IMPORTANT POINT
State should not act in an arbitrary or erratic manner.

JUDGMENT

Surinder Singh Nijjar, J. —

1. The instant appeals are preferred against the final order and judgment of the High Court of Karnataka at Bangalore in W.A. Nos. 2183 to 2221 of 2000 & W.A. No. 1492 of 2000 dated 18th February, 2003 whereby the Division Bench of the High Court allowed the writ appeal by setting aside the judgment of the High Court in W.P. Nos. 23578 to 23617 of 1999 dated 7th July, 1999.

2. We may now briefly notice the relevant facts which are necessary for the adjudication of the present case. The Karnataka Industrial Areas Development Board (hereinafter referred to as ‘appellant No.1) had formed an industrial layout at Tarihal village in the year 1983, pursuant to which, it invited interested purchasers to make applications for allotment of industrial sites. Pursuant to the same, the respondents herein, applied for the allotment of sites. It is a matter of record that the respondents had applied for the allotment of sites at different points of time. Consequently, the appellant issued letters of intent, indicating that it had resolved to allot all respondents the sites shown in their cause titles at Tarihal Industrial Estate. The said letter also indicated the tentative price at which the land was sought to be allotted.

3. In response to the offer made by the appellant No.1, the respondents being desirous of purchasing their respective plots indicated their willingness for the abovementioned site. Accordingly, they affirmed their interest to purchase the same. Thereafter, the letters of allotment were issued in favour of the respondents incorporating the terms and conditions of allotment. Subsequent thereto, lease-cum-sale agreements were executed in favour of the respondents on their complying with conditions of allotment.

4. One of the conditions mentioned in the lease-cum- sale agreement reads thus:-

“7(b) As soon as it may be convenient the Lessor will fix the price of the demised premises at which it will be sold to the Lessee and communicate it to the Lessee and the decision of the Lessor in this regard will be final and binding on the Lessee. The Lessee shall pay the balance of the value of the property, if any after adjusting the premium and the total amount of rent paid by the Lessee, and earnest money deposit within one month from the date of receipt of communication signed by the Executive Member of the Board. On the other hand, if any sum is determined as payable by the Lessor to the Lessee after the adjustment as aforesaid, such sum shall be refunded to the Lessee before the date of execution of the sale deed.”

5. The lease-cum-sale agreement, entered into between the Board and the respondents, contained covenants that the respondents shall pay 99% of the allotment price immediately and remaining 1% in 10 equal yearly installments plus lease premium alongwith the interest at 12.5%. The respondents claim to have complied with all the stipulations and the conditions incorporated in the lease-cum-sale agreements. It seems that the appellants even after a lapse of 11 long years did not execute the regular sale deeds in favour of the respondents. On the contrary, the appellants after a gap of 6 months from the date of expiry of the lease period, issued letters to the respondents, raising therein the demands with regard to the final allotment price and also directed the respondents to pay the balance of final allotment price within a stipulated period. The appellants vide its Board meeting dated 18th September, 1997 resolved to fix the final price of the land as follows:

Allotment made at the Basic final prices basic tentative rates as fixed per acre (in Rs.) per acre (in Rs.)

1. 40,000/- 1.08 lakhs

2. 60,000/- 1.27 lakhs

3. 1.00 lakh to 1.25 lakhs 2.01 lakhs

4. 1.50 lakhs to 1.60 lakhs 2.61 lakhs

6. On receipt of the aforesaid demand, respondents filed their objections individually putting forth their grievances and declined to pay the increased amount. It was contended by them that the final allo