IN THE HIGH COURT OF PUNJAB AND HARYANA
AT CHANDIGARH
Civil Writ Petition No.2677 of 2008
Date of decision: 12th November, 2009
Babbar Bhan and another
... Petitioners
Versus
State of Haryana and others
... Respondents
Civil Writ Petition No.3870 of 2008
Surinder Kumar Sharma and others
... Petitioners
Versus
State of Haryana and others
... Respondents
Civil Writ Petition No.3915 of 2008
Keshav Kumar Bansal
... Petitioner
Versus
State of Haryana and others
... Respondents
CORAM: HON'BLE MR. JUSTICE T.S. THAKUR
HON'BLE MR. JUSTICE KANWALJIT SINGH AHLUWALIA
Present: Mr. Vinod S. Bhardwaj, Advocate for the petitioners.
Mr. Randhir Singh, Additional Advocate General, Haryana
for the State.
Mr. Ashok Aggarwal, Sr. Advocate with
Mr. Amit Aggarwal, Advocate.
Mr. Ajay Kumar Kansal, Advocate for respondents No.2 to 4.
Mr. Aman Pal, Advocate for respondents No. 15 and 25.
Civil Writ Petitions No. 2677, 3870 & 3915 of 2008 2
Mr. Raj Mohan Singh, Advocate
for respondents No.5 and 31.
Mr. B.R. Gupta, Advocate for respondents No.6 and 34.
Mr. Raman Chawla, Advocate for respondent No.9.
Mr. Sudhanshu Makkar, Advocate
for respondents No.10 and 18.
Mr. Dilbagh Singh, Advocate for respondents No.11 and 23.
Mr. Arun Sehgal, Advocate for respondent No.16.
Ms. Sandeepa Mehta, Advocate for respondent No.19.
Mr. D.S. Malik, Advocate for respondents No.20 and 33.
Mr. Haripal Verma, Advocate for respondent No.22.
Mr. Jitender Nara, Advocate for respondent No.35.
Mr. Kamal Sehgal, Advocate
for respondents No.17 & 40 to 42.
Ms. Nisha Goel, Advocate for
Mr. D.S. Bali, Sr. Advocate.
Mr. Sanjay Vashisth, Advocate for respondent No.8.
Notes: 1. Whether Reporters of local newspapers may be allowed to
see the judgment?
2. To be referred to the Reporters or not?
3. Whether the judgment should be reported in the Digest?
KANWALJIT SINGH AHLUWALIA, J.
Three writ petitions filed in this Court, question the allotment
of industrial plots in Industrial Estate, Bhiwani to the successful allottees,
on the ground that the same are vitiated by nepotism, favouritism and
total lack of a fair and transparent procedure that could ensure fairness
and objectivity. It is alleged that the successful allottees are
relatives/friends and protégé of politicians and bureaucrats. They had,
therefore, succeeded in getting the allotment, not on the basis of merit
but because authorities allowed them to steal march over the better
candidates available. This, according to the petitioners, amounts to
Civil Writ Petitions No. 2677, 3870 & 3915 of 2008 3
distribution of largesse, as the recipient of plots were less meritorious and
no comparative criteria to evaluate claim of all those, who applied for
allotment of plots, has been followed. It is prayed that since the entire
allotment stands vitiated, the allotment letters issued be cancelled and an
inquiry be ordered.
Petitioners’ challenge to the mode of allotment, questioning
the procedure followed by the authorities, makes it imperative for us to
first notice the broad parameters laid by the Hon’ble Supreme Court
regarding distribution of public property to private individuals, so that on
the touchstone of the same, we are able to evaluate the allotment of plots
made, in the factual backdrop pleaded in these writ petitions.
The principle that the government while entering into
contracts or distributing public largesse cannot act arbitrarily has been
emphasized by the Supreme Court in a number of landmark decisions
such as ‘Ramana Dayaram Shetty v. International Airport Authority
of India‘ (1979) 3 SCC 489 and ‘Kasturi Lal Lakshmi Reddy v. State
of J & K‘ (1980) 4 SCC 1. After discussing the entire conspectus of law,
it was held by the Supreme Court in ‘New Horizons Ltd. v. Union of
India‘, (1995) 1 SCC 478 that
“7. At the outset, we may indicate that in the matter of
entering into a contract, the State does not stand on the
same footing as a private person who is free to enter into a
contract with any person he likes. The State, in exercise of its
various functions, is governed by the mandate of Article 14 of
the Constitution which excludes arbitrariness in State action
and requires the State to act fairly and reasonably. The
action of the State in the matter of award of a contract has to
satisfy this criterion. Moreover a contract would either involve
expenditure from the State exchequer or augmentation of
public revenue and consequently the discretion in the matter
Civil Writ Petitions No. 2677, 3870 & 3915 of 2008 4
of selection of the person for award of the contract has to be
exercised keeping in view the public interest involved in such
selection. The decisions of this Court, therefore, insist that
while dealing with the public, whether by way of giving jobs or
entering into contracts or issuing quotas or licences or
granting other forms of largesse, the Government cannot act
arbitrarily at its sweet will and like a private individual, deal
with any person it pleases, but its action must be in
conformity with the standards or norms which are not
arbitrary, irrational or irrelevant. It is, however, recognised
that certain measure of “free play in the joints” is necessary
for an administrative body functioning in an administrative
sphere.”
It has been held in the case of ‘Sachidananda Pandey v.
State of W.B.’ (1987) 2 SCC 295 that:
“On a consideration of the relevant cases cited at the
bar the following propositions may be taken as well
established: State-owned or public-owned property is not to
be dealt with at the absolute discretion of the executive.
Certain precepts and principles have to be observed. Public
opinion is the paramount consideration. One of the methods
of securing the public interest, when it is considered
necessary to dispose of a property, is to sell the property by
public auction or by inviting tenders. Though that is the
ordinary rule, it is not an invariable rule. There may be
situations where there are compelling reasons necessitating
departure from the rule but then the reasons for the departure
must be rational and should not be suggestive of
discrimination. Appearance of public justice is as important
as doing justice. Nothing should be done which gives an
appearance of bias, jobbery or nepotism.”
Civil Writ Petitions No. 2677, 3870 & 3915 of 2008 5
Similar observation have been made in the case of ‘Haji
T.M. Hassan v. Kerala Financial Corporation‘ (1988) 1 SCC 166
wherein it was held that:
“The public property owned by the State or by any
instrumentality of the State should be generally sold by public
auction or by inviting tenders. This Court has been insisting
upon that rule, not only to get the highest price for the
property but also to ensure fairness in the activities of the
State and public authorities. They should undoubtedly act
fairly. Their actions should be legitimate. Their dealings
should be aboveboard. Their transactions should be without
aversion or affection. Nothing should be suggestive of
discrimination. Nothing should be done by them which gives
an impression of bias, favouritism or nepotism. Ordinarily
these factors would be absent if the matter is brought to
public auction or sale by tenders.”
The perusal of the aforesaid decisions makes it clear that
whenever public property is distributed the same has to be ordinarily
done by public auction or inviting tenders. The deviance from this rule
ipso facto is not illegal but nothing should be done which gives as an
appearance of bias or nepotism. As a matter of fact it has been held in
the case of ‘Netai Bag v. State of W.B.’, (2000) 8 SCC 262 that:
“There cannot be any dispute with the proposition that
generally when any State land is intended to be transferred
or the State largesse decided to be conferred, resort should
be had to public auction or transfer by way of inviting tenders
from the people. That would be a sure method of
guaranteeing compliance with the mandate of Article 14 of
the Constitution. Non-floating of tenders or not holding of
public auction would not in all cases be deemed to be the
result of the exercise of the executive power in an arbitrary
manner. Making an exception to the general rule could be
Civil Writ Petitions No. 2677, 3870 & 3915 of 2008 6justified by the State executive, if challenged in appropriate
proceedings.”
The principles of law propounded above by the Hon’ble Apex
Court can be summed up as under:
(a) The State ought to dispose of public property by way of
public auction or by inviting tenders as an ordinary rule. But
if the State chooses to act otherwise, it has to act fairly and
reasonably and action of the State must exclude
arbitrariness;
(b) In case the State opts to make an exception to the general
rule of disposing the property through public auction or by
inviting tenders, the procedure followed should be so
transparent that it overrules an impression of bias,
favourtism or nepotism;
(c) In all the cases, where the general rule (sale through public
auction or by invitation of tenders) is not adhered to, it must
be in consonance with the criterion, which satisfies the
expectation that the same is fair and reasonable.
(d) The criteria should be pre-determined and published to rule
out the allegation of any bias.
It is now time to state the facts.
Civil Writ Petition No. 2677 of 2008 has been filed by two
advocates. They have filed this writ petition purportedly in public interest.
Civil Writ Petition No.3870 of 2008 has been filed by Surinder Kumar
Sharma, Smt.Sarita Sharma and Ajay Kumar. They have pleaded that
they are industrialists in their own right, having requisite experience and
Civil Writ Petitions No. 2677, 3870 & 3915 of 2008 7
had applied for the allotment of ½ acre plots by depositing the earnest
money, but they could not succeed as respondents No.5 to 30 were well
connected and had a say in the corridors of power. Civil Writ Petition No.
3915 of 2008 has been filed by Keshav Kumar Bansal. He is an
industrialist, who appears to have applied for allotment of a 2 acre plot.
His grievance and prayer for seeking cancellation of allotment of plots to
the successful allottees is no different from that of the petitioners in other
two writ petitions. For facility of reference, facts are gathered from Civil
Writ Petition No. 2677 of 2008, as on all important aspects, i.e., facts and
law, submissions made, all the three writ petitions are similar.
Haryana Urban Development Authority published a brochure
offering freehold industrial plots at Roj-Ka-Meo, Hathin, Bahadurgarh,
Hisar and Bhiwani. The booking had to commence from 3rd August, 2007.
Since all the three writ petitions have assailed the allotment of plots at
Bhiwani only, no reference is required to be made qua other Industrial
Estates. As per the chart, which formed part of the brochure, one plot of 2
acre, 22 plots of ½ acre and 4 plots of ¼ acre were to be allotted at the
rate of Rs.770/- per square meter. For 2 acre plot Rs.6,31,400/-, for ½
acre plot Rs.1,57,850/- and for ¼ acre plot Rs.78,925/- were to be
deposited as earnest money along with the application form.
The brochure describes Bhiwani as a fast developing
industrial commercial town of Haryana, known for its temples and textiles.
Bhiwani, being the district headquarter, is also headquarter of Haryana
School Education Board. It is situated at a distance of 125 kms from
Delhi and 50 kms from Rohtak and is equipped with all basic
infrastructure facilities and public utilities like, General Hospital and a Mini
Secretariat. The close proximity of Bhiwani to Delhi had enhanced the
value of plots available.
Civil Writ Petitions No. 2677, 3870 & 3915 of 2008 8
The procedure for allotment of plots published in the
brochure reads as under:
“Mere submission of an application would not
necessarily entitle an application for allotment. Allotment of
plot will be after due assessment of the application/project
report & on basis of individual merits/financial capabilities of
entrepreneurs.
The applications received shall be scrutinized and
applicants interviewed by the Allotment Committee, and
thereafter, the allotment shall be made in favour of the
recommendee with approval of the Competent Authority.”
According to the brochure, preference was to be given to the
entrepreneurs belonging to the category of ex-servicemen, women,
unemployed engineering graduates/ Polytechnic/ ITI trained candidates,
oustees of that sector and expansion/ shifting of existing units.
Copy of the brochure is attached as Annexure P-2.
It is stated in the writ petitions that respondents No.5 to 30
have been allotted plots solely on the ground that they were related to the
people in prominence, which included Members of Legislative Assembly
and senior Bureaucrats, constituting the ruling clique. Petitioners have
enumerated the instances to prove this contention. These can be
summed up as under:
(a) That the single plot measuring 2 acres was allotted to Kamla
Bhardwaj respondent No.4. She was in Government service
till the application form was filed. The petitioners have stated
that the allottee was the wife of Shiv Shankar Bhardwaj, a
sitting Member of Legislative Assembly from Bhiwani
constituency.
Civil Writ Petitions No. 2677, 3870 & 3915 of 2008 9
(b) Naresh Aggarwal respondent No. 6 was allotted 1 acre plot.
Petitioners aver that he had applied for 2 acre plot for
allotment to Chinar Multi Feb India Limited. There was no
category of 1 acre plot in the brochure. Naresh Aggarwal
had also applied for 2 plots of ½ acre each for allotment of
the same to a company named Parshotam Dass Naresh
Kumar Pvt. Ltd. 1 acre plot was not allotted to this company
but to Chinar Multi Feb India Limited. Naresh Aggarwal is
stated to be grandson of Ram Bhajan Aggarwal, who is
former Home Minister and had also held the portfolio of
Tourism Minister in the State of Haryana. 1 acre plot was not
available in any category, but, was specially created to
accommodate the said respondent by clubbing two plots.
Furthermore, it is alleged that Naresh Aggarwal was
ineligible for the allotment of plot, as earlier 2 plots allotted to
him bearing No. 241 and 242 were resumed for non-
payment of the installments. Therefore, from his conduct,
authorities could not infer that he was having sound financial
credentials.
(c) A ½ acre plot was allotted to Dalsher Singh respondent
No.13, who is nephew of Dharambir Singh, the Chief
Parliamentary Secretary and Member of Legislative
Assembly. According to the petitioners, it is perceived in
large circles that this was a benami allotment to Dalsher
Singh. In fact, the beneficiary was Dharambir Singh.
(d) Another ½ acre plot was allotted to Satyender Singh
respondent No.20, who is nephew of Sombir Singh, Member
of Legislative Assembly from Loharu constituency.
Civil Writ Petitions No. 2677, 3870 & 3915 of 2008 10
(e) Respondent No.17 Rani is related to Chhatarpal, Member of
Legislative Assembly, as he is first cousin of her husband
and it is stated that Rani belongs to a family of political
influence, as her brother-in-law is the president of Vaish
College, Bhiwani and engaged in active politics.
(f) Respondent No.23 Suresh Tanwar is relative of Sandeep
Tanwar, Secretary of Haryana Pradesh Congress Party.
(g) R.K. Sachdev respondent No.25 is close relative of Rajiv
Arora and Smt.Jyoti Arora. According to the petitioners,
these husband and wife duo is posted as senior IAS officer
in the State of Haryana.
The petitioners have laid much emphasis on the assertion
that all other successful allottees were allotted plots because their close
relations or friends were in position to exercise influence in the corridors
of power. Petitioners have made following averments:
“3. (viii) That the petitioners have reliable
information and strong reasons to believe that allotment that
has been made in favour of Kishan Lal Jain – respondent
No.29 for ¼ acre has been made because he was the class-
fellow to Shri M.L.Tayal, IAS, presently posted as Principal
Secretary to Chief Minister, Haryana. Shilpa Gupta
(respondent No.30) daughter of Shri Jai Kumar Gupta, who
has been allotted ¼ acre plot has been allotted the same for
the reason that her father is a friend of Shri T.C. Gupta, IAS,
(respondent No.38), who is also coincidently posted as Chief
Administrator, Haryana Urban Development Authority, Hisar
and was a member of the Allotment Committee. The
petitioners have reasons to believe that allotment of plots in
favour of Bhim Sain, respondent No.8 and Umed Singh,
respondent No.26, have been made at the instance of Ram
Civil Writ Petitions No. 2677, 3870 & 3915 of 2008 11
Kishan “Fouji” (respondent No.35) who is a Member
Legislative Assembly from Bawani Khera constituency and
allotment in favour of Ajay Aggarwal, respondent No.12 is at
the instance of Mange Ram Gupta, Minister of Transport and
Education, State of Haryana. The petitioners have reasons to
believe that various other allotments have been made for
considerations other than merit and to persons who are
enjoying the confidence of people in power. Resultantly, a
scam of allotment of industrial plots is rampantly prevalent in
the State of Haryana, which needs to be enquired into as the
distribution of plots raises everything except confidence. It is
difficult-nay-impossible to believe that the allotment in favour
of people who are strikingly close to people in power, were on
account of their suitability and eligibility for industrial plots on
the strength of their merit.”
The grouse of the petitioners is that a number of allotments
made in favour of the relatives of politicians or bureaucrats are not co-
incidental, but on the facts, it stands proved that the allotment was
arbitrary and was not a result of any just criteria adopted. The petitioners
state that rules of fairness and transparency have not been followed by
the allotment committee.
The officials of HUDA have been impleaded as respondents
No.2 to 4. They have filed a joint reply, in which it has been submitted
that HUDA has framed Estate Management Procedure (EMP-2005)
under the industrial policy 2005 pronounced by the State Government.
The Committee duly constituted under the Estate Management
Procedure – 2005 considered the applications of all those persons who
applied and made recommendations in favour of only those applicants,
who were able to satisfy the Committee, regarding their financial
resources, technical knowledge qua the project and genuineness of their
Civil Writ Petitions No. 2677, 3870 & 3915 of 2008 12
claim. It was submitted that Mrs.Kamla Bhardwaj respondent No.5, along
with her other three partners, was allotted plot purely on merit and the
Committee formulated a view that the applicant Mrs.Kamla Bhardwaj was
fully capable to implement the project successfully and within the
proposed time period. The allotment of 1 acre plot made to Naresh
Aggarwal respondent No. 6 was sought to be justified on the ground that
M/s Parshotak Dass Naresh Kumar Pvt. Ltd. is a sister concern of Chinar
Multi Fab. India Limited and the Committee had unanimously decided to
make allotment of 1 acre plot to Naresh Aggarwal by clubbing two plots
of ½ acre size each. In their written statement filed, regarding the
allotment made to Dalsher Singh and Satyender Singh, it has been
stated as under:
“3. (iii) That the applicant Dalsher Singh is a graduate
and as per the information supplied is having 10 years of
experiences in the field while associating with his family.
However, the allotment has been made in favour of Dalsher
Singh and after consideration of all the parameters laid in the
Estate Management Procedure-2005.
(iv) That the applicant Satyender Singh has been
allotted a plot. It has been found by the committee that the
applicant has enough basic technical knowledge, which was
an essential feature for the successful implementation of the
project. He was able to give suitable replies to the each and
every query of the committee members to their satisfaction.
The applicant has also enclosed copy of the Jamabandi for
the year 2000-01, which shows property in his name in village
Gagarwas. He has also enclosed copy of a sale deed of a
plot at Bhiwani and therefore, stated that he can raise
requisite resources. It is re-iterated that the experiences of
the applicant is one of the preferential criteria but is not the
only one. The purpose Industrial Policy-2005, is not only to
facilitate the on going business activities but is also meant to
Civil Writ Petitions No. 2677, 3870 & 3915 of 2008 13
encourage young and enterprising persons to come ahead
and to take part in the development of nation.”
Similarly, in respect of other successful applicants,
mentioned by the petitioners, the official respondents have taken a
definite stand that the allotment of plots were made to the allottees on the
ground that the Committee, after holding interview, was satisfied qua
their claim and had recommended the allotment.
Naresh Aggarwal respondent No.6, Rajiv Garg respondent
No.16, Hem Lata respondent No.18, Satyender Singh respondent No.20,
Suresh Tanwar respondent No.23, Sombir Singh respondent No.33 and
Ram Bhajan Aggarwal respondent No. 34, by filing separate written
statements, have categorically stated that the allotment made was on
merit and the allegations of malafide have been falsely levelled.
Ashok Kumar Aggarwal respondent No. 8 pleaded that he
has got vast experience to set up an industry and he has been allotted
plot, as the interview committee had approved the project report
submitted by him.
Bhim Singh Garg respondent No.9 has also claimed that his
claim for allotment of the plot was solely based on merit and no help was
extended by Ram Kishan ‘Fouji’ respondent No. 35, a sitting member of
State Legislative Assembly.
Ghansham Dass Gupta respondent No. 10 submitted that
the allotment of plot was made after stringent procedure was followed
and no favour was extended to him by any person.
Ajmer Singh respondent No.11 has submitted that baseless
and false allegations have been leveled. He was the deserving candidate
for the allotment.
Civil Writ Petitions No. 2677, 3870 & 3915 of 2008 14
Ajay Aggarwal respondent No.12, in his counter-affidavit,
denied that he was helped by Mange Ram Gupta, Minister for Transport
and Education respondent No.43.
Kailash Kumar Sharma respondent No.15 disputed the
locus-standi of the petitioners to the writ petition No. 2677 of 2008 to file
the writ petition in public interest. It was further submitted that he had a
30 years long experience in running industry and had invested his youth,
capital as well as much hard-work in establishing and commissioning
Steel-Fabrication Unit in the name of M/s Kaushik Industries, situated at
Bamunimaidan, Industrial Area, Gauhati (Assam) and due to law and
order problem created by extremist outfits such as ULFA, he was
compelled to close his Fabrication Unit. Thereafter, he came to his native
place at Bhiwani and applied for allotment of the plot. It has been further
averred that he had spent Rs.8.00 lakh for the development work at the
site of plot. He had paid the fee to the consultant also. It has been urged
by him that the allotment was made in the most fair manner. This
respondent has pleaded that he has got his firm registered with District
Industrial Center, Bhiwani under the title of M/s Sharma Flour Mill and he
has also obtained VAT number for his firm, M/s Sharma Flour Mill.
Sanjay Kakkar respondent No.19 submitted that he is an
entrepreneur manufacturing Polypropylene Multifilament Yarn and Tape
since 2001 and therefore, his experience impressed the Committee to
make allotment of the plot.
Shivani Lachhiramka respondent No.22 also denied the
allegations leveled in the writ petition.
Bansi Lal respondent No. 24 submitted that on the basis of
his individual merit and capabilities, allotment of plot was made, after his
project report was evaluated and that he is in the process of setting up a
Civil Writ Petitions No. 2677, 3870 & 3915 of 2008 15
manufacturing unit of Pressure Cookers in the name of M/s Vishal
Aluminum Manufacturing Co. at Noida.
Shilpa Gupta respondent No. 30 submitted that she has got
requisite experience in designing soft toys and therefore, she succeeded
to allotment of the plot.
Dharambir respondent No.32 and Sandeep Tanwar
respondent No.36 denied that they were instrumental in allotment of plots
to any allottee and that the petitioners have exploited their position.
Ram Kishan ‘Fouji’ respondent No.35, who is a Member of
Legislative Assembly, has denied that the allotment made to respondent
No.9 was due to any influence exercised by him.
M.R. Gupta, Education and Transport Minister respondent
No. 43 has filed his affidavit to state that he has no concern with the
allottee Ajay Aggarwal and the Ministries headed by him are not engaged
in the allotment of industrial plots. He denied that he exercised any
influence for allotment of industrial plot to Ajay Aggarwal.
We have heard counsel for the parties.
A perusal of the record reveals that no comparative merit of
the applicants was drawn. No exercise to compare the successful
allottees and unsuccessful applicants was undertaken. The relevant
factors, i.e., experience, availability of capital, qualification, managerial
capability and professional skill etc. were not considered to determine
inter-se merit. The committee had interviewed the applicants and on a
separate sheet, had given reasons for making the allotment of plot. The
reasons given are general in nature, vague and non-specific. The
reasons spelt out are such that they can stick to any applicant, to whom
the committee wanted to make allotment. To illustrate, one or two
examples can be made part of this judgment:
Civil Writ Petitions No. 2677, 3870 & 3915 of 2008 16
Kamla Manufacturin 750.00 Ms. Kamla Bhardwaj applicant herself
Bhardwaj, g of lacs attended the interview. The application has
M/s Lifeline Intravenous been made in the name of M/s Lifeline Health
Health Transfusion Care, a partnership concern which consists of
Care, Solutions four partners having 25% share each. Two of
Bhardwaj the partners are Doctors i.e. professionals &
Hospital, remaining two partners are highly qualified
Rohtak as, one is having Pharma Degree and the
Gate, other is having Diploma in Mechanical
Bhiwani. Engineering. They are desirous to set up a
manufacturing unit of Intravenous
Transfusion Solutions. The total investment
in the project shall be 750.00 lac.
The following shall be financial pattern:
From Banks/Financial Institutions : 500.00 lac
Own sources/unsecured loans : 250.00 lac
She is qualified and well experienced
practicising doctor. She stated that, before
making the application, she had visited USA
for study of the project and after collecting all
the data relating to project has decided to set
up this project. The product shall be of
international standards. She assured that she
shall implement the project successfully within
a period of three years. She has already
made arrangements of technical know how,
marketing and specifically of finances. The
committee has gone through the details given
in the project profile. She was also thoroughly
questioned by all the committee members
about minute details of the project and she
Civil Writ Petitions No. 2677, 3870 & 3915 of 2008 17
Dalsher To set up a 91.50 Shri. Dalsher Singh, who is a graduate
Singh, P.P. Plant lacs himself appeared. The applicant is a sole
Behind proprietorship concern. He is desirous to set
PWD B&R up a manufacturing unit of P.P. Tape, Cloth,
Workshop, Niwar etc. The total investment in the project
Vidya shall be 91.50 lacs.
Nagar,
Meham
The following shall be financial pattern:
Road,
1. From Banks/Financial : 68.62 lacs
Bhiwani
Institutions
2. Own sources/unsecured loans : 22.88 lacs
The applicant has claimed that he has gained
10 years experience in the line. He has
further explained to the Committee that he
belongs to the industrialist family, who are
already in the same line for more than one
decade. While associating them, he has
acquired full expertise in the field of technical
know-how source of raw material, machinery,
its costing, demand etc. He was well aware of
the covered area requirement for this project.
It has been claimed by him that he has
already arrange oral commitment from Bank,
his family members and relatives. For the
project, ground coverage shall be equal to
10000 sq. ft. He shall be gainfully utilizing the
permissible covered area up to optimum level
on first and second floor of the proposed
building.
The Committee has gone through the details
given in the project profile and as further
explained by the person, attending the
Civil Writ Petitions No. 2677, 3870 & 3915 of 2008 18
The reasons given qua Dalsher Singh that the applicant
entrepreneur seems to be young, promising and genuine entrepreneur,
and that although, he did not carry with him any documentary evidence,
but was able to convince and satisfy the committee members about the
genuineness of the claim, were too subjective and lacked objectivity.
Similarly in case of Kamla Bhardwaj, to say that “after going through the
details given in the project profile and interaction/ discussions with the
person attending the interview, the Committee has assessed this
applicant fully capable to implement the project successfully and within a
reasonable time period” is a reason which can be bestowed upon any
person, to whom the committee desires to allot the plot. Case of other
successful allottees is no different. In case of another successful allottee,
Ajay Aggarwal, the committee observed as under:
“Although he did not carry with him documentary
evidences but he presented his claim of being financially
capable to implement the project successfully in such a way
that all the committee members with unanimous view,
decided to accept the explanation as true & correct. The
applicant has offered 12 months to start commercial
production. The committee was fully satisfied with the
genuineness of the project and commitment of the
entrepreneur.”
The petitioners had also impleaded the persons, against
whom allegations of malafide were levelled. We are not inclined to
examine the allegations of malafide and their denial. We are of the view
that the committee ought to have evolved criteria for allotting marks
under the different sub-heads, e.g. qualification, experience, financial
strength, product, capability and skill. The allotment of marks could be on
Civil Writ Petitions No. 2677, 3870 & 3915 of 2008 19various counts. They cannot be put in water tight jackets, but the
example has been given only to elaborate our view. It is admitted stand
of the official respondents that no comparative table or merit-list was
drawn in case of all the applicants, who were interviewed.
The issue which has arisen before us is that whether the
exception which has been made to the general rule can be justified by
the State. Before proceeding to answer this question, it would be
imperative to make reference to the case of ‘New India Public School v.
HUDA‘ (1996) 5 SCC 510 wherein also the allotment made by HUDA
were questioned. It was urged on behalf of the Haryana Urban
Development Authority that allotment by auction is not the only criteria
provided in Section 15 of the Haryana Urban Development Authority Act,
1977. The Haryana Urban Development (Disposal of Land and Buildings)
Regulations, 1978 do indicate the provision for allotment by modes other
than public auction. Proviso to regulation 5(3) itself gives power for
allotment to groups or individuals or persons practicing any profession or
carrying on any occupation, trade or business or for any such categories
of persons or government department or institution or charitable
institutions or other organisations for public welfare as may be decided by
the authority from time to time. This argument was rejected by observing
as under:
“A reading thereof, in particular Section 15(3) read with
Regulation 3(c) does indicate that there are several modes of
disposal of the property acquired by HUDA for public
purpose. One of the modes of transfer of property as
indicated in sub-section (3) of Section 15 read with sub-
regulation (c) of Regulation 5 is public auction, allotment or
otherwise. When public authority discharges its public duty
the word “otherwise” would be construed to be consistent
Civil Writ Petitions No. 2677, 3870 & 3915 of 2008 20
with the public purpose and clear and unequivocal guidelines
or rules are necessary and not at the whim and fancy of the
public authorities or under their garb or cloak for any
extraneous consideration. It would depend upon the nature of
the scheme and object of public purpose sought to be
achieved. In all cases relevant criterion should be
predetermined by specific rules or regulations and published
for the public. Therefore, the public authorities are required to
make necessary specific regulations or valid guidelines to
exercise their discretionary powers; otherwise, the salutary
procedure would be by public auction. The Division Bench,
therefore, has rightly pointed out that in the absence of such
statutory regulations exercise of discretionary power to allot
sites to private institutions or persons was not correct in law.”
(Emphasis Supplied)
It has been strenuously urged by the learned counsel for the
petitioner that the present case is covered by the ratio of ‘Delhi Assam
Roadways Corporation Ltd. v. Haryana Urban Development
Authority’ 2008(3) R.C.R. (Civil) 389 wherein allotments made by the
Haryana Urban Development Authority were set aside in view of the law
laid down in New India Public School by observing as under:
“30. It was in fact conceded that no pre-determined
criteria was published before the application could be placed
before the Selection Committee. It is further clear that
respondent No. 1 HUDA was party-respondent in the case of
New India Public School (Supra) before this Court as well as
before the Hon’ble Supreme court. It is, therefore, fully aware
about the law laid down by their Lordships of Hon’ble the
Supreme Court. It was incumbent and obligatory on its part to
either publish the pre-determined criteria of allotment as per
the provisions of Section 15 of the Act read with Regulations
3, 4 and 5 of the Regulations if the allotment was to be made
by any other method, than public auction. Otherwise, the safe
Civil Writ Petitions No. 2677, 3870 & 3915 of 2008 21method in the larger public interest and in the interest of
HUDA respondent No. 1 would be to resort to public auction
as has been held by Hon’ble the Supreme Court.
31. We do not wish to make detail reference to
numerous observations made by their Lordships of Hon’ble
the Supreme Court in the cases of Ramana Shetty v.
International Airport Authority of India, AIR 1979 SC 1628;
Mohd. Rashid Ahmed v. State of U.P., AIR 1979 SC 592;
Jaya Cellular v. Union of India, JT 1994(4) SC 532; Kumari
Shri Lekha Vidharthi v. State of U.P., 1991(1) S.C.T. 575 :
AIR 1991 SC 537; and M/s Kasturi Lal Lakshmi Reddy v.
State of J&K, 1980(4) SCC 1. It is suffice to conclude that
wherever the authorities are entrusted with the duty of selling
public property or granting its lease, then normal method is
auction or call for tenders so that all the intending purchasers
should have equal opportunity of submitting their bids and
tenders. The authority entrusted with such duty or the
Government, as the case may be, is required to act fairly in
arriving at the best available arrangement in the
circumstances. In that regard reference may be made to the
judgment of Hon’ble the Supreme Court in G.D. Zalani v.
Union of India, JT 1995(2) SC 420. Therefore, by no stretch
of imagination, HUDA-respondent No. 1 can justify the failure
either to resort to public auction or proceed for allotment on
the basis of a pre- determined published criterion if the
allotment was to be made by any other method especially
when in the case of New India Public School it was a party
before Hon’ble the Supreme Court. Therefore all these
allotments are liable to be set aside.
32. We are further of the view that the so called
selection committee failed to advert to the comparative merits
of the applicants and it has not been pointed out as to why
the allottee was selected from amongst those applicants who
have been left out. It was in these circumstances that the
Division Bench judgment of this Court in Munish
Manufacturing Corporation, Ludhiana (Supra) has held that
every activity of the Government has a public element in it
Civil Writ Petitions No. 2677, 3870 & 3915 of 2008 22
and it must, therefore, be informed with reason and guided by
public interest. If the Government awards a contract or leases
out or otherwise deals with public property or grants any
other largess, it would be liable to be tested for its validity on
the touchstone of reasonableness and public interest and if it
fails to satisfy either test, it would be unconstitutional and
invalid.”
Hon’ble Apex Court, in ‘Dr. Krushan Chandra Sahu v.
State of Orissa‘ 1996 AIR (SC) 352, held that the selection committee
does not have the inherent jurisdiction to lay down the norms of selection,
nor such powers can be assumed by necessary implication. Therefore,
where the candidates were selected on the basis of character rolls, it was
held that the procedure adopted by the selection board was wholly
arbitrary.
In the present case, the procedure for allotment was stated
to be due assessment of the application/ project report, individual merit
and financial capability of the entrepreneur. The project reports submitted
by the applicants have not been evaluated. No criteria was adopted to
find out as to which project report, submitted by the applicants, was
better than the other. Similarly, there is no inter-se determination of
financial capability. Some of the successful entrepreneurs had no
documents to support their cases. Loans from banks and financial
institutions were not tied up. No appraisal of the project reports was done
by the financial institutions. Qua one of the eligible candidates, i.e. Umed
Singh Mapinia, the Committee had to say as under:
“The committee has gone through the details given in
the project profile and as further explained by the person,
attending the interview. After going through the details given
in the project profile and interaction/ discussions with the
Civil Writ Petitions No. 2677, 3870 & 3915 of 2008 23person attending the interview, the Committee has observed
that the applicant/ entrepreneur although first generation
entrepreneur but seems to be young and promising
entrepreneur. He has acquired adequate experience in the
marketing of Readymade garments and well conversant with
the various processes of the industry. The covered area is in
consonance with the size of plot applied for which is as per
HUDA Policy. He has also submitted the sources of plant and
machinery from where we will collect the same. He has
knowledge about the machinery and sources of raw material
and has wide range of the market potential. He has
elaborated his own source of income before the committee
which seeks to be genuine. Although the applicant did not
bring supporting documents but during cross checking and
enquiry, the applicant was able to convince all the committee
members.”
The above example, when tested on the touchstone of the
following observations made by Hon’ble Apex Court in ‘M/s Kasturi Lal
Lakshmi Reddy, etc. v. The State of J & K and another’ 1980 AIR
(SC) 1992, leaves us to only inference that the plots were allotted, as
State largesse. The Hon’ble Supreme Court, in the above said judgment,
observed as under:
“15. The second limitation on the discretion of the
Government in grant of largess is in regard to the persons to
whom such largesse may be granted. It is now well settled
as a result of the decision of this Court in Ramana D. Shetty
v. International Airport Authority of India. (AIR 1979 SC
1628) (supra) that the Government is not free, like an
ordinary individual, in selecting the recipients for its largesse
and it cannot choose to deal with any person it pleases in its
absolute and unfettered discretion. The law is now well
established that the Government need not deal with anyone,
but if it does so, it must do so fairly without discrimination
Civil Writ Petitions No. 2677, 3870 & 3915 of 2008 24and without unfair procedure. Where the Government is
dealing with the public, whether by way of giving jobs or
entering into contracts or granting other forms of largess, the
Government cannot act arbitrarily at its sweet will and, like a
private individual, deal with any person it pleases, but its
action must be in conformity with some standard or norm
which is not arbitrary, irrational or irrelevant.”
To emphasize, reliance can again be placed upon ‘Ramana
Dayaram Shetty v. International Airport Authority of India and
others‘ 1979 (3) SCC 489, the Hon’ble Apex Court emphasized that
“State action must not be arbitrary but must be based on some rational
and relevant principle which is non-discriminatory: it must not be guided
by any extraneous or irrelevant considerations, because that would be
denial of equality. The principle of reasonableness and rationality which
is legally as well as philosophically an essential element of equality or
non-arbitrariness is projected by Article 14 and it must characterise every
State action, whether it be under authority of law or in exercise of
executive power without making of law. The State cannot, therefore, act
arbitrarily in entering into relationship, contractual or otherwise with a
third party, but its action must conform to some standard or norm
which is rational and non-discriminatory. This principle was
recognised and applied by a Bench of this Court presided over by Ray,
C.J., in Erusian Equipment and Chemicals Ltd. v. State of West Bengal
where the learned Chief Justice pointed out that ‘the State can carry on
executive function by making a law or without making a law. The exercise
of such powers and functions in trade by the State is subject to Part III of
the Constitution. Article 14 speaks of equality before the law and equal
protection of the laws. Equality of opportunity should apply to matters of
Civil Writ Petitions No. 2677, 3870 & 3915 of 2008 25public contracts. The State has the right to trade. The State has there the
duty to observe equality. An ordinary individual can choose not to deal
with any person. The Government cannot choose to exclude persons by
discrimination’.”
The question, which we have asked ourselves, is whether
the procedure adopted by the Committee that ‘allotment of plot will be
after due assessment of the application/project report & on basis of
individual merits/financial capabilities of entrepreneurs’ satisfies the test
of rational and relevant principle, which is non-discriminatory ? It makes
us conclude that until and unless each applicant was compared, it vested
arbitrary power in the Committee to discriminate and say that candidate
‘A’ is better than candidate ‘B’. Thus, the procedure adopted by the
Committee, in no way, can be termed as rational in answering all the
requirements of Article 14 of the Constitution of India.
In these circumstances, we accept the present writ petitions,
quash the allotments made in pursuance of the recommendations of the
Committee and direct the respondent Haryana Urban Development
Authority to evolve a criteria, which is in accordance with the
requirements of law and observations made by us and to re-assess the
comparative merit of the applicants. We propose no costs.
[T. S. THAKUR] [KANWALJIT SINGH AHLUWALIA]
CHIEF JUSTICE JUDGE
November 12, 2009
rps