1. Allotment of government land to a private educational institution following eviction from Wakf property — Challenge to non-auction and free allocation of land. (Para 2 , 3 )
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2018 Supreme(SC) 1099
SUPREME COURT OF INDIA
N.V. RAMANA, MOHAN M. SHANTANAGOUDAR, JJ.
J.S. Luthra Academy & Another – Appellants
Versus
State of Jammu and Kashmir & Others – Respondents
Civil Appeal Nos. 7184-7185 of 2013
Decided On : 30-10-2018
Important Points
IMPORTANT POINTS
In allotting natural resources adequate compensation should be ensured.
Alleviating plight of students uprooted for no fault of the school is in public interest.
An executive action would not be arbitrary merely because the action is not explicitly stated to have been taken for a particular reason or based on a particular principle which in itself is reasonable. Court should see whether such a reasonable principle is discernible from the facts and circumstances of the case.
Allotment of land to profit earning organization, even in public interest, cannot be at concessional rate or free of cost.
In allotting natural resources adequate compensation should be ensured.
Alleviating plight of students uprooted for no fault of the school is in public interest.
An executive action would not be arbitrary merely because the action is not explicitly stated to have been taken for a particular reason or based on a particular principle which in itself is reasonable. Court should see whether such a reasonable principle is discernible from the facts and circumstances of the case.
Allotment of land to profit earning organization, even in public interest, cannot be at concessional rate or free of cost.
Subject
Land Allotment - Educational Institution
Act Referred
Headnote
(a) Constitution of India – Article 39(b) and Article 14 – Allocation of natural resources – Land – Adequate compensation of the resource should be ensured – Decision must be fair – Public good should be the guiding factor – Decision should conform to Article 39(b) and Article 14. (Para 6)
(2012) 3 SCC 1 (2G case); (2012) 10 SCC 1; (2014) 9 SCC 516; (2015) 12 SCC 1; (2000) 8 SCC 262; (2003) 8 SCC 100; (2009) 7 SCC 561; (2018) 12 SCC 756; (2018) 4 SCC 218 – Relied upon
(2015) 1 SCC 720 – Referred
(b) Constitution of India – Articles 38 and 39 – Appellant school evicted from its previous location by Wakf Board – Making students to suffer – Plight of the students major concern for the school to ask and the government to allot the land to it – Non mention of plight of students in correspondence between school and government does not imply that the action was not motivated by welfare considerations – An executive action would not be arbitrary merely because the action is not explicitly stated to have been taken for a particular reason or based on a particular principle which in itself is reasonable – The Court should see whether such a reasonable principle is discernible from the facts and circumstances of the case – Held, action taken in public interest – Not arbitrary. (Para 7, 9)
(1991) 1 SCC 212; (2017) 4 SCC 449 – Relied upon
(c) Constitution of India – Articles 38 and 39 – Established School in main city evicted by Wakf Board for requirement of the land for its own use – Eviction not for any default of school – School allotted two Kanals, two on payment and two free of cost – Free of cost land given in nature of compensation for uprooting thee school for no fault of theirs – No error. (Para 10)
(d) Constitution of India – Articles 38, 39 – Natural resources – Allotment of land to profit earning organization – Cannot be at concessional rate or free of cost – Instantly appellant allotted two Kanals at the rate of Rs.8,00,000 per Kanal – Thus the two Kanals free of cost putting State to loss of Rs.16,00,000 – Appellant directed to make good the loss for the other two Kanals. (Para 14, 15)
(2012) 10 SCC 1; (1997) 1 SCC 164; (2011) 7 SCC 493 – Relied upon
Facts of the case:
The Appellant J.S. Luthra Academy initially was situated on a Wakf property in Jammu. Appellant was ordered by the Wakf Board to be evicted from the Wakf property.
The Academy was allotted alternate land and it finally paid a total of Rs.16,00,000/- for two kanals of land and obtained two more kanals free of cost. The Academy constructed the school building thereon and the school is being run on this premises, having shifted from the wakf property.
The Division Bench allowed the writ petitions and consequently quashed the allotment made in favour of the Academy.
Finding of the Court:
Allotting land to appellant upheld but not the free land.
Result: Appeals allowed.
Legal Category Hierarchy
- constitutional law
- administrative law
- property law
Table of Contents
2. Validity of non-competitive allotment based on public interest and student welfare versus the requirement for public auction to ensure transparency and revenue maximization. (Para 4 , 5 )
3. Allotment for social welfare purposes is not inherently arbitrary; however, granting public land free of cost to potentially profit-oriented institutions is legally unsustainable. (Para 6 , 7 , 8 , 9 , 10 , 12 )
4. State alienation of natural resources without auction is permissible for public good, but must ensure adequate compensation unless the entity is purely non-profit. (Para 6 , 11 , 12 )
5. Allotment upheld; however, the institution directed to pay the shortfall for land received gratuitously along with interest. (Para 15 , 16 )
6. Is public auction mandatory for all state land allotments?
No. While auction or tenders are generally preferred to ensure transparency and revenue, they are not constitutional mandates. Non-auction is justifiable if the decision is taken for social, public, or common good. (Para 6 )
7. When does non-competitive allocation of natural resources attract judicial scrutiny under Article 14?
Allocation to private parties for commercial profit-maximization without competitive bidding attracts higher scrutiny. However, if backed by a constitutionally recognized social purpose or welfare objective, such deviations from standard procedure may be reasonable. (Para 6 )
8. Can public land be allotted free of cost to educational institutions?
Land may be allotted at concessional prices or free to non-profit institutions serving public interest, subject to stringent conditions. However, such gratuitous allotment is questionable for profit-oriented institutions. (Para 12 )
9. What is the remedy when a land transfer is found to have a shortfall in consideration?
If the transferee acted bona fide and public interest is not permanently harmed, the transfer may be saved by allowing the transferee to make good the shortfall in consideration. (Para 13 , 14 )
JUDGMENT :
Mohan M. Shantanagoudar, J.
The judgment of the Division Bench of the High Court of Jammu and Kashmir at Jammu in L.P.A. (OW) No. 38/2008 and L.P.A. (OW) No. 39/2008 dated 01.04.2009 is the subject matter of these appeals.
2. The brief facts leading to these appeals are that the Appellant J.S. Luthra Academy (hereinafter referred to as the ‘Academy’), an educational institution, initially was situated on a Wakf property in Jammu. Vide order dated 27.12.1995 of the authority constituted under the J&K Wakf Act, 1978, the said educational institution was ordered to be evicted from the Wakf property. Against the said order, the Academy approached the Jammu & Kashmir Special Tribunal, and an interim order of stay on eviction was granted by the tribunal on 09.01.1996. During the interregnum, the Academy made representations to the State Government requesting for allotment of a piece of land at any place mentioned in the representations for shifting and running the school. The concerned minister in the meeting dated 14.1.1998 considered the question of allotment of land in favour of the Academy. Subsequently, a note was prepared by the Managing Director of the J & K Housing Board on 25.1.1999, proposing that the Board had 4 kanals of land in Sector 2 of Channi Himmat, Jammu earmarked for schools which could be considered for allotment to the Appellant at Rs. 8,00,000/- per kanal. In a subsequent meeting on 29.4.1999 after completion of formalities, four kanals in Sector 2 of Channi Himmat were alloted to the Academy at Rs. 8,00,000/- per kanal on lease for 40 years and the Academy was directed to deposit 50% of the said amount, the remaining amount to be deposited subsequently. In a meeting dated 28.6.2000, a decision was taken by the J & K Housing Board in pursuance of the orders of the Chief Minister, that two kanals of land would be allotted to the Academy at the rate of Rs. 8,00,000/- per kanal and the other two kanals free of cost. Further, in a Cabinet meeting dated 18.8.2000, it was decided that the Jammu Development Authority was to be compensated for the free allocation of land in the form of allotment of alternate land to the Authority. The allotment of land to the Academy was sanctioned by the Principal Secretary, Government of J&K, vide letter dated 24.8.2000. The Academy finally paid a total of Rs.16,00,000/- for two kanals of land and obtained two more kanals free of cost. A lease deed was executed, and possession was handed over on 12.12.2001. The Academy constructed the school building thereon and the school is being run on this premises, having shifted from the wakf property.
3. The residents of Channi Himmat vide Writ Petition No. 1093 of 2002 questioned the allotment made in favour of the Academy, on the ground that the piece of land was meant for a playground but the same was allotted to the Academy in violation of the original scheme and plan of the Channi Himmat Housing Colony. One Mr. Naresh Kumar, a proprietor of the United Public School situated at Channi Himmat, filed a writ petition being O.W.P. No. 10/2003, questioning the allotment made in favour of the Academy on the ground that the property ought to have been auctioned by the Government, so that he could have also applied for the allotment of the plot, which he required for the upgradation of his school to the higher secondary level. Both the writ petitions were clubbed, heard and decided together by the learned Single Judge of the High Court and were dismissed. However, the Division Bench by the impugned judgment set aside the order of the Single Judge and allowed the writ petitions and consequently quashed the allotment made in favour of the Academy with the following observations:
“The board is directed to hold public auction of the land for the purpose of leasing the same out on the same terms and conditions it had leased it to the private respondent, except that the premium thereof shall be fixed at the highest price to be obtained at such au
