;??HIGH COURT OF JAMMU AND KASHMIR AT JAMMU. OWP No. 855 OF 2007 AND OWP No. 507 OF 2008 AND OWP No. 850 OF 2007 1.Rahul Pant & anr 2.Raj Kumari 3.National Finance Company 4.Anil Modi 5.Ashok Kumar 6.Anil Modi 7.M/s Vardman Bartan Store 8.Raman Aggarwal & anr. 9.M/s AGM Sales Corporation 10.Anand Rathi Securities Ltd. 11.Bal Krishan Gupta 12.Rajinder Gupta 13.Kapil Salathia & anr. 14.Raj Kumar Gupta & anr. 15.Ashwani Kumar Bali 16.Tarun Bali 17.Sanjeev Kumar 18.Majid Farid Shapoo 19.Som Kumar Gupta & anr. 20.Mufti Sharifu Din 21.Sahil Mahajan 22.Abhiney Gupta 23.Arwan Kumar 24.Sajjad Ahmad Bhat Petitioners State & Ors. Respondent !M/s U.K.Jalali, A.V.Gupta,D.C.Raina,Sunil Sethi Senior Advocates,D.K.Khajuria & D.S.Thakur,P.N.Raina, M. L.Gupta,F.S.Butt,M.K.Riana and I.H.Bhat, Advocates. ^M/s Seema Shekher, AAG, Adarsh Sharma & A.G.Sheikh Advocates. Mr. Justice J.P.Singh, Judge. Date: 01/06/2009 :J U D G M E N T :
OWP No. 855/2007 & CMP No. 1243/2007
OWP No. 507/2008 & CMP No. 786/2008
OWP No. 850/2007 & CMP No. 1238/2007
OWP No. 851/2007 & CMP No. 1239/2007
OWP No. 852/2007 & CMP No. 1240/2007
OWP No. 853/2007 & CMP No. 1241/2007
OWP No. 854/2007 & CMP No. 1242/2007
OWP No. 856/2007 & CMP No. 1244/2007
OWP No. 857/2007 & CMP No. 1245/2007
OWP No. 858/2007 & CMP No. 1246/2007
OWP No. 859/2007 & CMP No. 1247/2007
OWP No. 860/2007 & CMP No. 1248/2007
OWP No. 861/2007 & CMP No. 1249/2007
OWP No. 862/2007 & CMP No. 1250/2007
OWP No. 863/2007 & CMP No. 1251/2007
OWP No. 866/2007 & CMP No. 1254/2007
OWP No. 868/2007 & CMP No. 1256/2007
OWP No. 869/2007 & CMP No. 1257/2007
OWP No. 870/2007 & CMP No. 1258/2007
OWP No. 884/2007 & CMP No. 1280/2007
OWP No. 890/2007 & CMP No. 1291/2007
OWP No. 896/2007 & CMP No. 1299/2007
OWP No. 902/2007 & CMP No. 1306/2007
OWP No. 904/2007 & CMP No. 1308/2007
OWP No. 905/2007 & CMP No. 1309/2007
OWP No. 934/2007 & CMP No. 1355/2007
Allotments for 31 Shops/Halls situated at Bahu Plaza
Complex, Jammu, made by the Jammu Development
Authority were found to have been made without following
the procedure of Open Auction. The Jammu and Kashmir
Government, in exercise of power, under Section 37 of the
Jammu and Kashmir Development Act, 1970, hereinafter to
be referred as b�the Actb�, therefore, issued directions vide
Government Order No. 1126-GAD of 1997 dated 22.09.2007
to the Jammu Development Authority to cancel the
allotments and take appropriate steps for restoration of the
property.
The Government Order aforementioned has been
questioned in all these writ petitions which, taken up for joint
consideration, are being disposed of by this judgment.
3
Justifying the allotments of the Shops/Halls made in
their favour, the petitioners have, inter alia, pleaded that the
Government Order impugned in the writ petitions, cancelling
their allotments, was illegal and unwarranted, in that, it had
been issued without complying with the statutory requirement
of issuing notice to them, in terms of the Proviso to Section
37 of the Act, before issuing directions which affect their
rights, And that the State Government had initiated action
directing cancellation of the allotments, on the basis of
truncated information which the Vice Chairman of, the
Jammu Development Authority, hereinafter to be referred as
b�the Authorityb�, had supplied to it. It is stated that the decision
taken by the Board of Directors of the Authority in its 65th
meeting providing for its earlier Board Resolution for making
the allotment of Shops/Halls on First Come First Served,
basis, to remain operational until all the Shops/Halls were
allotted, had not been brought to the notice of the
Government by the Vice Chairman of the Authority.
According to the petitioners, the Government had
cancelled the allotments to avoid embarrassment to the
Chief Minister whose brother had been allotted space at
4
Bahu Plaza Complex Jammu, in violation of the decision of
the Authority to follow the First Come First Served, rule.
The State Government has justified the impugned
Government Order saying that the Board Resolution of the
Authority adopted in its 65th meeting was unwarranted, in
that, it had been taken without holding any deliberations on
the subject, and the fact situation, that the area had been
fully developed and the Authority would get better price for
the Shops and Spaces at Bahu Plaza Complex, Jammu had
not been taken into consideration. The 65th meeting of the
Board of Directors, where the post facto approval of the
Board had been obtained, is stated to have been a result of
the non-application of mind by the Authority. It is further
stated by the State-respondents that the Authority had not
given publicity to its policy of First Come First Served, in
the matter of allotment of Shops/Spaces available at Bahu
Plaza Complex so as to provide opportunity to all those who
were interested in availing the opportunity, the allotments
were, therefore, illegal and improper.
The specific plea raised by the petitioners in their writ
petitions that the Government had not heard them before
5
issuing directions under Section 37 of the Act, has not been
adverted to by the State-respondents and all that has been
said in this respect is that the Government had issued the
impugned order after due application of mind and in terms of
the provisions of Section 37 of the Act, which, according to
them, would not prejudice the petitioners because they can
project their grievance, if any, while responding to the show
cause notice which has been issued by the Jammu
Development Authority to them pursuant to the Government
Order in question.
I have considered the submissions of learned counsel
for the petitioners, the counsel for the Authority and learned
Additional Advocate General appearing for the State-
respondents.
The first issue that falls for consideration in these
petitions is as to whether the Government was obliged to
hear the petitioners before issuing directions for cancellation
of their allotments?
According to the petitioners, the Government was
required to hear them before issuance of the order impugned
6
in the writ petitions as mandated by the Proviso appearing in
Section 37 of the Act.
The State Counsel, on the other hand, contends that
the State Government was not required to hear the
petitioners before passing the impugned order, in that,
opportunity of hearing contemplated by the Proviso would
apply only when the Government passes an order prejudicial
to any person, and not in a case where only directions were
issued to the Authority to pass requisite orders under the
Development Act. Learned counsel submitted that as the
Authority, in terms of the order impugned in the writ petition,
had yet to pass final orders pursuant to the notices issued to
the allottees requiring them to Show Cause as to why their
allotments be not cancelled, the petitioners plea that action
of the State Government in issuing directions to the Authority
was violative of the principles of natural justice, was
untenable, in that, issuance of notice by the Authority to the
petitioners, would satisfy the principles aforementioned.
In order to deal with the rival contentions of the parties,
regard needs to be had to the provisions of Section 37 of
Act, which for facility of reference is reproduced hereunder:-
b� 37. Control by Government b�
7
(1) The Authority shall carry out such direction as
may be issued to it from time to time by the
Government for the efficient administration of this
Act.
(2) If in, or in connection with, the exercise of its
powers and discharge of its functions by the
Authority under this Act, any difference or dispute
arises between the Authority and the Government,
the decision of the Government on such differences
or dispute shall be final.
(3) The Government may, at any time, either on
its own motion or on application made to it in this
behalf, call for the records of any case disposed of
or order passed by the Authority for the purpose of
satisfying itself as to the legality or propriety of any
order passed or direction issued and may pass such
order or issue such direction in relation thereto as it
may think fit.
Provided that the Government shall not pass an
order prejudicial to any person without affording
such person a reasonable opportunity of being
heard.b�
Plain reading of Section 37 of the Act demonstrates
vesting of plenary power in the Government to call for the
records of any case disposed of, or order passed by the
Authority, for the purpose of satisfying itself as to the legality
or propriety of any order passed or direction issued by the
Authority and passing such order or direction as it may deem
fit.
The orders passed and the directions so issued by the
Government under Section 37 of the Act, are required to be
carried out by the Authority in terms of Section 37 (1) of the
Act.
8
The Proviso appended to Section 37 of the Act casts
statutory obligation on the Government not to pass any order
prejudicial to any person without affording such person a
reasonable opportunity of being heard.
I do not see any merit in the State Counselb�s
submission that the rider aforementioned provided in the
Proviso would not be applicable when the State Government,
intends only to issue directions to the Authority, and that the
rider would have application only when a final order had to
be passed by the Government itself. This is so because the
expression b�shall not pass any order prejudicial to any
personb� appearing in the Proviso would, in my opinion,
include passing of directions too by the State Government,
which may be prejudicial to the person against whom such
directions had been issued. The expression b�shall not pass
any order prejudicial to any personb� appearing in the Proviso,
may not admit of any restrictive or literal meaning which the
learned State Counsel wants the Court to ascribe to the
expression b�orderb� appearing in the Proviso not including in
its fold, the b�directionsb� which may be issued by the State
Government for compliance by the Authority.
9
In order to understand the true meaning and import of
the expression b�orderb� appearing in the Proviso, the intention
of the legislature to include directions issued by it under
Section 37 of the Act too, in it, becomes explicit, on a bare
reading of the provisions of Section 37 (3) of the Act, in
terms whereof after examining the legality or propriety of any
order passed or direction issued by the Authority, the State
Government may either pass the order itself, or issue such
directions in relation to the act(s) of the Authority, as it may
think fit.
Passing of orders or issuance of directions by the State
Government in respect of the orders/directions issued by the
Authority is contemplated only after the Government
examines the legality or propriety of the Authorityb�s act(s)
and in such view of the matter, no distinction can be
contemplated in the two expressions aforementioned
appearing in Section 37 (3) of the Act. Directions issued by
the Government under Section 37 of the Act, if prejudicial to
the person against whom these are so issued, would
certainly require issuance of prior notice to him before
issuance of such directions so as to carry out the mandate of
10
the principle underlying the maxim audi alteram partem,
which the legislature in its wisdom has adopted by enacting
Proviso to Section 37 of the Act.
Keeping the intention of the legislature in view, in this
regard, the only logical interpretation which emerges from
the reading of the Section as a whole, would be that the
Proviso contemplates affording of reasonable opportunity of
being heard to the person who is prejudicially affected by
any order or directions issued by the State Government in
exercise of powers under Section 37 of the Act.
The first contention raised by the learned State Counsel
that the State Government was not required to hear the
petitioners before passing the Government order in question,
therefore, fails and is, accordingly, rejected.
An ancillary issue which may require consideration
before answering the main issue, is as to whether or not the
directions issued by the State Government are prejudicial to
the petitioners and in this view of the matter, were they
required to be heard before issuance of the Government
order?
11
The State Counsel, when asked to respond as to
whether or not the directions issued were prejudicial to the
petitioners, admitted these to be prejudicial, and rightly so
because perusal of the fifth and the penultimate paragraph of
the impugned Government order leaves no manner of doubt
that the Government had, after coming to the conclusion that
the allotments had been made without following the
procedure of Open Auction, on the basis of the report of the
Vice Chairman of the Authority, taken a decision that the
allotments being illegal and improper were required to be
cancelled. This decision of the Government certainly causes
prejudice to the petitioners who had not been heard by it
before taking the decision.
The Government order impugned in the petitions, even
otherwise, leaves nothing with the Authority, except to pass
resultant order for cancellation of the allotments and initiation
of steps for restoration of the allotted property.
The order passed by the State Government, therefore,
visits the petitioners with serious civil consequences
affecting the rights they had acquired in the allotted
properties after paying money therefor.
12
The State Government was, therefore, required to
comply with the requirements of the Proviso in providing
reasonable opportunity of hearing to the petitioners before
passing the impugned Government order which prejudicially
affects the rights of the petitioners in the allotted
Shops/Space.
Even otherwise, before taking the decision which visits
the petitioners with civil consequences regarding their rights
in the allotted properties, the State Government was required
to comply with the principles of natural justice in hearing
them before contemplating cancellation of their allotments.
Another aspect which needs to be noticed is that the
State Government does not appear to have been apprised
by the Vice Chairman of the Authority about the decision
which Board of the Jammu Development Authority had taken
in its 65th meeting, as its records, produced for the
examination of the Court during the course of hearing of the
petitions, so demonstrate.
It further comes out from the records that the State
Government had taken its decision directing cancellation of
13
the allotments, without noticing the resolution which the
Board of the Authority had passed in its 65th meeting.
The stand taken by the State Government, in its
response to the writ petitions, that the Authority had not
given publicity to its policy decision of serving persons on
First Come First Served, basis for allotment of the premises
available at Bahu Plaza Complex, Jammu and the allotments
being bad on that account, and no opportunity of hearing
was required to be afforded to the petitioners, is thus not
tenable, in that, neither the Government Order indicates the
State Government to have issued the order on the basis of
the Authority having not given publicity to its decision of
making allotments on First Come First Served, basis, nor
do the records of the State Government indicate this stand of
the State Government reflected in its pleadings. The State
Government had taken the decision to cancel the petitionersb�
allotments, only on the basis of the report of the Vice
Chairman of the Authority, as it so appears from reading of
the impugned order and the records of the State
Government.
14
The issue raised is thus answered by holding that the
Government was under a statutory obligation to hear the
petitioners before issuing the impugned order directing the
Jammu Development Authority to cancel the allotments of
their Shops/Halls.
Thus found to have been issued in violation of the
mandatory provisions of the Proviso appended to Section 37
of the Act, the Government Order impugned in these
petitions, is liable to be quashed, additionally, because it is
arbitrary and in violation of the principles of natural justice,
offending Article 14 of the Constitution of India.
The rest of the issues canvassed by learned counsel for
the petitioners at the Bar that the impugned order of the
State Government was even otherwise unjustified, on merits,
may not require consideration for the disposal of these
petitions, which are being allowed on the sole ground that
the Government have erred in issuing the impugned
Government order without providing reasonable opportunity
of hearing to the petitioners in terms of the Proviso appended
to Section 37 of the Act.
15
For all what has been said above, these petitions,
therefore, succeed and are accordingly allowed, quashing
Government Order No. 1126-GAD of 2007 dated
22.09.2007.
The State Government is, however, left free to examine
the issue as to the impropriety or illegality of the allotments of
the Shops/Halls at Bahu Plaza Complex, Jammu made by
the Jammu Development Authority and pass appropriate
orders/directions in this behalf as warranted under law, after
affording reasonable opportunity of hearing to those who
may be prejudicially affected by the order which the
Government may consider passing in this behalf.
A copy of this judgment shall be placed on each file.
(J. P. Singh)
Judge
JAMMU:
01.06.2009
Pawan Chopra
