JUDGMENT

PATHAK, J.:— This appeal by special leave is directed against the judgment of the Nagpur Bench of the Bombay High Court quashing the grant of Nazul land to the appellants on a writ petition filed by the respondents Nos. 1 to 16.

2. The respondents Nos. 1 to 16 Applied on March 15, 1963 for the grant of sixteen plots of land included in Government Nazul Plot No. 31/1 (Sheet No. 49-D) in Yeotmal Town for the purpose of constructing shops thereon. They alleged that they had not been allotted any land yet for carrying on business at Yeotmal, and inasmuch as land sites were being released to refugees or displaced persons they claimed that having been compelled to migrate from West Pakistan to India during the partition of 1947 they were entitled to the grant of such plots. The appellants made a similar application on May 16, 1964 and it is their case that they had also applied earlier in the same behalf on Feb. 27, 1962. There were applications from other claimants also. The State Government, acting on the report of the Commissioner, Nagpur Division, rejected all the applications. The appellants say that they sought a review of the order of the Government, and on June 28, 1965 the Government reversed its order and decided to grant plots on permanent lease to the appellants. The Collector, Yeotmal submitted a report to the Government pointing out that each plot would be 192 sq. ft. in area and having regard to its market value each allottee should be required to pay a premium of Rs. 960/-. The State Government granted the plots to the appellants as shop Sites in Bhumidhari right without auction on payment of premium, and the decision was conveyed in a Memorandum dated March 3, 1966. The allotment was assailed by the respondents, and they represented to the State Government that after further inquiry the land should be reserved for deserving claimants.

3. The respondents filed a writ petition before the Nagpur Bench of the Bombay High Court challenging the allotment made by the Government in favour of the appellants. They urged that no reasonable opportunity had been given to them to press their claims for grant of plots after the Government had reversed its earlier decision not to grant land, that the appellants had been unduly favoured and that the order was bad in law because the plots had been granted without holding an auction. It was also contended that the power to grant the plots was vested in the Collector and not the State Government.

4. During the pendency of the writ petition a statement was made on behalf of the State Government that it was prepared to consider the claims of the respondents. The appellants, however, maintained that they had acquired a right to the land in terms of the order dated March 3, 1966 and that they could not be divested of those rights.

5. By its judgment dated March 14, 1968 the High Court allowed the writ petition quashed the order granting plots to the appellants arid directed the State Government and its officers to take appropriate action on the several claims for allotment of land. The High Court held that in view of sub-section (2) of S. 149 read with sub-section (3) of S. 164 of the Madhya Pradesh Land Revenue Code, 1954, as applied to the Vidharba region of Maharashtra, and Rr. 22 and 26 framed under the Code, it was not open to the State Government to dispose of the plots without holding a public auction unless there were reasons recorded in writing for doing so, and that after initially deciding not to grant the plots the subsequent decision to allot them to the appellants was contrary to law inasmuch as the claims of others had not been considered.

6. In this appeal, it is urged by the appellants that the High Court erred in applying sub-section (3) of S. 164 and R. 26, and therefore in holding that the lease of the plots without auction and without recording any reasons was invalid.

7. When the Government decided to grant land to the appellants, it thought that the grant should