The main legal point established was that entitlement to shop sites at Transport Nagar required proper verification and proof of connection to the transport business in the Warehouse area. The court also emphasized that disputed questions of fact could not be determined in a writ court under Article 226 of the Constitution.

It appears that fairly a large number of persons and firms had been carrying on transport and allied business in Warehouse area, Jammu, mostly on State land. Some time in or around the year 1984, the Government of Jammu and Kashmir and the Jammu Development Authority in their endeavour to clear up the aforesaid State land at Warehouse area and to shift the transport business therefrom, decided to allot alternate sites to such person and firms for their business in the area known as Transport Nagar near Jammu Railway Head. The said Transport Nagar was basically a resettlement project financed by the State Government and executed by the Jammu Development Authority. Plots / Shop sites of various sizes were to be alloted to the individuals and firms in accordance with their entitlement determinable on the basis of the criteria laid down by the Jammu Development Authority. Some other persons had Khokhas in Warehouse area in which they were carrying on the business of spare parts, motor workshops, service stations, tyre retreaders, and body builders etc. They were also to be allotted shop sites. Persons who were connected with transport trade and were in possession of shops in the Warehouse area were to be allotted shop sites of the size of 15 x 40 and those who were having petty workshops in Khokhas were to be allotted shop sites measuring 12 x 15. In early Ninetys a fire incident took place in the Warehouse area and some Khokhas got burnt and they also staked claims to the allotment of shop sites at Transport Nagar. It appears that during the year 1991-92 large number of bogus persons and firms, who did not have any Khokha in Warehouse area, managed to obtain allotment letters in their favour.

Jammu Development Authority also found that some of the persons who, in fact, had their Khokhas and were actually carrying on business connected with transport in the Warehouse area had not been allotted any shop site at Transport Nagar. The said persons alleged that the teams/Committees, which had been appointed to acertain and verify the existence of Khokhas burnt in fire, excluded their names on extraneous considerations. Consequently, a Committee of Officers was constituted to examine and acertain the names and relevant particulars of all such left out persons. The Committee published a notice asking all those who had Khokhas in the Warehouse area, but had not been allotted shop sites at Transport Nagar, to submit their claims along with proof. In response to the notice so issued by the Committee, as many as 396 persons filed their applications before it. The Committee examined each and every case and, after proper verification, recommended allottments only in favour of eighteen (18) persons. Vice Chairman, Jammu Development Authority, accepted the report of the Committee and, accordingly, allottments were made in favour of the said 18 persons. It appears though allottments of shop sites were made during the year 1988-91 by the Jammu Development Authority on the basis of verification conducted by the Committee, but no action was taken to demolish or remove the Khokhas those existed in Warehouse area and in lieu whereof shop sites at Transport Nagar were allotted in favour of such persons, nor any identification or numbers were given to such Khokhas so as to prevent claim of fresh or double allottment against the same Khokhas. In the absence of such identification marks, the same Khokhas in lieu of which allottments had already been made changed hands number of times and each successive transferee of the Khokhas claimed allottments.

Since the Khokhas in the Warehouse area were constructed on State land without any permission, no record regarding their ownership was available. The teams of officers,who had been entrusted with the task of verification, did record the names of persons who were actually conducting business on the spot but there were persons who actually had no Khokhas in Warehouse area a