & MD of respondent No.5 forwarding his
letter dated 30.6.2009 addressed to Smt. Anandiben M. Patel,
Hon’ble Minister of Revenue recording the minutes of the
meeting held in her office on 29.6.2009. Immediately
thereafter, the respondent No.5 has written a letter to the
Chief Minister of Gujarat seeking permission to purchase
these lands. The Secretary to the Chief Minister, Shri A.K.
Sharma has then sent a letter on 2.7.2009 to the Principal
Secretary, Revenue Department informing him that Shri Nitin
Patel, of respondent No.5, had approached them with their
representation dated 18.6.2009. It had inked an MOU during
the Vibrant Gujarat Global Summit for establishing an
Alumina Refinery, and they had identified a land suitable for
that purpose. This letter further stated:
“On verification of the issue, necessary action may kindly be taken at the earliest. In the meantime, a brief note indicating the possible course of action may please be sent to this office.”
28
Page 29
24. In view of this note from the Secretary to the Chief
Minister, the Revenue Department sought the factual report
from the Collector by their letter dated 6.7.2009. What we
find however, is that instead of sending a factual report, the
Collector fowarded the original proposal of respondent No.5
itself to the Department, and sought their decision thereon in
favour of Alumina through his letter dated 31.7.2009.
Thereafter, we have the note dated 7.8.2009 in the
Government file which is signed by then Section Officer and
Under Secretary, Land Revenue. This note refers to the fact
that a letter dated 2.7.2009 had been received from the
Secretary to the Chief Minister. Thereafter, a letter dated
31.7.2009 had been received from the Collector, Kutch
stating that respondent No.4 had purchased the concerned
land admeasuring 39 acres and 25 guntas, but no industrial
use had been made, and that the respondent No.5 had shown
his willingness to purchase the land. Thereafter, the note
records what the Collector had stated viz.
“Taking into consideration the reasons shown in the submission of Alumina Refinery Company addressed to the Hon’ble C.M.,
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Page 30
dated 18.6.2009, it is submitted to grant permission for purchasing land”.
25. The departmental note thereafter states in sub-
paragraph A, B, C of paragraph 4, that under the relevant law
the purchaser of the land should commence the industrial
activity within a period of 3 years from date of the certificate
of purchase, and within 5 years start the manufacture of
goods and provide the services. Where the purchaser fails to
commence the industrial activity, the Collector has to initiate
an enquiry as to whether the purchaser has failed to
commence industrial activity or production, as mentioned in
clause (b) of sub-section 4. Thereafter, if on giving the
purchaser an opportunity to be heard, the Collector comes to
a conclusion that the purchaser has failed to do so, he has to
determine the payment of compensation, and pass an order
that the land shall vest in the State Government. Thereafter
the note records:-
“ …..Taking into consideration the above provisions, whatever action required to be taken, is to be taken by Collector, Kutch, means there is no question at all of the authority for a period of more than five years. Further vide letter dated 6.7.2009, Collector was informed to submit factual
30
Page 31
report. Instead of the same, proposal is submitted by him. Vide order dated 1.5.2003 Deputy Collector has granted permission to Indigold Refinery Company under Section-89 of the T.A. with regard to the lands in question. The time limit of this permission has come to an end. Now another company, Alumina Refinery Co. wants to purchase land of this company and establish a project. Looking to the same, taking into consideration the above provisions, whatever action is required to be taken, the same is to be taken at his (Collector) level only. This is submitted for consideration whether to inform Collector accordingly or not?
As Collector is required to take action as per the legal provisions, any action on proposal of Collector is not required to be taken by this office. Therefore, proposal of the Collector be sent back.
Submitted respectfully…” (emphasis supplied)
26. Since, the Secretary of the Hon’ble Chief Minister
had sought a note indicating the possible course of action,
the Deputy Secretary, Land Revenue made a note on
25.8.2009, and at the end thereof, he stated as follows:-
“..……
Under these circumstances, looking to legal provisions, there is a provision that either the company carries out the industrial activity or the State Government resumes the land. There is no provision for mutual transfer by the parties.
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Page 32
As suggested by the Secretary to the Hon’ble C.M., note indicating the above position be sent separately.”
27. A note was, thereafter, made by the Principal
Secretary, Land Revenue, which recorded that as per existing
policy such sale was not permissible. In para 2 of his note he
stated:
“as per rules, the land is to be resumed by Collector in case of failure to utilize for industrial use”. In para 5 thereof he however suggested “that in such case, as in cases under the Land Acquisition Act, 50% of the unearned income being required to be charged by the State Government can be introduced as a policy measure”.
The Principal Secretary, Revenue Department marked para 2
above as “A” and then remarked on 29.8.2009 as follows:-
“We may resume as “A” of pre-page and allot as per the existing policy on land price”.
The Chief Secretary wrote thereon on 1.9.2009 –
“We should take back the land. Allotment may be separately examined”.
What is relevant to note is that the Minister of Revenue Smt.
Anandiben Patel thereafter put a remark on 10.9.2009:-
“Land is of private ownership. As a special case, permission be granted for sale”.
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Page 33
28. Thereafter, it is seen from this file that in view of
this direction by the Minister, the matter was further
discussed. A note was then made by the Principal Secretary,
Revenue Department on 21.9.2009 - “Discussed. We may
resubmit to adopt a procedure for such cases”. The Principal
Secretary, Land Revenue made a detailed note thereafter on
14.10.2009 referring to the amendment brought in by Gujarat
Act No.7 of 1997 incorporating Section 63AA in the Bombay
Tenancy and Agricultural Lands Act, 1948, and the
developments in the present matter up to the noting made
by the Minister, that the land may be permitted to be sold as
a special case. Thereafter, he sought an opinion as to
whether or not an action similar to a provision under the Land
Acquisition Act on the occasion of sale of land providing for
taking of 50% amount of unearned income by the State
Government, be taken in the present case. The Chief
Secretary made a note thereon as follows:-
“It would be proper to give land to the new party provided industry department recommends as per the laid down rules. As indicated in page 9/D note (marginal). Let us
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Page 34
take back land under 63AA and then re-allot to the new party”. 15.10
The Minister still made a note thereon on 4.11.2009:-
“As a special case as suggested earlier, permission for sale be given”.
In view of this direction by the minister, the department has,
thereafter, taken the decision that the permission be given as
a special case but not to be treated as precedent. Thus, the
opinion of the Principal Secretary, Land Revenue that 50% of
the unearned income be taken by the Government was not
accepted. Similarly, the opinion of the Chief Secretary that
the land be resumed, and then be re-allotted to the new
party was also not accepted.
29. This has led to the communication from the State
Government to the Collector dated 18.12.2009 that the
Government had granted the necessary permission to
respondent No.5 to purchase the land, treating it as a special
case. The said letter reads as follows:-
“ Urgent/RPAD Sr. No.: GNT/2809/2126/Z State of Gujarat
Revenue Department 11/3 Sardar Bhavan Sachivalay
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Gandhinagar Date: 18/12/2009
To, The Collector Kutch-Bhuj
Subject: Shri Nitin Patel c/o M/s Indigold Refinery/Alumina Representation qua the land of Kukma and Moti Reldi
Reference: Your letter dated 31/9/09 bearing no. PKA-3- Land- Vs. 2083/2009
Sir, In connection with your above referred and
subject letter, the land of Kukma and Moti Reldi admeasuring Acre 39 Guntha 25 was purchased by Indigold Refinery as per the provisions of Bombay Tenancy and Agricultural Lands (Vidharbha Region and Kutch Area) Act, 1958; Section 89. However due to financial incapability, the Company is unable to establish industry and other company M/s Alumina Refinery Pvt. Ltd. being ready to purchase the said land, upon careful consideration the Government on the basis of treating the case as “A special case and not to be treated as precedent” has granted the permission. 2. Papers containing pages 1 to 89 are returned herewith.
Encl: As above
Yours sincerely Section Officer Revenue
Department State of Gujarat
Copy to: Select File/Z Branch Select File/Z Branch/N.S.A”
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Page 36
30. Thereafter, the Deputy Collector has issued an
order dated 15.1.2010 granting permission to sell the land for
industrial purpose under Section 89A of the Act. He, however,
added that the action of issuing the certificate can be taken
only after the submission of a project report and technical
recommendation letter of Industries Commissioner by
respondent No.5. The above referred order dated 15.1.2010
of the Deputy Collector granting permission to sale the land
reads as follows:-
No. Jaman Vashi/218/09
Office of Deputy Collector Bhuj, Date-15/01/2010
To Shri Hanumantrav V. Kharat Indi Gold Refineries Limited 201-212, EMCS House 289 SBSL, Fort Mumbai-400 001
Subject:- Regarding getting the approval for sale of the agricultural land of village Kukma and Moti Reldi, Taluka Bhuj purchased for industrial purpose, under Section-89-A of the Tenancy Act. Read:- Letter No. Ganat/2809/2126/Z dated 18/12/2009 of the Revenue Department of the Government, Gandhinagar.
Sir,
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Page 37
With reference to the above subject it is to be informed that vide this office certificate No. Land/Vasi/1169/03 dated 01/05/2003 you have been granted permission under Section-89-A of the Tenancy Act for purchasing agricultural land for industrial purpose as under:-
In the above lands as the company due to financial circumstances is not in a position to establish any industry, with reference to your application dated 06/12/2008 seeking the permission for sale of the above land for industrial purpose to Shri Alumina Refinery (Pvt.) Limited, Mumbai for the Alumina Refinery project, vide the above referred letter of the R.D. of the Government as a “special case and with a
37
Sr.No .
Name of Village Survey No. Acre/Guntha
1 Kukma 94/1 4.14 2 Kukma 94/2 2.16 3 Moti Reldi 101/1 9.30 4 Moti Reldi 106 6.10 5 Moti Reldi 100/1 2.20 6 Moti Reldi 107 4.15 7 Moti Reldi 105/4 5.21 8 Moti Reldi 110/2/3 4.19
Total 39.25
Page 38
condition not to treat as the precedent” the permission is granted, which may be noted.
As the above land is admeasuring more than 25 Acres, in this case on submission of the Project Report and the Technical recommendation letter of Industries Commissioner, G.S., Gandhinagar by the party desirous to purchase the land Alumina Refinery (Pvt.) Ltd., Mumbai, further action can be taken by this office for issuing the certificate under Section-89 of the Tenancy Act, which may be noted.
Sd/- Deputy Collector, Bhuj
Copy to Alumina Refinery (Pvt.) Ltd. 1501-1502 Shiv Shankar Plaza- Near HDFC Bank, Sector-8 Airoli, New Mumbai-400 708”
31. This led to the sale deed between respondent No.4
and 5 for sale of the lands at Rs.1.20 crores. It is, however,
interesting to note that the sale deed is signed for Indigold by
Nitin Patel on the basis of the power of attorney from them,
and for Alumina by his brother Nilesh Patel. Subsequently
the permission from the Industries Commissioner was
obtained on 8.3.2010, and the certificate under Section 89A
(3) (c) (i) of purchase for bona-fide industrial purpose on
21.5.2010.
The submissions on behalf of the appellants:-
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Page 39
32. The decision of the State Government to permit the
transfer of the concerned agricultural lands was challenged
by the appellants on various grounds. Firstly, it was
submitted that Section 89 basically bars transfer of
agricultural land to the non-agriculturists. Section 89A makes
an exception only in favour of a bonafide industrial user. The
industry is required to be set-up within three years from the
issuance of necessary certificate issued by the Collector for
that purpose, and the production of the goods and services
has to start within five years. If that is not done, the
Collector has to take over the land after holding an
appropriate enquiry under sub-section (5) of 89A, and the
land has to vest in the Government after paying the
compensation to the purchaser which has to be determined
having regard to the price paid by the purchaser. In the
instant case, it is very clear that the respondent No. 4 had
expressed their inability to develop the industry way back on
6.12.2008. The Collector was, therefore, expected to hold an
enquiry and pass appropriate order. This was a power
coupled with a duty. A judgment of this Court in Indian
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Page 40
Council for Enviro-Legal Action Vs. Union of India &
Ors. reported in 1996 (5) SCC 281, was relied upon to
submit that a law is usually enacted because the legislature
feels that it is so necessary. When a law is enacted
containing some provisions which prohibit certain types of
activities, it is of utmost importance that such legal provision
are effectively enforced. In Section 89A there is no provision
for a further transfer by such a party which has not
developed the industry, and therefore, the Collector ought to
have acted as required by Section 89A (5). In that judgment
it was observed “enacting of a law, but tolerating its
infringement, is worse than not enacting a law at all.” It was
submitted that in the instant case the state itself has issued
an order in violation of the law.
33. It was then submitted that the Collector was
expected to dispose of the land by holding an auction. The
judgment of this court in Centre for Public Interest
Litigation and Ors. Vs. Union of India and Ors. reported
in 2012 (3) SCC 1 was relied upon in support, wherein it has
been held that natural resources are national assets and the
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Page 41
state acts as trustee on behalf of its people. Public Interest
requires that the disposal of the natural resources must be by
a fair, transparent and equitable process such as an auction.
The same having not been done, the State exchequer has
suffered. Reliance was also placed on the judgment in Noida
Entrepreneurs Association Vs. Noida and ors. reported
in 2011 (6) SCC 508 to submit that whatever is provided by
law to be done cannot be defeated by an indirect and
circuitous contrivance.
34. In the instant case, the transfer of the land has
been permitted because respondent No. 5 directly
approached the Chief Minister and thereafter the Revenue
Minister. It was submitted that such an act of making of a
special case smacks of arbitrariness. The judgment of this
Court in Chandra Bansi Singh Vs. State of Bihar reported
in 1984 (4) SCC 316 was relied upon in this behalf. In that
matter the state of Bihar had released a parcel of land
acquired by it for the benefit of one particular family which
had alleged to have exercised great influence on the
Government of the time. The action of the State was held to
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Page 42
be a clear act of favouritism. Another judgment of this Court
in Manohar Joshi Vs. State of Maharashtra and Ors.
reported in 2012 (3) SCC 619 was also relied upon to
criticise a direct approach to the ministers rather than going
through the statutory authorities. Reliance was also placed
on the judgment in Bhaurao Dagdu Paralkar Vs. State of
Maharashtra reported in 2005 (7) SCC 605 which has
explained the concept of ‘fraud’ from paragraph 9 to 12
thereof. In paragraph 12 amongst others it has referred to an
earlier judgment in Shrisht Dhawan Vs. Shaw Bros
reported in 1992 (1) SCC 534 which relies upon the English
judgment in Khawaja Vs. Secy. of State for Home Deptt.
reported in 1983 (1) All ER 765. In para 20 of Shrisht
Dhawan (supra) this Court has observed:-
“ If a statute has been passed for some one particular purpose, a court of law will not countenance any attempt which may be made to extend the operation of the Act to something else which is quite foreign to its object and beyond its scope.’ Present day concept of fraud on statute has veered round abuse of power or mala fide exercise of power. It may arise due to overstepping the limits of power or defeating the provision of statute by adopting subterfuge or the power may be exercised for extraneous or
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irrelevant considerations. The colour of fraud in public law or administrative law, as it is developing, is assuming different shades……”
35. The learned senior counsel for the appellants Mr.
Huzefa Ahmadi submitted that the appellants’ writ petition
should not have been dismissed only on the ground of delay,
in as much as the environmental clearance to the project was
granted on 19.2.2012 and the writ petition was filed in March
2012. He submitted that similarly the appellant cannot be
criticised for suppression of any information about the
investment made by respondent No. 5, since the appellant
cannot be aware of the same. In any case he submitted that
in as much as there has been an immediate interim order,
the plea of large investment having been made is untenable.
As far as the objection to the appellant No 1 being a person
belonging to a rival political party is concerned, he submitted
that he has specifically accepted that he is a political activist.
In any case, he submitted that the Collector did not act in
accordance with law at any point of time. Similarly, the order
passed by the Government is not a reasoned order and is
undoubtedly arbitrary. The power in the Collector implied a
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Page 44
duty in him to act in accordance with law. He relied upon a
judgment of this Court in Deewan Singh & Ors. Vs.
Rajendra Pd. Ardevi & Ors. reported in 2007 (10) SCC 528
in this behalf.
Submissions on behalf of the State Government:-
36 . The defence of the Government has principally
been that because Indigold was not in a position to set up the
industry, and Alumina had given a proposal in the Vibrant
Gujarat summit to set up its project on the very land, the
proposal was accepted. It had entered into an MOU with
GMDC which was to have 26% equity therein. While looking
into the proposal, initially there was some hesitation on the
part of the Government as can be seen from the notings of
the officers in the Government files. However, ultimately
looking into the totality of the factors, the Government took
the decision to permit the transfer of the land. It is not
mandatory that the land must be resumed under Section 89A
(5) of the Tenancy Act, if the initial purchaser does not set up
the industry. Section 89A (5) does not operate automatically.
Besides, the permission to Indigold to sell the land can be
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Page 45
explained with reference to the authority of the Collector
available to him under the first proviso to Section 89(1) read
with condition No. (4) of the permission dated 1.5.2003
granted to Indigold to purchase the concerned lands. This
condition No. (4) reads as follows:-
“4. These lands cannot be sold, mortgaged, gifted or transferred in any manner etc. without obtaining prior permission of the competent officer.”
Last but not the least, Section 126 of the Tenancy Act was
relied upon to submit that the State Government has an
overall control which permits it to issue the necessary
directions. This Section 126 reads as follows:-
“126. Control- In all matters connected with this Act, the State Government shall have the same authority and control over the [Mamlatdar] and the Collectors acting under this Act as [it has and exercises] over them in the general and revenue administration.”
37. The learned senior counsel Mr. Andhyarujina
appearing for the State, submitted that the Collector had the
authority to grant such a permission to sell under Rule 45 (b)
of the Bombay Tenancy and Agricultural Lands Rules, 1959.
This rule reads as follows:-
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“45.Circumstances in which permission for sale, etc. of land under section 89 may be granted - The Collector or any other officer authorised under the proviso to sub-section (1) of section 89 may grant permission for sale, gift exchange, lease or mortgage of any land in favour of a person who is not an agriculturists or who being an agriculturists, cultivates personally land not less than three family holdings whether as tenure holder or tenant or partly as tenure holder and partly as tenant in any of the following circumstances:- (a) such a person bona fide requires the
land for a non-agricultural purpose; or (b) the land is required for the benefit of an
industrial or commercial undertaking or an educational or charitable institution” …..
Submissions on behalf of the other respondents:-
38. Since it was the respondent No.4 Indigold, which
had initially purchased the land for industrial purpose, the
stand of Indigold was of significance. It is, however, very
relevant to note that Indigold had neither filed any affidavit in
the High Court, nor in this Court, and their counsel Mr. Trivedi
stated that he has no submissions to make. It is the failure of
the respondent No. 4 to set up the industry, and the
subsequent justification on the basis of financial difficulties
for the same which has led to the sale of the land. It is
strange that such a party had nothing to state before the
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Page 47
Court. This is probably because it had already received its
price after selling the land. The respondent No. 4 appeared
to be very much disinterested in as much as even the sale
documents were signed on their behalf by Mr. Nitin Patel, the
Managing Director of Alumina. Mr. Ahmadi, learned counsel
for the appellant therefore alleged collusion amongst all
concerned.
39. The respondent No. 5, however, contested the
matter vigorously. Mr. Krishnan Venugopal, learned senior
counsel appearing for respondent No. 5 pointed out that the
respondent No. 5 had entered into a correspondence with
GMDC earlier, and thereafter participated in the Vibrant
Gujarat Summit. He pointed out that the respondent No. 5
had previous experience in dealing in Alumina products, and
therefore was interested in setting up the plant in Kutch. It
intended to use the bauxite available in that district, and
finally it was going to have a production of 25,000 metric
tonnes of Alumina per-annum. It was being set up with an
investment of Rs. 30 crores. The project was being set up in
furtherance of the Industrial Policy of the State of Gujarat and
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with the technical know-how from NALCO. He drew our
attention to the project report and the photographs showing
the work done so far.
40. It was submitted that the respondent No.5 had also
entered into an MOU with GMDC whereunder GMDC was to
supply bauxite for 25 years, and it was to have 26% equity
participation. It is however, material to note that there are 3
MOUs placed on record. The first MOU is dated 13.1.2009
between Alumina Refinery Pvt. Ltd. and GMDC which is
basically like a declaration of intent to set up the plant, and it
contains the assurance of support from the Government of
Gujarat. The second MOU between them is dated 9.9.2009,
and it records that Government of Gujarat has agreed to
support this refinery, and that the GMDC had agreed to
supply, on priority basis, the plant-grade bauxite to this plant.
It is this document which states that GMDC will invest in the
equity of Alumina Refinery to an extent not exceeding 26%.
It contains the promise to supply bauxite. Mr. Krishnan
Venugopal, fairly accepted that this document cannot be
construed as a contract, and that it can at best be utilised as
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Page 49
a defence to insist on a promissory estoppel. The third MOU
is dated 30.11.2011 which is an agreement between Earth
Refinery Pvt. Ltd. which the holding company of Respondent
No. 5 and GMDC. In clause 2.1 of this agreement they have
agreed to set up a joint venture Company by name Alumina
Refinery Ltd. Clause 6.2 of this agreement states that equity
participation of GMDC in this company shall be 26%. The
obligation of GMDC has been spelt out under clause 4.2 to
supply bauxite.
41. The principal submission of respondent No. 5 is
that it is a bonafide purchaser of land of respondent No. 4, it
has a serious commitment for industrial development, and it
is acting in accordance with the industrial policy of the State.
There is nothing wrong if the Minister directs the transfer of
the unutilized land of respondent No. 4 to respondent No. 5
for industrial purpose, and this should be accepted as
permissible. The minister’s action cannot be called malafide
since it is in the interest of the industrial development of the
State. Mr. Krishnan Venugopal submitted that the right to
transfer is incidental to the right of ownership, and relied
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upon paragraph 36 of the judgment of this Court in DLF
Qutab Enclave Complex Educational Charitable Trust
Vs. State of Haryana and Ors. reported in 2003 (5) SCC
622. He further submitted that unless the possession of the
unutilized area is taken over by the State, the landlord’s title
to it is not extinguished. There is no automatic vesting of
land in the instant case. He relied upon the judgment of this
Court in Ujjagar Singh Vs. Collector reported in 1996 (5)
SCC 14 in this behalf.
42. It was then submitted that notings cannot be made
a basis for an inference of extraneous consideration, and
reliance was placed upon the observations of this Court in
paragraph 35 in Jasbir Singh Chhabra Vs. State of
Punjab reported in 2010 (4) SCC 192. He pointed out that
the law laid down in Centre for Public Interest Litigation
and Ors. Vs. Union of India and Ors. (supra) had been
clarified by a Constitution Bench in the matter of Natural
Resources Allocation, In Re: Special Reference (1) of
2012 reported in 2012(10) SCC 1. He referred to paragraph
122 of the judgment which quotes the observations from
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Page 51
Katuri Lal Lakshmi Reddy Vs. State of J&K reported in
1980 (4) SCC 1 as follows:-
” 122. In Kasturi Lal Lakshmi Reddy v. State of J&K, while comparing the efficacy of auction in promoting a domestic industry, P.N. Bhagwati, J. observed: (SCC p. 20, para 22)
“22. … If the State were giving a tapping contract simpliciter there can be no doubt that the State would have to auction or invite tenders for securing the highest price, subject, of course, to any other relevant overriding considerations of public wealth or interest, but in a case like this where the State is allocating resources such as water, power, raw materials, etc. for the purpose of encouraging setting up of industries within the State, we do not think the State is bound to advertise and tell the people that it wants a particular industry to be set up within the State and invite those interested to come up with proposals for the purpose. The State may choose to do so, if it thinks fit and in a given situation, it may even turn out to be advantageous for the State to do so, but if any private party comes before the State and offers to set up an industry, the State would not be committing breach of any constitutional or legal obligation if it negotiates with such party and agrees to provide resources and other facilities for the purpose of setting up the industry…..”
He also referred to paragraph 146 of the judgment (Per
Khehar J), therein, where the learned Judge has observed that
the court cannot mandate one method to be followed in all
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facts and circumstances, and auction and economic choice of
disposal of natural resources is not a constitutional mandate.
It was therefore submitted that, it was not necessary that the
Collector ought to have opted for auction of the concerned
parcel of land.
43. The learned senior counsel Mr. Krishnan
Venugopal, lastly drew our attention to the Jantri prices of the
land in 2008. He pointed out that at the highest, the State
would have sold this land, as per the Jantri price, for Rs. 4.35
crores. Assuming that the State was also to pay Rs. 1.20
crores as compensation to Indigold, the loss to the State
would come to Rs 3.15 crores. He submitted that if it comes
to that, the respondent No. 5, alongwith Indigold, could be
asked to compensate the state for this difference of 3.15
crores or such other amount as may be directed, but its
project must not be made to suffer.
44. GMDC was represented by learned senior counsel
Mr. Giri. He defended the action of the State as something in
furtherance of the industrial policy of the State. If the land
was to be sold and compensation was to be given, it may not
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have resulted into much benefit to the state. He relied upon
Section 7 of the Transfer of Property Act, to submit that every
person competent to contract, and entitled to transferable
property can transfer such property, and under S 10 of the
said Act any condition restraining alienation was void. He
relied on paragraph 20 of the judgment in Prakash
Amichand Shah Vs. State of Gujarat reported in 1986 (1)
SCC 581, to submit that divesting of title takes place only
statutorily, and which had not happened in the instant case.
Examination of the Scheme underlying Sections 89 and 89A above:-
45. Before we examine the submissions on behalf of all
the parties, it becomes necessary to examine the scheme
underlying the relevant sections 89 and 89A. As can be seen,
Section 89 essentially bars the transfers of agricultural lands
to non-agriculturists. The said section is split into four parts.
(a) Sub-section (1) provides that no sale or mortgage, gift,
exchange or lease of any land, or no agreement in that behalf
shall be valid in favour of a non-agriculturist. The first proviso
to Section 89 (1) makes an exception viz. that the Collector
or an officer authorised by the State Government in this
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behalf may grant permission for such sale, gift, exchange,
lease or mortgage for that purpose, in such circumstances as
may be prescribed. The second proviso of course provides
that no permission is required where the land is being sold to
a person who is not an agriculturist, but it is sold for
agricultural purpose.
(b) Sub section (2) provides that the above restriction will not
apply to a sale etc. in favour of an agricultural labourer or an
artisan
(c) Sub-section (3) similarly provides that the above
restriction will not apply to a mortgage in favour of a
cooperative society, to secure a loan therefrom.
(d) Sub-section (4) lays down that the restriction under
Section 90 with respect to the reasonable price for the land
to be sold will not apply to the sale under Section 89(1).
46. Section 89A creates an exception to Section 89 for
sale of land for bona-fide industrial purposes in certain cases.
This section is split into five sub-sections. Sub-section (1) of
Section 89A deals with those lands for which no permission is
required under sub-section (1) of Section 65B of the Bombay
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Land Revenue Code, 1879, i.e. lands such as those in
industrial zone etc. It lays down that nothing in Section 89
will prohibit the sale or the agreement of sale of such zonal
land in favour of any person for use of such land by such
person for a bona-fide industrial purpose. Section 89A,
creates an exception to Section 89 by allowing a sale of land
for bonafide industrial purpose in certain cases as
contemplated under the said section. These requirements
are laid down in the provisos (a) to (d) of sub-section (1) and
in sub-section (2) to (4) of Section 89A. They are as follows:-
(i) That the land is not situated within an urban
agglomeration,
(ii) A prior permission of the Industries Commissioner of the
State is to be obtained where the area of the land proposed
to be sold exceeds ten hectares,
(iii) The land proposed to be sold shall not exceed four times
the area on which the construction of the industry is to be put
up excluding the additional land for pollution measures,
(iv) If the land belongs to a tribal, it shall be subjected to
certain additional restrictions,
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(v) Within 30 days the purchaser has to inform the Collector
of such purchase failing which he is liable to a fine,
(vi) The Collector has thereafter to make an enquiry
whether the land is purchased for a bonafide industrial
purpose and issue a certificate to that effect. In case he is
not satisfied of the bonafide industrial purpose, he has to
hear the purchaser, and thereafter he may refuse issuance of
such certificate against which an appeal lies to the State
Government.
(vii) Lastly, the purchaser has to commence the industrial
activity within three years from the date of certificate, and
start the production of goods and services within five years
from the date of issuance of certificate.
47. Where the purchaser fails to start the industrial
activity as stipulated above, Section 89A (5) requires the
Collector to hold an enquiry, wherein he has to give the
purchaser an opportunity of being heard. Thereafter, if he
confirms such a view, he is expected to pass an order that
the land shall vest in the Government which will, however, be
done after determining appropriate compensation payable to
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the purchaser, which has to be done having regard to the
price paid by the purchaser. Then the land shall be disposed
of by the Government having regard to the use of the land.
Thus, the only authority contemplated under the section is
the Collector, and the decision is to be taken at his level. It is
only in the event of his refusing to give the certificate of
purchase for bonafide industrial purpose that an appeal lies
to the State Government. Thus, where one wants to
purchase agricultural land for industrial purposes, one has to
first obtain the permission of the Industries Commissioner.
The purchaser has also to inform the Collector about the
purchase within 30 days of such purchase, and obtain a
certificate that the land is purchased for a bonafide industrial
purpose. He has to see to it that the industrial activity starts
in three years from the date of such certificate, and the
production of goods and services also starts within five years
thereof, which period can be extended by the State
Government, in an appropriate case. In the event the
purchaser fails to commence such industrial activity, the
Collector has to make an enquiry, and thereafter pass an
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appropriate order of resumption of the land on determining
the compensation. Thus, the entire authority in this behalf is
with the Collector and none other.
Have the provisions of Sections 89 and 89A been complied in the present case:-
48. Now, we may examine the developments in the
present matter on the backdrop of these statutory provisions.
It is relevant to note that in their first letter dated 6.12.2008,
the respondent No.4 has not referred to any financial
constraint. The letter merely states that respondent No.4
wanted to dispose off the entire piece of land since they were
no more interested in putting up any industrial project in the
said land. As can be seen from Section 89A, the object of the
section is to permit transfer of agricultural land, only for a
bonafide industrial purpose. Where the land exceeds ten
hectares, such a purchaser has to obtain, to begin with, a
previous permission of the Industries Commissioner before
any such sale can be given effect to. Thereafter, the
purchaser has to send a notice to the Collector within 30 days
of the purchase, and the Collector has to be satisfied that the
land has been validly purchased for a bonafide industrial
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purpose, in conformity with the provisions of sub-section (1),
and then issue a certificate to that effect. There is a further
requirement that the purchaser has to commence the
industrial activity within three years, and has to start the
production within five years from the date of issuance of the
certificate. Admittedly no such steps were taken by Indigold,
nor was any affidavit in reply filed by them, either before the
High Court or before this Court. Mr. Trivedi, learned counsel,
appeared for Indigold, and he was specifically asked as to
what were the attempts that had been made by respondent
No.4 to set up the industry, and what were the difficulties
faced by it. He was asked as to whether there was any
material in support of the following statement made in
Indigold’s letter dated 16.6.2009 i.e. ‘we have tried our level
best to set up the industry on the land in question.’ Mr.
Trivedi stated that he had nothing to say in this behalf. All
that he stated was that the respondent No.4 purchased the
land, it was unable to set up its unit, and it sold the land to
respondent No.5.
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49. What is, however, material to note in this behalf is
that whereas the land is supposed to have been purchased in
2003 at a price of Rs.70 lakhs, it is said to have been sold at
Rs.1.20 crores in 19.1.2010. It is very clear that even before
the letter of 16.6.2009 proposing to sell the land to
respondent No.5, in December 2008 itself respondent No.4
had written to the Collector that they were no more
interested in putting up the industrial project, and therefore
they wanted to dispose off the piece of land to their
prospective clients. That being the position, it was
mandatory for the Collector at that stage itself to act under
sub-Section 5 of Section 89A to issue notice, conduct the
necessary enquiry, determine the compensation and pass the
order vesting the land in the State Government. It is very
clear that Collector has done nothing of the kind. In any case
he should have taken the necessary steps in accordance with
law at least after receiving the letter dated 16.6.2009. Again
he did not take any such steps.
50. It has been pointed out by the respondents that the
representative of respondent No.5 participated in the Vibrant
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Gujarat Global Investors Summit on 31.1.2009, and signed an
MOU with respondent No.6 for setting up a specialty alumina
plant in Kutch. The MOU stated that the Government of
Gujarat was assuring all necessary permissions to respondent
No.5. The respondent No.5 will be investing an amount of
Rs.30 crores in the proposed plant, and it will provide
employment to 80 persons. Thereafter, the above referred
letter dated 12.6.2009 was addressed by the respondent
No.5 to the Deputy Collector Bhuj. The letter sought
permission to purchase land belonging to Indigold. It referred
to the letter of respondent No.4 dated 6.12.2008. It stated
that the respondent No.5 would like to purchase the land for
a bonafide industrial purpose, for setting up their upcoming
project, Alumina Refinery Limited, on the land admeasuring
39 acres and 25 gunthas, situated in villages Kukma and Moti
Reladi. It then sought the permission from the competent
authority, under Section 89 of the Tenancy Act, 1958 to
register the sale in their favour.
51. After writing to the Collector on 16.6.2009, without
waiting for any communication from him, Alumina wrote to
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the Chief Minister on 18.6.2009. Directors of Alumina had a
meeting with the Minister of Revenue Smt. Anandiben Patel
on 29.6.2009, which was recorded by Mr. Nitin Patel on
30.6.2009. The Chief Minister’s Secretary wrote to the
Principal Secretary, Revenue Department on 2.7.2009
seeking a note on the possible course of action. The
Revenue Department sought a factual report from the
Collector, who instead of furnishing the same, forwarded the
proposal of Alumina itself to the Department for granting the
permission for the sale. The Department looked into the
statutory provisions, and then recorded on 7.8.2009 that the
Collector is required to take an action at his level in the
matter, and the proposal be sent back to him. After looking
into the legal position, the Principal Secretary, Revenue
Department and the Chief Secretary of the State wrote that
the land be taken back, and thereafter the issue of allotment
be examined separately.
52. The matter could have rested at that, but the
Minister of Revenue put a remark that permission be granted
as a special case, since the land is of private ownership. The
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matter was again discussed thereafter, and then a
suggestion was made by the departmental officers that 50%
of the unearned income may be sought from the seller. The
Chief Secretary noted that land may be given to the new
party provided Industries Department recommends it as per
the laid down rules. He maintained that the land be taken
back, and then be re-allotted to the new party. The Minister,
however, again passed an order that as suggested earlier by
her, permission be given and, therefore, the Collector
ultimately granted the permission as directed by the
Government. Thus, as can be seen, that instead of the
statutory authority viz. the Collector acting in accordance
with the statutory mandate, only because a direction was
given by the Minister that the statutory authority was
bypassed, and even the enquiry as contemplated under sub-
section 5 of Section 89A was given a go-by. Thus, as can be
seen from the above narration what emerges from the record
is that whereas Sections 89 and 89A contemplate a certain
procedure and certain requirements, what has been done in
the present matter is quite different. We may refer to Lord
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Bingham’s work titled ‘Rule of Law’ where in the Chapter on
exercise of power, he observes that:
‘Ministers and public officers at all level must exercise the powers conferred on them in good faith, fairly, for the purpose for which the powers were conferred, without exceeding the limits of such powers and not unreasonably’ .
He quotes from R v. Tower Hamlets London Borough
Council [1988] AC 858, which states:
‘Statutory power conferred for public purposes is conferred as it were upon trust, not absolutely, that is to say, it can validly be used only in the right and proper way which the parliament, when conferring it, is presumed to have intended.’
53. It is well settled that where the statute provides for
a thing to be done in a particular manner, then it has to be
done in that manner and in no other manner. This proposition
of law laid down in Taylor Vs. Taylor (1875) 1 Ch D
426,431 was first adopted by the Judicial Committee in Nazir
Ahmed Vs. King Emperor reported in AIR 1936 PC 253 and
then followed by a bench of three Judges of this Court in Rao
Shiv Bahadur Singh Vs. State of Vindhya Pradesh
reported in AIR 1954 SC 322. This proposition was further
explained in paragraph 8 of State of U.P. Vs. Singhara
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Singh by a bench of three Judges reported in AIR 1964 SC
358 in the following words:-
“8. The rule adopted in Taylor v. Taylor is well recognised and is founded on sound principle. Its result is that if a statute has conferred a power to do an act and has laid down the method in which that power has to be exercised, it necessarily prohibits the doing of the act in any other manner than that which has been prescribed. The principle behind the rule is that if this were not so, the statutory provision might as well not have been enacted….”
This proposition has been later on reiterated in Chandra
Kishore Jha Vs. Mahavir Prasad reported in 1999 (8) SCC
266, Dhananjaya Reddy Vs. State of Karnataka reported
in 2001 (4) SCC 9 and Gujarat Urja Vikas Nigam Limited
vs. Essar Power Limited reported in 2008 (4) SCC 755.
54. (i) Therefore, when Indigold informed the Collector on
6.12.2008 that they were ‘no more interested’ to put up any
industrial project, and were disposing of the entire piece of
land to their prospective client, the Collector was expected to
hold the necessary enquiry. This was the minimum that he
was expected to do. After holding the enquiry, if he was
convinced that the industrial activity had not been started, he
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was expected to pass an order that the land will vest in the
State which will have to be done after determining the
compensation payable having regard to the price paid by the
purchaser. In the instant case, the respondent No.4 claims to
have purchased the land for Rs.70 lakhs. As pointed out by
Mr. Krishnan Venugopal himself, as per the jantri price of the
lands at that time, i.e. even at the Government rate in 2008,
the land was worth Rs.4.35 crores. The collector was
expected to dispose of the land by auction which is the
normal method for disposal of natural resources which are
national assets. Out of that amount, the compensation
payable to the respondent no.4 would have been around
Rs.70 lakhs having regard to the amount that the respondent
No.4 had paid. This is because respondent no. 4 had
purchased agricultural land to put up an industry, and they
had taken no steps whatsoever for over five years to set up
the industry. They were not expected to purchase the land,
and thereafter sell it for profiteering. The Jantri price is an
official price. In actual auction the State could have realised a
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greater amount. In permitting the sale inter-se parties, the
State exchequer has positively suffered.
(ii) On the other hand, in the event, the Collector was to
form an opinion after receiving the bids or otherwise that it
was not worth disposing of the land in that particular way, he
could have divested Respondent No. 4 of the land by paying
compensation, and re-allotted the same to the Respondent No
5 at an appropriate consideration. The statute required him
to act in a particular manner and the land had to be dealt in
that particular manner only, and in no other manner, as can
be seen from the legal position, accepted in various
judgments based on the proposition in Taylor vs. Taylor.
55. Thus inspite of the Secretaries repeating their
advice, the Minister of Revenue Smt. Anandiben Patel has
insisted on treating this case as a special case for which she
has recorded no justifiable reasons whatsoever, and orders
were issued accordingly. Under Section 89A(3), the
Government is the appellate authority where the Collector
does not grant a certificate for purchase of bonafide industrial
purpose. Thus what has happened, thereby is that the powers
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of the statutory authority have been exercised by the
Government which is an appellate authority.
56. The State Government gave three additional
reasons when it defended its decision. (i)The first reason was
that if the land had been directed to be vested in the State
Government, State would have been required to pay
compensation to Indigold, and it would have been a long-
drawn process for determining the valuation of the land, and
thereafter for finding the suitable and interested party to set
up an industry. As stated earlier, this plea is not tenable. If
the law requires something to be done in a particular manner,
it has got to be done in that way and by no other different
manner. (ii) The second reason given was that the action was
in State’s own interest because through its public sector
undertaking i.e. GMDC, it was involved in the transaction viz.
that is it is going to have 26% equity. As far as this part is
concerned again it is difficult to accept this reason also
because one does not know what will be the value of shares of
the new company. (iii) Third reason given was that the land
was worth Rs.4.35 crores as per the Jantri in 2008, and as per
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the revised Jantri in 2011 it had come down to Rs.2.08 crores.
This is a situation which was brought about by the State itself
and this cannot be a ground for the State to submit that it
would not have gained much in the process.
57. That apart it has to be examined whether the
Government had given sufficient reasons for the order it
passed, at the time of passing such order. The Government
must defend its action on the basis of the order that it has
passed, and it cannot improve its stand by filing subsequent
affidavits as laid down by this Court long back in
Commissioner of Police, Bombay vs. Gordhandas
Bhanji reported in AIR 1952 SC 16 in the following words:-
“Public orders, publicly made, in exercise of a statutory authority cannot be construed in the light of explanations subsequently given by the officer making the order of what he meant, or of what was in his mind, or what he intended to do. Public orders made by public authorities are meant to have public effect and are intended to affect the actings and conduct of those to whom they are addressed and must be construed objectively with reference to the language used in the order itself.”
This proposition has been quoted with approval in paragraph
8 by a Constitution Bench in Mohinder Singh Gill vs. Chief
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Election Commissioner reported in 1978 (1) SCC 405
wherein Krishna Iyer, J. has stated as follows:-
“8. The second equally relevant matter is that when a statutory functionary makes an order based on certain grounds, its validity must be judged by the reasons so mentioned and cannot be supplemented by fresh reasons in the shape of affidavit or otherwise. Otherwise, an order bad in the beginning may, by the time it comes to court on account of a challenge, get validated by additional grounds later brought out.”
In this context it must be noted that the Revenue Minister’s
direction merely states that it is a private land, and the
Governments letter dated 18.12.2009 speaks of the financial
incapability of Inidgold. Neither the letter dated 18.12.2009
from the Government to the Collector, nor the order passed
by the Deputy Collector on 15.1.2010 mention anything
about:
1. the mineral policy of the Government of Gujarat.
2. the time taking nature of the process of acquiring the land and re-allotting it.
3. That the second sale was under the authority of the
Collector available to him under the first proviso to
Section 89(1) read with condition no. (4) of the
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permission dated 1.5.2003 granted to Indigold to
purchase the concerned lands.
In the absence of any of these factors being mentioned in the
previous orders, it is clear that they are being pressed into
service as an after-thought. The Government can not be
allowed to improve its stand in such a manner with the aid of
affidavits.
58. As noted earlier, the State Government is an
Appellate Authority under sub-section 3 of Section 89A, and it
could not have given a direction to the Collector who was
supposed to take the decision under his own authority. We
may profitably refer to a judgment of a Constitutional Bench
in State of Punjay vs. Hari Kishan reported in AIR 1966
SC 1081. In that matter, the respondent desired to construct
a cinema at Jhajhar. He submitted an application and under
the orders of the State Government all applications were
directed to be referred to the State Government. Therefore,
though his application was initially accepted, the SDO
informed him that the application was rejected. He appealed
to the State Government and the appeal was rejected which
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has led to the petition in the High Court. The Punjab High
Court framed the question as to whether the State of Punjab
was justified in assuming the jurisdiction which was conferred
on the licensing authority by the act. The Supreme Court held
in paragraph 4 of the judgment, that the course adopted by
the State of Punjab had resulted in the conversion of the
appellate authority into the licensing authority. That was not
permissible, and so it is in the present case. The reliance by
the State Government on the overall control of the State
under Section 126 of the Tenancy Act cannot be used when in
the instant case the power is with the Collector and the
appellate power is with the State Government. The power
under Section 126 can be utilized for giving general
guidelines, but not for interference or giving directions in
individual cases.
59. The submission that condition No.4 of the
permission to purchase, obtained by respondent No.4 in 2003
permits the Collector to pass such an order is equally
untenable. There is nothing in the statutory scheme to
suggest that a second sale, inter se parties, after the failure of
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a purchaser to set up an industry is permissible. In such an
event, the statute requires an enquiry to be conducted by the
collector. If he is satisfied that there is a failure to set up the
industry, the compensation to be paid to the purchaser is
determined. After this stage the land vests in the
Government. It is thus clear that the condition No 4 in the
permission obtained by Respondent No. 4 is bad in law, not
having its basis in any statutory provision. Even assuming
that the Collector had that power to lay down such a
condition, the authority to permit the sale as per the said
condition had to be exercised by him in the manner
contemplated under Section 89 A (5) viz. after holding the
enquiry as prescribed. Here the enquiry itself was dispensed
with. Rule 45(b) of the Bombay Tenancy and Agricultural
Lands Rules, 1959 also cannot be pressed into service for the
reason that, neither under Section 89 nor under Section 89A,
a sale inter-se parties is contemplated or permitted.
60. Now, what is to be noted is that wherever an
agriculturist is in possession of a land, either as an owner or
as a tenant protected by the statute, transfer of his land for
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industrial purposes is subject to the conditions regulated by
the Act. It is for the protection and preservation of the
agricultural land that the bar against conversion is created
under Section 89. Thereafter, as an exception, only a bonafide
use for industrial purpose is permissible under section 89A.
Ownership of respondent No.4 was subject to the conditions
of utilization for bonafide industrial purpose, and it was clear
on record that respondent No.4 had failed to utilize the land
for bonafide industrial purpose. The reliance on Sections 7
and 10 of the Transfer of Property Act is also misconceived in
the present case, since the Tenancy Act is a welfare
enactment, enacted for the protection of the agriculturists. It
is a special statute and the sale of agricultural land permitted
under this statue will have to be held as governed by the
conditions prescribed under the statute itself. The special
provisions made in the Tenancy Act will therefore prevail over
those in the Transfer of Property Act to that extent.
61. Besides, the present case is clearly a case of
dictation by the State Government to the Collector. As
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observed by Wade and Forsyth in Tenth Edition of
Administrative Law:-
“if the minister’s intervention is in fact the effective cause, and if the power to act belongs to a body which ought to act independently, the action taken is invalid on the ground of external dictation as well as on the obvious grounds of bad faith or abuse of power”.
The observations by the learned authors to the same effect in
the Seventh Edition were relied upon by a bench of three
judges of this Court in Anirudhsinhji Karansinhji Jadega
and anr. vs. State of Gujarat reported in 1995 (5) SCC
302. In this matter the appellant was produced before the
Executive Magistrate, Gondal, on the allegation that certain
weapons were recovered from him. The provisions of TADA
had been invoked. The appellant’s application for bail was
rejected. A specific point was taken that the DSP had not
given prior approval and the invocation of TADA was non-est.
The DSP, instead of granting prior approval, made a report to
the Additional Chief Secretary, and asked for permission to
proceed under TADA. The Court in para 13, 14, 15 has held
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this to be a clear case of ‘dictation’, and has referred to Wade
and Forsyth on ‘Surrender Abdications and Dictation’.
62. The respondent No.5 had the courage to state that
the notings of the Secretaries were inconsequential. As a
beneficiary of the largesse of the Government, respondent
No.5 could say that, but it is not possible for us to accept the
same. In Trilochan Dev Sharma vs. State of Punjab
reported in AIR 2001 SC 2524 what is observed by this Court
is relevant for our purpose
“In the system of Indian Democratic Governance, as contemplated by the constitution, senior officials occupying key positions such as Secretaries are not supposed to mortgage their own discretion, volition and decision making authority and be prepared to give way or being pushed back or pressed ahead at the behest of politications, for carrying out commands having no sanctity in law.”
A higher civil servant normally has had a varied experience
and the ministers ought not to treat his opinion with scant
respect. If Ministers want to take a different view, there must
be compelling reasons, and the same must be reflected on
the record. In the present case, the Secretaries had given
advice in accordance with the statute and yet the Minister has
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given a direction to act contrary thereto and permitted the
sale which is clearly in breach of the statute.
63. Now, the effect of all that is stated above is that the
land which was purchased by respondent No.4 for Rs.70 lakhs
is permitted by the Government of Gujarat to be sold directly
to respondent No.5 at Rs.1.20 crores to set up an industry
which could not have been done legally. It is undoubtedly not
a case of loss of hundreds of crores as claimed by the
appellants, but certainly a positive case of a loss of a few
crores by the public exchequer by not going for public auction
of the concerned property. It is true as pointed out by Mr.
Venugopal, learned senior counsel that in a given case the
state may invite an entrepreneur and give an offer. However,
in the instant case, the sale of the land for industrial purpose
is controlled by the statutory provisions, and the State was
bound to act as per the requirements of the statute. The
minister’s direction as seen from the record clearly indicates
an arbitrary exercise of power. The orders passed by the
Government cannot therefore be sustained. As seen earlier,
there is neither a power nor a justification to make any special
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case, in favour of the Respondent No 5. Such exceptions may
open floodgates for similar applications and orders, even
though the Gujarat Government is contending that this order
is purportedly not to be treated as a precedent.
64. In our view, considering the scheme of the act, the
process of industrialization must take place in accordance
therewith. As stated earlier if the law requires a particular
thing should be done in a particular manner it must be done
in that way and none other. The State cannot ignore the
policy intent and the procedure contemplated by the statute.
In the instant case, the State could have acquired the land,
and then either by auction or by considering the merit of the
proposal of respondent No.5 allotted it to respondent No.5.
Assuming that the application of the Respondent No 5 was for
a bona-fide purpose, the same had to be examined by the
industrial commissioner, to begin with, and thereafter it
should have gone to the collector. After the property vests in
the Government, even if there were other bidders to the
property, the collector could have considered the merits and
the bona-fides of the application of Respondent No. 5, and
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nothing would have prevented him from following the course
which is permissible under the law. It is not merely the end
but the means which are of equal importance, particularly if
they are enshrined in the legislative scheme. The minimum
that was required was an enquiry at the level of the Collector
who is the statutory authority. Dictating him to act in a
particular manner on the assumption by the Minister that it is
in the interest of the industrial development would lead to a
breach of the mandate of the statute framed by the
legislature. The Ministers are not expected to act in this
manner and therefore, this particular route through the
corridors of the Ministry, contrary to the statute, cannot be
approved. The present case is clearly one of dereliction of his
duties by the Collector and dictation by the Minister, showing
nothing but arrogance of power.
65. The High Court has erred in overlooking the legal
position. It was expected to look into all the earlier mentioned
aspects. The impugned judgment does not reflect on the
issues raised in the petition. It could not be said that the
petition was delayed and merely because investment had
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been made by the respondent No.5, the court would decline
to look into the important issues raised in the PIL.
Epilogue:-
66. Before we conclude, we may observe that India is
essentially a land of villages. Although, urbanization and
industrialization is taking place, the industry has not
developed sufficiently, and large part of our population is still
required to depend on agriculture for sustenance. Lands are,
therefore, required to be retained for agricultural purposes.
They are also required to be protected from the damage of
industrial pollution. Bonafide industrial activity may mean
good income to the entrepreneurs, but it should also result
into good employment and revenue to the State, causing least
pollution and damage to the environment and adjoining
agriculturists. While granting the permission under Section
89A (5) the Collector has to examine all these aspects. This is
because the only other exception for conversion of
agricultural lands to non-agricultural purpose is for those
lands which are in an industrial zone. As far as the conversion
of lands otherwise than those in the industrial zone is
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concerned, all the aforesaid precautions are required to be
taken when a decision is to be arrived at as to whether the
application is for a bonafide industrial purpose. In the instant
case, there were newspaper reports of apprehensions and
protest of the adjoining farmers. The Revenue Secretary and
the Chief Secretary had placed the statutory provisions on
record. It was expected of the Government and the Revenue
Minister to take cognizance of these apprehensions of the
farmers as well as the statutory provisions brought to her
notice by the secretaries. She has simply brushed aside the
objections of the secretaries merely because the Chief
Minister’s secretary had written a letter, and because she was
the minister concerned. While over-ruling the opinion of
secretaries to the concerned department, the Minister was
expected to give some reasons in support of the view she was
taking. No such reason has come on record in her file notings.
She has ignored that howsoever high you may be, the law is
above you.
67. Development should not be measured merely in
terms of growth of gross domestic product, but it should be in
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terms of utility to the community and the society in general.
There is a certain inbuilt wisdom in the statute which is the
mandate of the legislature which represents the people. The
Minister has clearly failed to pay respect to the same.
Hence, the following decision:-
68. Having noted the legal position and the factual
scenario, the impugned judgment and order passed by the
High Court will have to be set aside. The prayers in the PIL
will have to be entertained to hold that the direction of the
State Government dated 18.12.2009 and the consequent
order issued by the Collector of Kutch on 15.1.2010 is
arbitrary, and bad in law for being in violation of the scheme
and the provisions of Sections 89 and 89A of the Tenancy Act.
The direct sale of land by Indigold to Alumina is also held to
be bad in law, and inoperative.
69. (i) In normal circumstances, the order hereafter would
have been to direct the Collector to proceed in accordance
with Section 89A(5) viz., to hold an enquiry to decide whether
the purchaser viz. Indigold had failed to commence the
industrial activity and the production of goods and services
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within the period specified. In the instant case, there is no
need of any such direction to hold an enquiry, in view of the
letter of Indigold itself, dated 6.12.2008, wherein, it clearly
stated that they were no more interested in putting up any
industrial project in the said land.
(ii) Consequently, there will be an order that the land shall
vest in the State Government free from all encumbrances.
This vesting order, however, has to be on payment of
appropriate compensation to the purchaser as the Collector
may determine. In the instant case, there is no need of
having this determination, for the reason that Indigold has
received from Alumina Rs. 1.20 crores as against the amount
of 70 lakhs, which it had paid to the agriculturists when it
bought those lands in 2003. Neither Indigold nor Alumina is
making any grievance towards this figure or the payment
thereof. In fact, it is the case of both of them that the direct
sale by Indigold to Alumina for this amount as permitted by
the State Government be held valid. That being so, this
amount of Rs. 1.20 crores would be set-off towards the
compensation which would be payable by the State
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Government to the purchaser Indigold, since the land was
originally purchased by Indigold, and is now to vest in the
State Government.
(iii) The third step in this regard is that the land is to be
disposed off by the State Government, having regard to the
use of the land. The land was supposed to be used for the
industrial activity on the basis of the utilization of bauxite
found in Kutch, and respondent No. 5 has proposed a plant
based on use of bauxite. The disposal of the land will,
however, have to be at least as per the minimum price that
would be receivable at the Government rate. In the facts and
circumstances of this case, having noted that the respondent
No.5 claims to have made some good investment, and that
the Respondent No.5 has also offered to pay, without
prejudice, the difference between Rs.4.35 crores and Rs.1.20
crores i.e. Rs.3.15 cores to the State, the land will be
permitted to be disposed of by the State Government to
Alumina provided Alumina pays this amount of Rs. 3.15 crores
to the State Government. This particular order is being made
having further noted that, Alumina has acted on the basis of
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the commitment made to it by the Government of Gujarat in
the Vibrant Gujarat Summit, and in furtherance of the
industrial development policy of the State. It is also relevant
to note that the respondent No.5 had made an application to
the Collector in the year 2009 for permitting the purchase of
the land, and has been waiting to set up its industry for the
last four years. Mr. Ahmadi, learned senior counsel appearing
for the appellants has also submitted that, as such, appellants
are not against the development of Kutch area, but they do
want the state to follow the law and exchequer not to suffer.
In the circumstances, although we do not approve the action
of the State Government, and hold it to be clearly arbitrary
and untenable, we are of the view that the aforesaid order will
be appropriate to do complete justice in the matter.
70. In the circumstances, we pass the following orders:-
(a) The appeal is allowed in part;
(b) The impugned judgment and order passed by the High
Court is set-aside;
(c) The PIL No.44 of 2012 filed by the appellants is allowed
by holding that the order dated 18.12.2009 passed by the
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Government of Gujarat and by the Collector of Kutch on
15.1.2010, are held to be arbitrary and bad in law;
(d) In the facts and circumstances of this case, the sale of
the concerned land by Indigold to Alumina is held to be bad in
law. The land involved in the present case is held to have
vested in the State of Gujarat free from all encumbrances,
and the amount of Rs. 1.20 crores paid by Alumina to Indigold
is treated as full payment towards the compensation payable
by the State to Indigold.
(e) If Alumina is interested in their proposed project, it shall
pay an amount of Rs. 3.15 crores to the Government of
Gujarat within three months hereafter. On such a payment
being made, an order of allotment of the land to Alumina will
be issued by the State Government. The further activities of
Alumina on the concerned parcel of land will start only after
this payment is made, and in the event the amount is not so
paid within three months hereafter, the Government will
proceed to take further steps to dispose of the land having
regard to the use of the land.
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(f) In the facts of the present case, there shall be no order
as to costs.
…………………………………..J. [ H.L. Gokhale ]
……………………………………J. [ J. Chelameswar ]
New Delhi Dated: January 23, 2014
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