1. Dispute over auction of State land and subsequent conversion of leasehold rights to freehold — Challenge to bid cancellation and arbitrary grant of State largesse. (Para 2 , 3 , 4 , 5 )
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2024 Supreme(SC) 625
SUPREME COURT OF INDIA
ABHAY S. OKA, AUGUSTINE GEORGE MASIH, JJ.
City Montessori School – Appellant
Versus
State of U.P. and Others – Respondents
Civil Appeal Nos. 8355, 8356 of 2024, Arising Out of Special Leave Petition (C) Nos. 2612, 12976 of 2015
Decided On : 02-08-2024
Important Points
IMPORTANT POINT
Allotment of State largesse – Rights of State as lessor can only be sold by a public auction or by any other transparent method – Selling plot to its alleged lessee at a nominal price will not be a fair and transparent method at all – It will be arbitrary and violative of Article 14 of Constitution of India.
Allotment of State largesse – Rights of State as lessor can only be sold by a public auction or by any other transparent method – Selling plot to its alleged lessee at a nominal price will not be a fair and transparent method at all – It will be arbitrary and violative of Article 14 of Constitution of India.
Subject
Property Law - Land Allotment and Conversion
Act Referred
Headnote
Constitution of India – Article 14 – Transfer of Property Act,1882 – Section 109 – Allotment of State largesse – Rights of State as lessor can only be sold by a public auction or by any other transparent method by which apart from lessee, others too get a right to submit their offer – Selling plot to its alleged lessee at a nominal price will not be a fair and transparent method at all – It will be arbitrary and violative of Article 14 of Constitution of India – Even assuming that alleged lessee has leasehold rights concerning the plot, rights of State as owner and lessor can be transferred only by adopting a fair and transparent process by which State fetches best possible price – In case of sale of a leasehold plot by lessor, rights of lawful lessees do not get affected as their tenancy will be attorned to purchaser in view of Section 109 of Transfer of Property Act,1882 – There was no binding order passed by High Court giving mandate to authority or to State Government to grant application which alleged lessee may make for conversion – Impugned judgment of High Court by which order of conversion and deed of conversion in favour of alleged lessee were set aside, calls for no interference – Whether lease claimed by alleged lessee is valid and subsisting and whether plot can be put to auction are questions left open which can be agitated by parties in appropriate proceedings – However, alleged lessee shall not be dispossessed without due process of law. (Paras 8, 9, 13, 16 and 17)
Facts of the case:
Present appeals take an exception to the same Judgment of a Division Bench of Allahabad High Court. Dispute is essentially between City Montessori School and one Shri M.M. Batra regarding plot measuring 2238.5 sq. ft. situated at Maha Nagar, Lucknow. Plot vests in State Government.
Findings of Court:
It will be open to school to apply for a refund of money paid towards the bid amount. It will also be open to alleged lessee to apply for a refund of the amount paid for converting the plot from leasehold to freehold. State Government/authority will issue necessary refund within six weeks of making such applications.
Result : Appeals dismissed.
Legal Category Hierarchy
- constitutional law
- administrative law
- property law
- practice and procedure
Advocates appeared:
For the Appellant(s) : Mr. Shantanu Kumar, AOR Mr. Honey Jain, Adv. Mr. Ashish Batra, Adv. Mr. R. P. Gupta, AOR
For the Respondent(s):Mr. R. P. Gupta, AOR Mr. Ravindra Raizada, Sr. Advocate, A.A.G. Mr. Shaurya Sahay, AOR Mr. Aditiya Kumar, Adv. Mr. Abhishek Chaudhary, AOR Mr. Shantanu Kumar, AOR Mr. Sudhir Sharma, Adv.
For the Appellant(s) : Mr. Shantanu Kumar, AOR Mr. Honey Jain, Adv. Mr. Ashish Batra, Adv. Mr. R. P. Gupta, AOR
For the Respondent(s):Mr. R. P. Gupta, AOR Mr. Ravindra Raizada, Sr. Advocate, A.A.G. Mr. Shaurya Sahay, AOR Mr. Aditiya Kumar, Adv. Mr. Abhishek Chaudhary, AOR Mr. Shantanu Kumar, AOR Mr. Sudhir Sharma, Adv.
Table of Contents
2. Validity of bid cancellation based on tender purchase date — Legality of converting leasehold to freehold during pending litigation and adherence to State policy. (Para 6 , 7 )
3. Conversion of State land at nominal prices without transparent process is arbitrary — Failure to disclose pending litigation and disregard for Trial Court findings render conversion illegal. (Para 9 , 11 , 12 , 13 , 14 )
4. State largesse must be distributed through a transparent, non-discriminatory, and well-defined policy to prevent arbitrariness and satisfy the equality clause under Article 14. (Para 8 , 9 )
5. Appeals dismissed — Order of conversion and subsequent deed set aside — Refund of bid and conversion amounts directed. (Para 16 , 17 )
6. What are the requirements for the State to legally grant largesse such as land allotment?
State largesse must be founded on a sound, transparent, discernible, and well-defined policy published in the Official Gazette. It must be implemented using non-discriminatory and non-arbitrary methods to ensure fairness and equality under Article 14, avoiding favouritism or nepotism. (Para 8 )
7. Can the State convert leasehold land to freehold at a nominal price without a public auction?
No. Transferring State ownership rights must involve a fair and transparent process to fetch the best possible price. Selling land to a lessee at a nominal price without a public auction or transparent method is arbitrary and violates Article 14. (Para 9 , 11 , 14 )
8. Does the pendency of a Writ Petition affect the propriety of administrative orders regarding the disputed property?
Yes. Passing a conversion order while a Writ Petition challenging the auction of the same property is pending, especially when the parties are aware of the litigation, can be viewed as a covert method to defeat interim court orders. (Para 14 )
JUDGMENT :
ABHAY S. OKA, J.
1. Leave granted.
FACTUAL ASPECTS
2. These appeals take an exception to the same judgment of a Division Bench of Allahabad High Court. The dispute is essentially between the City Montessori School (for short, ‘the school’) and one Shri M.M. Batra regarding plot no. 90-A/A- 754, measuring 2238.5 sq. ft. situated at Maha Nagar, Lucknow (for short, ‘the plot’). It is not in dispute that the plot vests in the State Government. By a lease dated 4th January 1961, the Hon’ble Governor of Uttar Pradesh, through Nazul Officer, Lucknow, granted the lease of the plot to one Gursharan Lal Srivastava which was described as a ‘garden lease’ A separate lease was granted on the same day in respect of the building on the plot. By a registered sale deed dated 26th June 1962, Gursharan Lal Srivastava sold his leasehold interest in the plot to Shri M.M. Batra (the alleged lessee). Rajat Batra and Raman Batra are the sons of the alleged lessee. It appears that the plot is a Nazul property. Several Government Orders (G.Os.) have been issued, either providing for the conversion of leasehold lands into freehold or auction thereof.
3. The alleged lessee filed a Civil Suit in the year 1994 in the Civil Court. The suit was filed to protect possession. Later on, by amendment, he sought the benefit of G.O. of 17th February 1996 and 1st December 1998, which permitted the conversion of Nazul properties given on lease into freehold properties. On 13th March 1995, an auction notice was published for the auction of various Nazul lands, including the plot. The school and the sons of the alleged lessee submitted their bids. The school was found to be the highest bidder and therefore, the bid offered by the school was accepted. As provided in the auction notice/tender notice, the tender document had to be purchased by 23rd March 1995 since 24th March 1995 was a holiday, and the auction was fixed for 25th March 1995. It was alleged that the school purchased the tender document on 25th March 1995. The acceptance of the school's bid was cancelled. However, the authorities again called upon the school to deposit the bid amount. Ultimately, on 20th June 1996, the State Government cancelled the bid offered by the school on the ground of the failure to purchase the tender form within the outer limit provided in the tender notice. While cancelling the school's bid, the State Government decided to accept the bid offered by the sons of the alleged lessee.
4. Aggrieved by the action of the rejection of the bid, the school filed a Writ Petition under Article 226 of the Constitution of India before the Allahabad High Court. The impugned judgment is the final judgment in the said Writ Petition. By an interim order dated 18th July 1996, Allahabad High Court directed the status quo to be maintained with respect to the plot. Also, it directed that the Lucknow Development Authority (for short, ‘the authority’) shall not execute the sale deed in favour of the sons of the alleged lessee. The school applied for impleadment in the suit filed by the alleged lessee. The said application was rejected. However, on 3rd February 2011, the school impleaded the alleged lessee as a party to the Writ Petition. The alleged lessee’s suit was dismissed by the Civil Court by judgment dated 24th July 2000. The alleged lessee preferred an appeal against the decree of dismissal of the suit before the High Court. By recording statements of the counsel representing the alleged lessee and the authority, a Division Bench of the High Court, by order dated 6th December 2000, disposed of the appeal by directing the authority to expeditiously consider the application of the alleged lessee for conversion of his leasehold rights into freehold in accordance with law. The High Court also directed that the alleged lessee can be dispossessed only in accordance with the law. However, the High Court did not interfere with the findings recorded by the Trial Court on merits.
5. Based on the appli
