The government's discretion to grant or refuse exemption under Section 20 of the Urban Land (Ceiling and Regulation) Act, 1976 is not unfettered and is subject to the principles of natural justice.

P. A. CHOUDHARY, J.

( 1 ) RESPONDENTS 2 to 6 own excess vacant lands in Hyderabad urban agglomeration. We are concerned in this Writ Petition with an extent of acs 7. 01 guntas of vacant land situated in S. Nos 23, 24 and 194/6 of begumpet Paigah Village within the said urban agglomeration. The excess vacant land ot the respondents 2 to 6 is liable to be, acquired by the government under the provisions of the Urban Land (Ceiling and Regulations)Act 1976. As a corolary to the above, the Act denies freedom to the owners to sell their excess vacant lands except by the leave and exemption obtained by them from the Government under the above Act. In the hope of securing such exemption the respondents had agreed to sell the above mentioned vacant land to the writ petitioner, the Wholesale Clother Merchants association of Secunderabad at Rs. 75/. per square yard. For that purpose they entered into an agreement of sale with the writ petitioner on 13th December, 1979. The Writ-petitioner-association has plans to shift their present cloth-market from the highly congested and densely populated Secunderabad area and to establish a grand modern cloth-market on this site. The petitioner-association had negotiated the purchase of the above extent ot Acs. 7 01 guntas of land and entered into the above agreement and paid to the respondents-vendors a sum of Rs. 10,91. 000/- as earnest money.

( 2 ) AS the provisions of the above Act of 1976 do not permit respondents 2 to 6, the vendors, to alienate that prperty except under exemption obtained from the Government, they and their vendees the writ petitioner jointly applied in 1979 to the State for grant of such exemption under Section 20 of the Act. If the exemption is not granted the application of oner provisions of the Act will not be arrested and the State will acquire the excess land paying nominal rates of compensation to the respondents. Under those provisions owners will file declaratoins showing their holdings. On verification of such declaration the extent of excess land will be ascertained and declared and acquired by the Government. It is for this purpose of acquiring the excess land the Act is mainly made. But the Act has also other provisions laying open paths of escape for the excess lands owners from the operation of those expropriatory provisions of the Act. Section 20 with which we are concerned is one of such provisions. Section 20 of ths Act reads as follows :"20 (1): Notwithstanding anything contained in any of the foregoing provisions of the Chapter : (a) Where any person holds vacant land in excess of the ceiling limit and the State Government is satisfied either on its own motion or otherwise, that, having regard to the location of such land, the purpose for which such land is being or is proposed to be used and such other relevant factors as the circumstances of the case may require, it is necessary or expedient in the public interest to do, the government may, by order, exempt, subject to such conditions if any as may be specified, in the order, such vacant land from the provisions of the chapter ; (b) Where any person holds vacant land in excess of the ceiling limit and the State Govt. either on its own motion or otherwise, is satisfied that the application of the provisions of this chapter would cause undue hardship to such person, that Government may except, by order, subject to such conditions, if any, as may be specified in the order, such vacant land from the provisions of this chapter; provided that no order under this clause shall be made unless the reasons for doing so are recorded in writing".

( 3 ) IT is under the above Section 20 of the Act the writ-petitioner-vendees and the respondents 2 to 6, their vendors, applied jointly on 21st december, 1979, to the Government for the exemption of the abovementioned acs. 7. 01 guntas ot land from the operation of the aforesaid Act. As the lard was situated within the residential area of the Master Plan, they had also ask

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