JUDGMENT
R.P. Sethi, J.
1. Aggrieved by the order of allotment of plot in favour of respondent No. 3 measuring 3 acres situated in the industrial estate Barwala, this petition has been filed for not only setting aside the order of allotment but also the new policy for allotment/transfer/resumption of plots/sheds in the industrial estates dated 25.3.1988 Annexure P/2, mainly on the grounds of being violative of the provisions of the fundamental rights as enshrined in Part III of the Constitution. It is contended that wide unguided, discretionary powers have been vested in the respondent-stale with the result that the rural industrial entrepreneurs like the petitioners have been deprived of getting the benefit of the industrial policy of the State of Haryana formulated and advertised from time to time.
2. It is contended that respondent No. 1 carved out a rural industrial estate at Barwala, Tehsil and District Hissar in the year 1962-63 which is situated within the municipal limits of Barwala and abuts on the Hissar, Chandigarh G.T. Road. The peculiar location of the rural industrial estate has made the land comprised therein extremely of valuable. The respondents have been following the policy of allotment of plots or construction of sheds in the aforesaid industrial estate on the basis of the guidelines and regulations issued in that behalf. According to the aforesaid guidelines and regulations whenever the official respondents intended to allot a plot/shed in an industrial area to the entrepreneurs the intention was widely publicised by giving a public notice inviting application in the prescribed form from the interested parties. Such a policy was followed till 253.1988 when Annexure P/2 was issued changing the policy and directing that allotments shall be made on the principle of “first come first served”. The disputed plot is admitted to be lying vacant for a considerable period of time and no public notice whatsoever was issued inviting applications from the interested parties for the allotment of the said plot. S/Shri Bajrang Dass and Raj Kumar partners of the respondent firm are stated to be the sons of Shri Jai Narain who was the President of the Municipal Committee of Barwala at the relevant time when the impugned allotment was made. It is submitted that said Shri Jai Narain is a member of the Lok Dal Political party which was in power in the State of Haryana at the relevant time. Soon after being elected president of the Municipal Committee, Shri Jai Narain is alleged to have asserted his influence and got the plot allotted in favour of respondent No. 4. It is submitted that the plot was allotted to respondent No. 4 for a consideration of Rs. eight lacs only whereas the market value of the said plot was about Rs. fifteen lacs at the time of the filing of the petition in the year 1969. The allotment being contrary to the earlier prevalent policy and violative of fundamental rights is sought to be quashed.
3. In the written statement filed no behalf of official respondents, the carving out of the industrial estate at Barwala and the existence of the disputed plot for allotment has been admitted. It is submitted that as per the allotment policy, Annexure V/2, which was approved by the State Government, the cases of two parties namely Shri Kapoor Singh Poonia and M/s Aggarwal Cotton and Ginning Pressing Factory were received which were placed before the Second Line Committee in its meeting held on 11.4.1988. On the recommendations of the said committee, the Director of Industries approached the government for allotment of the said plot for setting up of the project of Cotton and Ginning Pressing Factory in favour of respondent No. 4. Shri Kapoor Singh Poonia who had also applied for the allotment of the plot is alleged to have not submitted the project report which was essential for considering his claim. The State Government is said to have examined the proposal of the Director of Industries and accorded approval to allot the land either at Collector rate or by adding 10% in the initial cost of the land from the year of inception, whichever was higher in favour of respondent No. 4. The cost as per the policy by adding 10 percent from the year of inception was worked out at Rs. 6.13 per square yard. The Collector vide his letter, Annexure R/1, indicated the rate of the plot at Rs. 3 lakhs per acre Khasra No. 508/8/2 and Rs. 2.5. lakhs for Khasra No. 477/22, 23 and 508/2, 3/1. Since the Collector’s rate were higher than the rates worked out as per the policy, a provisional letter of allotment was issued as per Collector’s rate in favour of respondent No. 4 who was asked to deposit 25 percent of the cost within thirty days and to complete the other formalities. Despite the expiry of six months period on 30.6.1989, the respondent No. 4 did not report the completion of any of the above referred four conditions for which a show-cause notice was served upon the said respondent on 2.8.1989 asking them to show-cause as to why the allotment of the land made in their favour be not cancelled. The petitioner is stated to have never applied for the allotment of the land nor expressed his intention to set up any industry. The basic idea of issuance of the policy impugned in this writ petition was to industrialise non potential town by providing the available plots to the prospective entrepreneurs easily and quickly on the principle of “first come first served basis.” The policy is stated to be legally valid requiring no interference. The writ petition is alleged to be mis-conceived.
4. In the reply filed on behalf of respondent No. 4, it is submitted that no entrepreneur was available for starting any factory so far as the industrial estate in Barwala was concerned which prompted the official respondents to formulate the policy impugned and to allot the plot to respondent No. 4 particularly when the petitioner had neither applied nor expressed his desire to start any factory in the industrial estate of Barwala. It is further contended that answering respondent and one Kapur Chand applied for the allotment of the aforesaid plot for which purpose they were interviewed on 11.4.1988. It is submitted that representative of respondent No. 4 faired better than Mr. Kapur Chand with the result that the allotment was made in their favour. It is contended that the plot in dispute could not have fetched the government price on which the same was decided to be allotted to the said respondent. The relationship of S/Shri Bajrang Dass Raj Kumar and Jai Narain, President of the Municipal Committee, Barwaia is not denied but it is submitted that the said Shri Jai Narain had nothing to do with the Lok Dal party which was in power in the State of Haryana at the relevant time as he had fought and won the election of the President of the Municipal Committee as an independent candidate. It is contended that Shri Jai Narain had nothing to do with the allotment of the plot or with the partnership firm, that is, respondent No. 4. The answering respondent claims to be resident of Uklana, the address shown in his application filed for allotment of plot. The policy decision is claimed to be perfectly legal, valid and according to law and the allotment order did not suffer from any infirmity.
5. We have heard the learned counsel for the parties and perused the record.
6. Equality before law and equal protection of law is heart and soul of the constitutional system adopted by this country. Equality before law postulates equality of opportunity. Non affording of opportunity of equality negates the fundamental right as enshrined in Articles 14 of the Constitution of India. As and when it is shown that executive has been responsible for non observance of the doctrine of equality and equal protection of laws, the Constitutional Courts are under an obligation to immediately interfere and protect the rights of the aggrieved by granting appropriate relief. Article 14 of the Constitution not only prohibits the State to deny equality before law or equal protection of law but also confers a right of equality upon the citizen, the violation of which is required to be redressed in exercise of the powers conferred upon this Court under Article 226 of the Constitution. The concept of equality under Article 14 of the Constitution is based upon the rule of law which ensures fairness showing that the action complained of was free from arbitrariness.
7. The Supreme Court of India examined the scope of Article 14 of the Constitution under the changed circumstances keeping in view the gradual development of democracy in our country. Agreeing with the judgment of Kerala High Court in Punnan Thomas v. State of Kerala, A.I.R. 1969 Ker. 81 (F.B.), the Apex Court in Ramana Dayaram Shetty v. International Airport Authority of India, A.I.R. 1979 S.C. 1628. held:
“Today the Government, in a welfare State is the regulator and dispenser of special service and provider of a large number of benefits, including jobs contracts, licences, quotas, mineral rights etc. The Government pours forth wealth, money, benefits, services, contracts, quotas and licences. The valuables dispensed by Government take many forms, but they all share one characteristic. They are steadily taking the place of traditional forms of wealth. These valuables which derive from relationships to Government are of many kinds. They comprise social security benefits, cash grants for political sufferers and the whole scheme of State and local welfare. Then again, thousand of people are employed in the State and the Central Government and local authorities. Licences are required before one can engage in many kinds of business or work. The power of giving licences means power to withhold them and this gives control to the Government or to the agents of Government on the lives of many people. Many individuals and many more businesses enjoy largess in the form of Government contracts. These contracts often resemble subsidies. It is virtually impossible to lose money on them and many enterprises are set up primarily to do business with Government. Government owns and controls hundreds of acres of public land valuable for mining and other purposes. These resources are available for utilisation by private corporations and individuals by way of lease or licence. All these mean growth in the Government largess and with the increasing magnitude and range of governmental functions as we move closer to a welfare State, more and more of our wealth consists of these new forms. Some of these forms of wealth may be in the nature of legal rights but the large majority of them are in the nature of privileges. But on that account, can it be said that they do not enjoy any legal protection ? Can they be regraded as gratuity furnished by the State so that the State may withhold, grant or revoke it at its pleasure? Is the position of the Government in this respect the same as that of a private giver ? We do not think so. The law has not been slow to recognise the importance of this new kind of wealth and the need to protect individual interest in it and with that end in view it has developed new forms of protection. Some interests in Government largess, formerly regarded as privileges, have been recognised as rights while others have been given legal protection not only for forging procedural safeguards but also by confining/structuring and checking government discretion in the matter of grant of such largess. The discretion of the Government has been held to be no unlimited in that the Government cannot give or withhold largess in its arbitrary discretion or at its sweet will. It is insisted as pointed out by Professor Reich in an especially stimulating article on “The New Property” in 73 Yale Law Journal 733, ” That Government action be based on standards that are not arbitrary or unauthorised.” The Government cannot be permitted to say that it will give jobs or either into contracts or issue quotas or licences only in favour of those having grey hair or belonging to a particular political party or professing a particular religious faith. The Government is still the Government when it acts in the matter of granting largess and it cannot act arbitrarily. It does not stand in the same position as a private individual.”
The Supreme Court further held that the government acting through its officers is subject to constitutional and public law limitations. Action of the respondents when challenged is required to be shown to be fair, reasonable and not actuated by the extraneous considerations.
9. Relying upon the various judgments of the Courts in the country and the various Courts abroad, this Court in S.R. Dass v. State of Haryana, (1988-1) 93 P.L.R. 430 held that when an executive authority is required to act in its discretion, it should do so in good faith and fairly and not in an arbitrary manner. Unchecked power is alien to the rule of law accepted and directed to be followed in this country. The Courts always have judicial control over the arbitrary acts of an executive authority it was further held:-
“It is expected from a Government that it should treat public property as Trust Property and, while it deals with such property, it should follow, relevant and rational norms and should not act in an irrational and arbitrary way. Nothing should be done by it which may give an impression that favouritism is being shown in favour of any person. Factors such as relationship, friendship or political gains should not weigh with the Government for conferring benefits. A private party should not be benefitted at the costs of State. Absolute discretion is unknown to rule of law. When wide power vests in a high dignitary, it is expected of him to act fairly and legally. However, if the misuses his power, the Court is empowered to strike down the act.”
10. In Sriniketan Cooperative Group Housing Society Ltd. etc. v. Vikas Vihar Cooperative Group Housing Society Ltd, A.I.R. 1989 S.C. 1673, the Supreme Court even though referred to the policy of first come first served without examining its constitutionality yet the court held that where the principle of first come first served alleged to be followed was not made known to the interested parties, the order of allotment being violative of Article 14 was liable to be quashed.
11. In Life Insurance Corporation of India v. Escorts Ltd. and Ors., A.I.R. 1986 S.C. 1370, it was held that every action of the State must be informed by reason and that in appropriate cases the action uniformed by reasons may be questioned as arbitrary in proceedings under Article 226 of the Constitution. Even though the court is not required to debate academic matter or concern itself with the intricacies of trade and commerce yet if the State action pertains to public law domain or the action complained is alleged to be the result of extraneous considerations a duty is cast upon to scrutinise such an action on the touch-stone of reasonableness while exercising the powers of writ jurisdiction.
12. The facts of this case reveal that one Ramesh Kumar Aggarwal c/o Aggarwal Industries, Uklana in District Hissar is shown to have applied for the allotment of disputed plot for which he was intimated that a meeting of the Second Line Committee had been fixed at Chandigarh on the date and time as specified in Annexure R/l. Respondent No. 4’s address of being resident of Barwala appears to have been intentionally suppressed. It is also admitted that father of the two partners of the respondent-firm had become the President of the Municipal Committee, Barwala. No advertisement or information in any other form is shown to have been published or intimated either to the public or to the entrepreneurs interested in the installation of industrial unit in the industrial estate of Barwala.
13. During the arguments of the case, the learned counsel appearing for the State produced certain publications from some newspapers to show that the allotment was duly advertised and sufficient opportunity was afforded to all concerned to approach the authorities for the allotment of the plot on first come first served basis. The newspaper cuttings produced are contrary to the stand taken by the official respondents in their written statement. Similarly the story of one Kapoor Singh Poonia filing an application for allotment of the plot apparently appears to be concocted because the official respondents in their written statement have submitted “the second party, i.e. Shri Kapoor Singh Poonia did not submit the project report which was essential for considering it a project for the allotment of land. The State Government after examining the proposal of the Director of Industries accorded approval to allot land either at Collector rate or by adding 10% in the initial cost of the land from the year of inception, whichever is higher, in favour of M/s. Aggarwal Cotton & Ginning Pressing Factory (respondent No. 4),” and respondent No. 4 in reply to the averments made in this behalf has stated that”…..the answering respondent and one Kapoor Chand s/o Shri Shola applied for its allotment for the set up of an Industry for which purpose the answering respondent as also Shri Kapoor Chand s/o Shola were duly interviewed on 11.4.1988. The interview letter inviting the answering respondent for attending the interview is attached herewith as Annexure R/l. The petitioner having faired much better than Mr. Kapoor Chand s/o Shola, was ultimately recommended for allotment of the plot in question subject of the fulfillment of the conditions detailed in the provisional allotment letter.” The contradictory pleas taken by the respondents has strengthen our belief that the order of allotment was not the result of buna-fide efforts allegedly made by the respondent-State. No opportunity of competing with respondent No. 4 was provided either to the petitioner or to any other entrepreneur interested in the installation of factory on the plot in dispute. It has further been pointed out on behalf of respondents that the petition was never interested in the allotment of the plot and has infact filed this petition only to pressurise respondent No. 4. Such a plea cannot be accepted in as much as of this Court dated 23.10.1989 has deposited a sum of Rs. one lace in this Court which is demonstrative of his bona-fide claim for allotment of the plot.
14. It was feebly argued by the counsel on behalf of the respondents that despite various efforts made by the State no other entrepreneur was prepared to accept the allotment of the plot which forced the authorities to allot the same to respondent No. 4 for the purpose of industrialisation of the backward area like Barwala. However, despite directions no record has been produced to show that any such proclaimed effort was made by the respondents. The order of allotment impugned in the petition being Annexure P/3 is, therefore, liable to be quashed being in violation of the provisions of Article 14 of the Constitution depriving the citizens similarly situated from competing for allotment of the plot which ultimately may bring more revenue to the State besides industrialisation of the area.
The new policy, Annexure P/2, provides:
“Reference your memo No. SI/Policy/IDC/2322-A dated 18.1.1988, on the subject noted above.
Govt. have considered the matter and accorded permission to exempt Industrial Estate located in the centrally/State notified Backward Area alongwith Industrial Estates falling in Kurukshetra district and at Bahadurgarh from the condition of issue of advertisement and to allot industrial plots in these estates on the principle of first-come first serve basis.”
15. A perusal of the aforesaid annexure would clearly show that no guidelines has been prescribed for exercise of the discretion vested in the authority conferred with the powers to make allotment on the principle of First come first serve basis. Conferment of unbriddled and unguided powers is negation of a guarantee of equality incorporated in Article 14 of the Constitution. The alleged policy has not been justified by the respondents on the touch-stone of reasonableness. No material has been placed before the Court necessitating the issuance of such a policy by which the normal course of granting state largess to the interested persons was opted to be dispensed with.
16. In view of the judgments referred to herein above and the preponderance of judicial pronouncements upon the subject the policy of allotment, Annexure P/2, being contrary to Article 14 of the Constitution is also liable to be quashed. The quashing of the policy, Annexure P/2, would, however, not confer any right upon any other citizen or entrepreneur to challenge the action already taken under the aforesaid policy merely because of this judgment. This judgment may, however, he made applicable in this case binding at the delivery of this judgment,
17. In the result, the new policy in allotment/transfer/resumption of plots/sheds in the industrial estates dated 25.3.1988, Annexure P/2, and the order of allotment of plot in Industrial Estate, Barwala, dated 21.12.1988, Annexure P/3, are quashed. After quashing the aforesaid annexures, this petition in its own merits is disposed of with the following additional directions:
i) that the plot in dispute shall be put to open auction after due advertisement and affording opportunity to all interested persons to participate in the auction;
ii) the minimum auction bid shall commence from Rs. fifteen lakhs which shall be deemed to be the bid of the petitioner herein. If the petitioner resiles or decline to participate in the bid, the mount of Rs. one lac already deposited by him alongwith interest shall stand forfeited in favour of the respondent-State out of which a sum of Rs. 50,000/- shall be paid to respondent No. 4 as costs of the litigation;
iii) If despite advertisement no other person participates in the auction or offers the bid for more than Rs. fifteen lacs, the order of allotment, Annexure P/3, shall be deemed to have been accepted at the auction and respondent No. 4 entitled to allotment of the plot at the rate fixed in the order of allotment;
iv) If consequent upon the auction a person other than the petitioner is held entitled to the allotment of the plot in question and the amount deposited is not required to be forfeited in terms of this judgment, the amount of Rs. one lac deposited by the petitioner in this Court which has been directed to be deposited in the Fixed Deposit shall be refunded to him alongwith upto date accrued interest; and
v) Similarly, if the allotment is not made in favour of respondent No. 4, the amount deposited by them with official respondents being 25 percent in pursuance of Annexure P/3 shall be refunded. No order as to costs.