The main legal point established in the judgment is that the government's unilateral decision to change the terms of land allotment from freehold to leasehold without a valid piece of legislation or a lawful administrative act or policy was arbitrary, unreasonable, wrongful, and illegal.

JUDGMENT

I. P. Mukerji, J. - The point involved in this appeal is very interesting.

2. It concerns a parcel of land in greater Kolkata measuring 30 cottahs, numbered as plot No.IIE/17 in Jyoti Basu Nagar, also known as New Town. It was owned by the state government, the respondent No.1. Through legal technicalities, the ownership and control of the law was transferred to the respondent No.2 (hereinafter referred to as HIDCO). For all purposes the state is the legal owner of an entire tract of land in New Town. In response to an offer made by the appellant No.1 (hereinafter referred to as the appellant), HIDCO by its letter dated 6th April, 2011 promised to convey to them on "freehold basis", the entirety of the said parcel of land @ Rs.13.364 lakhs per cottah aggregating to Rs.4,00,92,000/-. Earnest representing 25% of the amount of Rs.1,00,23,000/- was to be paid within 30 days of the said letter followed by the payment of the balance amount of Rs.3,00,69,000/- within a further period of 60 days. The land was to be used to build a modern showroom and for other commercial purposes. HIDCO promised to handover physical possession of the land on payment of the balance consideration and registration of the deed of conveyance. It reserved the right to cancel "the letter of allotment" in default of payment of consideration.

3. The entire payment under this letter of allotment was made by the appellant.

4. On 24th August, 2012 HIDCO wrote to the appellant saying that the letter of allotment was issued during the period the model code of conduct was in force before the West Bengal Assembly General Election, 2011. In those circumstances, the decision to allot was reviewed. It had come to a decision that the allotment would not be on freehold basis but on leasehold basis for a period of 99 years. The sale price was to be treated as premium. It was said that this letter was issued further to the decision of the Board of directors at its 67th meeting held on 30th July, 2012.

5. After receiving this letter, the appellant took legal opinion. Relying on it, it responded on 16th November, 2012. Amongst other things they said that the model code of conduct did not forbid transfer of land by HIDCO or as a matter of fact any government company. They also said that the effect of the grant of lease for 99 years and sale was the same, in as much as both were transfers under the Transfer of Property Act, 1882. They tried to contend that if the sale was hit by the code, transfer by lease was also similarly hit as both resulted in transfer. The appellant asked HIDCO to revoke their letter dated 24th August, 2012.

6. On 12th October, 2012 HIDCO forwarded a draft deed of lease to the appellant asking them to execute it. After writing this letter the managing director of the appellant had discussion with HIDCO officials on 26th November, 2012. On 6th December, 2012 HIDCO wrote to the appellant's managing director saying that by allotment of the land and acceptance of consideration, the transfer of title had not taken place. This could only happen on registration. It was reiterated that the transfer to the appellant would be by lease with a right of assignment. On 21st December, 2012 the appellant replied to this letter asking HIDCO to execute the deed of conveyance. Without prejudice to their other rights the appellant also wanted to have a look at the proposed draft deed of lease.

7. After exchange of this correspondence, the government decided on 26th December, 2012 to formally announce its policy.

8. The material terms of the policy of the government made on 26th December, 2012 are as follows:-

"2. And whereas there is need to introduce uniformity reduce discretion and avoid case by case decision making to ensure transparency while dealing with public assets.

3. Now, the Governor, after careful consideration of the matter, is pleased hereby to make the following Land Allotment Policy when will be applicable to land owned or held by any Department of th