Madhya Pradesh High Court
Ajiz Khan (Miyan) vs Union Of India on 25 October, 2017
Bench: Hemant Gupta, Rajeev Kumar Dubey, Shekhar Sharma
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HIGH COURT OF MADHYA PRADESH : JABALPUR
W.P. No.11190/2016
Ajiz Khan (Miyan) and others ................... Petitioners
Vs.
Union of India
and others ............... Respondents
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Coram (Division Bench):
Hon'ble Shri Justice Hemant Gupta, Chief Justice
Hon'ble Shri Justice Rajeev Kumar Dubey J.
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Shri Shekhar Sharma, Advocate for the petitioners.
Shri Anuj Agrawal, Advocate for Petitioner No.5.
Shri D. K. Gupta, Advocate for Respondent No.1.
Shri Ashok Lalwani, Advocate for Respondent Nos. 2 to 5.
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Whether approved for reporting - Yes
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Law laid down :-
The licensor is competent and entitled to frame its own Policy for grant of licenses
and their renewal. Whether a particular business should fall in the essential businesses or a
General business is also a matter of policy.
The policy decision could be judicially reviewed under Art. 226 but only on the
touchstone of it being unconstitutional; dehors the provisions of the Act and the regulations;
the delegatee has acted beyond its power of delegation; and when the executive policy is
contrary to the statutory or a larger policy. The Supreme Court decision in Delhi
Development Authority, N.D. Vs. Joint Action Committee, Allottee of SFS Flats, (2008)
2 SCC 672 relied upon.
Thus, in the facts & circumstances, Policy framed by BHEL dated 26.4.2014 for
allotment of shops cannot be declared arbitrary and illegal on the grounds that it is not
renewable, transferable, heritable and that licence fee is increased exorbitantly by applying
irrational formula. Further held that in absence of a contract to the contrary, legal heir of the
deceased licensee would not get any preferential right to continue with the permissive
possession nor would a licence gets a right to enjoy the superstructure after the expiry of
license of land underneath it.
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Significant Paragraphs - 10 to 12 and 14 to 19
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ORDER
(Passed on this 25th day of October, 2017) Per Hemant Gupta, Chief Justice Challenge in the present writ petition is to the policy framed by Bharat Heavy Electricals Ltd. (for short BHEL) on 26.4.2014 of allotment of shops and also providing Model License Agreements as approved in its 462nd Meeting held on 29.5.2014.
02. The petitioners are the shopkeepers in the shops constructed in the BHEL campus specifically at Habibganj, Gandhi Market Piplani and D-Sector Govindpura. The said shops were allotted about 25 to 30 years back as per the then existing policy. The petitioners claim that they were allotted land and that they have raised construction over the said piece of land from their own resources. The petitioners allege that there are approximately 1340 shops in 30 markets to cater the needs of residents/employees of BHEL. The policy is challenged, inter alia, on the ground that it is not renewable and the license fee is to be determined in consonance with the formula based upon the Collector rate. It is pleaded that Collector rate is a rate for transfer of land, therefore, the Collector rate for lease should have been incorporated. It is also pleaded that there is no intelligible differentia while formulating the formula for determination of the license fee. The formula framed will increase the license fee manifold then the license fee being paid now. The petitioners have pleaded that such decision has been taken unilaterally at the back of the shopkeepers,
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therefore, such decision which has been taken without taking the shopkeepers in confidence is not justified.
03. The petitioners have further pointed out that the policy does not provide for transfer of the license or the basis of formula of payment of licence fee and that there is total non-application of mind of classification of the businesses apart from the fact that there is exorbitant increase in the license fee.
04. A perusal of the terms of the policy Annexure P-1 shows that the shop has been defined to include BHEL constructed shops and also where only the land was allotted by the Company and permanent Construction has been undertaken. There is stipulation that in future no land will be allotted except for mobile towers. The minimum monthly reserve license fee is to be fixed by the Town Tender and Allotment Committee at the unit level which, in no case, should be as per the formula contain in Clause 4.3 of the policy. The businesses carried out in the shops allotted have been put in three different categories, as per Clause 4.3. The relevant table read as under:-
"The list of Essential & Banned Businesses will be prepared by TTAC at Unit level with the approval of GM/HR of the Unit. In case of level of GM (HR) is not available in the Unit, approval of Head of Unit will be obtained. Other permissible businesses will be termed as "General Businesses".
General Essential Businesses Banned Businesses Businesses Departmental Chemist & Druggist Liquor shop Stores
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Electronic shop Grocery shop Casino & similar
Consumer Milk booth Bar & Pubs
durable shop
Garment & cloth Shoe-maker/repair Dance bars
shop
Stationary Washerman/Drapers Night Clubs & like
shop/Book shop/
Magazine shop
Tuition centre and AIR Including
similar businesses activities/businesses
which are illegal
under Criminal Law/
as per applicable
statues.
Tailor Mobile Towers
Mobile and And similar trades & vocations
accessories shop
Courier shop
Restaurant &
refreshment shop
Shoe shoppee
And similar
trades &
vocations
xxx xxx xxx"
05. The relevant terms of the policy in respect of existing licenses/Leases for General Businesses is as under :-
"5.1.1 Businesses under the existing licenses/leases which do not figure in the list of Essential businesses and in banned businesses will be termed as "General Businesses".
5.1.2 in recognition of the fact that large number of allotments were made prior to issue of this policy and also at a time when limited business avenues existed at the time of original allotments in BHEL township and taking into account the varied practices in Units whereby constructed shops were allotted, Land only was allotted and construction by shopkeeper/Company on behalf of shopkeeper was carried- out, extension/additional construction were permitted at the cost of shopkeepers, provisions of shop-cum-residences permitted, the existing license holders/lessees will be treated
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under the policy as follows:
5.1.2.1 Licenses/leases which are in vogue, will be renewed as a License for a further period of maximum 5 years after expiry of existing period of existing lease/license period but not beyond 31.12.2018 at a monthly license fee as provided hereunder in this clause. Similarly, licenses/leases already expired on or before the date of issue of this policy will be renewed as a License from the date of expiry of such licenses/leases upto 31.12.2013 by increasing the then prevalent license fee @ 5% per annum and for a further period of maximum 5 years but not beyond 31.12.2018 at a monthly license fee as provided hereunder in this clause.
Further extension, if any, shall be as per clause 5.1.2.2. The formula for computing Monthly license fee, in both such cases will be as under:
Monthly License Fee = (5X (land Area of Shop (in Sq. Ft) X Collector rate (in Sq. Ft.) 100)/12 Collector rate as applicable on the date of renewal in respect of commercial premises will be taken into consideration for this purpose.
Or the prevailing licensee being paid by the Licensee; whichever is higher.
The MLF so calculated initially, will be increased @ 5% per annum.
In case of multi storied shops, cumulative covered area for all floors will be taken in place of land area for computation of MLF."
06. Similar terms exist for the licensee/lessee for essential businesses in Clause 5.2 of the Policy. The Clause 6 deals with the procedure for renewal. The Model License agreements have been
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appended with the Policy as per Clause 7.1 which reads as under :-
"7.1 The Model License agreement for Fresh allotments (General & Essential), for Existing Licenses (General Business) and for existing Licenses (Essential Businesses) are annexed at Annexure - II, III, IV Units may enter into Licensee agreement(s) with allottees based on these model license agreements.
The terms and conditions of the License Agreement will be implemented, enforced and monitored by TAD."
Some of the general conditions reads as under:-
"9.1 The shop(s) will be allotted on "As-Is-Where-Is" basis. The allottee will not paid any compensation, damages towards dismantling, removal of any infrastructure, temporary structures, interiors etc., which he/she may have done for running trade/business during the license period, at the time of expiry/ termination of license /vacation of premises on account of any reason whatsoever.
9.2 The Monthly License Fee fixed at the time of renewal shall be the License Fee calculated as per formula mentioned under each of the categories of Licenses or the License Fee prevalent at the end of the preceding term for the concerned Licensee, whichever is higher.
9.3 In case of allotment (including renewal of existing licenses) of BHEL constructed Shop -cum- residence (being composite unit/ adjacent units (eg. 1 st Floor being shop and second floor as residence/front side shop and back side residence etc.) the rate of license fee for residential area will also be calculated in similar manner as applicable for the shop area.
9.4 At the time of vacation, the construction/structure if any, erected by the LICENSEE shall be removed at his own
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cost and the premises would be restored as it was handed over, except normal wear and tear. If the COMPANY wants that such structures should not be removed, but be retained in the premises, then the value of such construction/ structure shall be determined by the Company which shall be final and paid to the licensee within a reasonable period."
07. On the other hand, in the return filed on behalf of BHEL, it is averred that respondent is a public sector undertaking of Government of India, therefore, it is bound to act as per law to ensure transparency and its action is required to be examined in the light of the settled principles that once a public contract has been granted for a specific period, then after expiry of the period there is no question of renewal and there must be public auction/public tender after advertisement in the newspapers having wide circulation. It is also averred that it would also in the interest of the State, if the BHEL get higher amount of license fee, whereas if extension is granted, an impression is created that there is some collusion between the licensee and the BHEL. It is also pointed out that the petitioners have been granted right of first refusal by permitting renewal of license fee for three specific terms up to 31.12.2018 and finally up to 31.12.2028. Initial license agreements were executed with the petitioners from 20.12.1980 to 31.12.1984 and time to time thereafter and the last extension of the period of license came to an end on 31.3.2011. It is also pointed out that the license does not create any interest in the property. It merely permits another person to make use of the property and there is no parting of legal possession in favour of the occupants. It is also pointed out that there is no
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public interest involved as the dispute raised by the petitioners is a commercial dispute and no interference under Article 226 of the Constitution is called for. The reliance is place on an order passed by the learned Single Bench of Delhi High Court in the case of B. K. Bhagat Vs. New Delhi Municipal Council - W.P. No.3417/2015 decided on 19.5.2015. It is pointed out that a lower license fee will obviously result in higher profit earning by the petitioners. Thus, respondent cannot subsidies business costs of the petitioners and to provide benefits to the petitioners with State largesse at the expense of public interest.
08. During the course of arguments, learned counsel for the petitioners placed reliance upon the Supreme Court judgment in the case of Olga Tellis and others Vs. Bombay Municipal Corporation and others reported as (1985) 3 SCC 545 to contend that the petitioners are from the poorest section of the society and thus they cannot be deprived of their source of subsistence for themselves and their family members. Therefore, it is in public interest to allow the petitioners to continue with the possession of the shops allotted to them more than 35 years back. It is also argued that the earlier Policies contemplated transfer of right of occupation in favour of the legal heirs in the unfortunate death of the occupant, but in the new Policy, there is no such right reserved. It is also contended that classification of the business is wholly arbitrary and without any rational basis. The occupation charges are much higher in the general business which is not reasonable classification. Learned counsel
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for the petitioners relies upon the judgment of Supreme Court in the case of Kandivali Cooperative Industrial Estate and another Vs. Municipal Corporation of Greater Mumbai and others reported as (2015) 11 SCC 161 and also relied upon the Single Bench judgment of Bombay High Court in the case of Laxmipat Singhania Vs. Larsen and Toubro Limited reported as AIR 1951 Bombay 205 to contend that since the land has been allotted to the petitioners and that the petitioners have raised construction thereon, the respondents cannot take possession of the land from the petitioners.
09. On the other hand, Mr. Lalwani refers to the judgments in the cases of M/s Ugar Sugar Works Ltd. Vs. Delhi Administration and others reported as AIR 2001 SC 1447; Delhi Development Authority, N.D. and another Vs. Joint Action Committee, Allottee of SFS Flats and others reported as AIR 2008 SC 1343; and Syed Ashwaq Ahmed Vs. Joint Secretary and Chief Passport Officer and another reported as (2010) 9 SCC 434 to contend that scope of judicial review in the policy matters is limited, and that as licensee, the petitioners have no interest in the land and/ or on the shops allotted to the petitioners. The petitioners are entitled to remain in possession on fulfillment of terms of the license. The possession of petitioners is protected in terms of M.P. Accommodation Control Act, 1961 or any other statute. As licensee, the petitioners are permitted to enjoy the possession of the land or building, as the case may be, but the license to enjoy possession of the property is revocable at the
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instance of the Licensor. The BHEL has a right to frame a transparent and non-discriminatory policy for allotment of shops so as to augment its resources and at the same time to provide facilities to the residents of the area. Augment of resources is right of an owner, more so, when it is a public sector undertaking. The Policy is not discriminatory, applicable to all occupants so as to bring transparency and fairness in the process of allotment on a license fee which is determined as per the Collector rate. Therefore, the decision of BHEL cannot be said to be arbitrary, irrational and unjust, which may warrant interference in the writ jurisdiction of this Court.
10. We have heard learned counsel for the parties and find no merit in the the petition. The reliance of the petitioners on the judgment of Supreme Court in the case of Olga Tellis (supra), is not helpful to the arguments raised by the petitioners. In the said case, the Supreme Court came to the rescue of the squatters living on the public land. The Supreme Court issued directions for allotment of alternative accommodation. We do not find that such judgment provide any assistance to the learned counsel for the petitioners, as the petitioners are not unauthorized occupants of a public land for habitation. Their possession of shops is as a licensee since long. The petitioners have got no right to continue in possession for indefinite period without increase of license fee or against the terms of license. The license itself is determinable at the instance of the Licensor. The possession of the licensee is not protected under the M.P.
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Accommodation Control Act, 1961 or under the Transfer of Property Act, 1882 or any other statute. The license is revocable on satisfaction of the conditions in the license deed or by serving notice in accordance with law. The license period of the petitioners expired on 31.3.2011. Thereafter, their possession is not protected in any manner. Mere fact that the petitioners were inducted as a licensee at some stage, does not give them a right to remain in possession without payment of increased license fee which is required to be determined with reference to Collector rate. Though the Collector rate is fixed for transfer of the immovable property, but the license fee is not fixed on the Collector rate but as per formula given in the Policy which is fraction of the Collector rate. Therefore, the method of determining of license fee on the basis of Collector rate is a reasonable formula.
11. The judgment in Kandivali Cooperative Industrial Estate's case (supra) is not helpful to the arguments raised by learned counsel for the petitioners as that is a case where trade refusing charges were contemplated to be increased by 10% every year. The trade refusing charges was consumable, therefore, the same was found to be arbitrary and without guidelines. But, in the present case, the license fee is based upon a given formula, which non-discriminatory and is transparent.
12. The Supreme Court in a judgment in the case of B.M. Lall v. Dunlop Rubber Co. (India) Ltd. reported as (AIR 1968 SC 175) discussed the essentials of lease and licence. It was held that the
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transaction is a lease, if it grants an interest in the land; it is a license if it gives a personal privilege with no interest in the land. The relevant extract read as under:-
"4. The question is whether the occupier under this agreement is a tenant or a licensee. The distinction between a lease and a license is well known. Section 105 of the Transfer of Property Act defines a lease. Section 52 of the Indian Easements Act defines a license. A lease is the transfer of a right to enjoy the premises; whereas a license is a privilege to do something on the premises which otherwise would be unlawful. If the agreement is in writing, it is a question of construction of the agreement having regard to its terms and where its language is ambiguous, having regard to its object, and the circumstances under which it was executed whether the rights of the occupier are those of a lessee or a licensee. The transaction is a lease, if it grants an interest in the land; it is a license if it gives a personal privilege with no interest in the land. The question is not of words but of substance and the label which the parties choose to put upon the transaction, though relevant, is not decisive. The test of exclusive possession is not conclusive, see Errington v. Errington and Woods - (1952) 1 KB 290 (298), Associated Hotels of India Ltd. v. R.N. Kapoor - (1960) 1 SCR 368 at pp.381-385 = (AIR 1959 SC 1262 at pp.
1268 - 1270) though it is a very important indication in favour of tenancy. See Addiscombe Garden Estates Ltd. v. Crabbe, 1958-1 QB 513 at p 525...."
13. In view of the nature of possession of the petitioners, the arguments raised by the petitioners need to be examined. The argument is that under the previous policy, the license could be transferred in favour of the legal heirs, but such condition has not been kept in the new Policy. We find that the license is not heritable. It is an agreement between parties to
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allow use of a property. It may be noticed that as per the judgment of the Supreme Court in the case of Chandavarkar Sita Ratna Rao Vs. Ashalata S. Guram reported as (1986) 4 SCC 447, the licence is not an interest in property. It is purely a personal right. Therefore, in the absence of contract to the contrary, the legal heirs are not entitled to continue in possession after the death of the licensee. Therefore, the condition that license will not be heritable cannot be said to be illegal or arbitrary. Still further, the effect of not transferring the license in favour of the legal heirs is that the legal heirs have to compete along with other eligible candidates for grant of license on such license fee which may be prevalent on the date of grant of the license. Mere fact that he happens to be the legal heir of the deceased licensee does not confer any preferential right to continue with the permissive possession.
14. In respect of an argument that the Collector rate for constructed area has been taken into consideration for determination of the license fee of land is again not tenable. Mr. Lalwani, counsel points out that the Collector rate is fixed separately for land and building and, therefore, in case of a land, the license fee will be arrived at by taking into consideration the Collector rate for land and in case of a building constructed by it on the basis of Collector rate meant for building.
15. Even if, the land alone has been leased to the petitioners, in the event of expiry of license period, the right of the licensee is to remove the superstructure on revocation of license or after expiry of the term of the
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license. The licensee does not get a right to enjoy the superstructure after the expiry of license of land underneath it. The judgment of Single Bench of Bombay High Court in the case of Laxmipat Singhania (supra) is a case of a ejectment suit filed by landlord against his tenants in respect of a premises governed by Bombay Rents, Hotels and Lodging House Rates Control Act, 1947, whereby only land was leased to the tenant. The Bombay High Court has rightly held that there are two distinct ownerships, one of the land and the other of the structure. It was also held that in terms of Section 108 (h) of the Transfer of Property Act, 1882, the lessee after expiry of the lease is entitled to remove all things which he has attached to the earth, which of course include structures or buildings put up by him. Thus, in the event of determination of the license for occupation of the land, the licensee would be entitled to remove superstructure at his own cost, but it cannot be said that the license is granted in perpetuity
16. In respect of an argument that classification of shops into Essential and General business is arbitrary and without any reasonable basis is again not tenable. Whether a particular business should fall in the Essential businesses or a General business is the matter of policy. The shops for chemist & druggist, grocery, Milk booth and washer man, shoemaker have been rightly classified as essential businesses, whereas the General businesses includes departmental store, electronic shop etc. Though, the classification is subject matter of decision of the owner, but
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even looking to the classification, we do not find any patent illegality in the classification which may warrant interference in exercise of power of judicial review of this Court under Article 226 of the Constitution of India. The leaned Single Bench of Delhi High Court in B. K. Bhagat's case (supra) is, in fact, relied upon the judgment passed earlier by its Division Bench in the case of K. T. Corporation and another Vs. India Tourism Development Corporation and another reported in (2009) 165 DLT 65. In the aforesaid case, increase of the license fee of the shops on commercial basis in the hotels run by the India Tourism Development Corporation was challenged. The Division Bench held that the Corporation is competent and entitled to frame its own Policy in respect of grant of licenses and their renewal and that in exercise of powers of judicial review, the increase in the license fee cannot be set aside unless the same is arbitrary and takes into consideration the irrelevant facts. The learned Division Bench in the case of K. T. Corporation (supra), held as under :-
"7. ITDC, respondent herein is a Government Corporation and therefore State under Article 12 of the Constitution of India. However, ITDC as a Corporation is not performing any public functions or duties. It is operating and maintaining hotels as a commercial venture. The object and purpose of ITDC is to earn profit and as such ITDC performs limited social obligations or purpose, keeping in view the nature of its activities. ITDC is a business venture in which commercial considerations and profit motive are primary/main concern and guiding factor. With this objective, ITDC is competent and entitled to frame its own policies in respect of grant of licenses and their renewal. However, the policy so framed
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cannot be discriminatory and one which is arbitrary, so as to offend Article of the Constitution of India. Action should not be actuated by bias or malafides. Quantum or the increase as demanded by ITDC cannot be set aside in exercise of power of judicial review unless the same is arbitrary and takes into consideration irrelevant facts. The scope of judicial interference by this Court under Article 226 of the Constitution of India is therefore limited and narrow. Keeping these aspects and principles in mind, we have examined the contentions raised by the appellants with reference to alleged arbitrary exercise of power and discretion by ITDC.
9. The appellants herein are commercial establishments who have set up shops or commercial offices in the premises located in the said three Hotels. The prime aim and objective of these commercial establishments managed and run by the appellant allottees is to earn profit for their personal gain. There is no public function or duty being performed by the appellants or for that matter even by the ITDC. A lower license fee will obviously result in higher profit earning by the appellants. In a way by charging lower license fee, ITDC is subsidizing business costs of the appellants and providing and benefiting the appellants with State largesse. There is no justification and reason for ITDC to do so and in fact ITDC will be guilty of violation of Article 14 by conferring State largesse and giving benefits to the appellants to the exclusion of others. In case, ITDC renews licenses and enters into contracts or renews the licenses at less than the market fee, it will be guilty of administering largesse to selected individuals at the expense of public. There must be adequate and justifiable reasons why State largesse should be granted to a particular person to the exclusion of others. We agree with the findings given by the learned Single Judge that the license fee charged by ITDC can be market driven and they are entitled to charge license fee as per the rates prevailing in the five star hotels. ITDC is not expected and cannot be compelled to continue and renew license agreements so as to subsidize
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private vendors, whose purpose and motive is to enhance private profits by occupying low cost accommodation."
17. In respect of an argument that in exercise of power of judicial review, the High Court should not ordinarily interfere with the policy decisions of the executive unless the policy can be faulted on grounds of mala fide, unreasonableness, arbitrariness or unfairness etc.. The Supreme Court in a judgment reported as Ugar Sugar Works Ltd. v. Delhi Admn., (2001) 3 SCC 635, held as under:-
"18. The challenge, thus, in effect, is to the executive policy regulating trade in liquor in Delhi. It is well settled that the courts, in exercise of their power of judicial review, do not ordinarily interfere with the policy decisions of the executive unless the policy can be faulted on grounds of mala fide, unreasonableness, arbitrariness or unfairness etc. Indeed, arbitrariness, irrationality, perversity and mala fide will render the policy unconstitutional. However, if the policy cannot be faulted on any of these grounds, the mere fact that it would hurt business interests of a party, does not justify invalidating the policy. In tax and economic regulation cases, there are good reasons for judicial restraint, if not judicial deference, to judgment of the executive. The courts are not expected to express their opinion as to whether at a particular point of time or in a particular situation any such policy should have been adopted or not. It is best left to the discretion of the State."
18. In another judgment reported as Delhi Development Authority Vs. Joint Action Committee, Allottee of SFS Flats, (2008) 2 SCC 672, the Supreme Court held a policy decision is subject to judicial review of the Courts but it can be interfered with only when it is unconstitutional; if it is dehors the provisions of the Act and the regulations; if the delegatee has acted beyond its power of delegation; and when the executive policy is contrary to the statutory or a larger policy; The Court held as under:-
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"64. An executive order termed as a policy decision is not beyond the pale of judicial review. Whereas the superior courts may not interfere with the nitty-gritty of the policy, or substitute one by the other but it will not be correct to contend that the court shall lay its judicial hands off, when a plea is raised that the impugned decision is a policy decision. Interference therewith on the part of the superior court would not be without jurisdiction as it is subject to judicial review.
65. Broadly, a policy decision is subject to judicial review on the following grounds:
(a) if it is unconstitutional;
(b) if it is dehors the provisions of the Act and the regulations;
(c) if the delegatee has acted beyond its power of delegation;
(d) if the executive policy is contrary to the statutory or a larger policy."
19. The judgment in Syed Ashwaq Ahmed's case (supra) relates to Policy recognizing travel agent for the purpose of submitting passport applications. We find that the Policy of grant of licenses and their renewal is not said to be unconstitutional, as it does not violate any of the rights conferred in Chapter III of the Constitution. Such Policy is again not in contravention of any of the provision of the Act or Regulations. Since the Policy framed by BHEL has been approved by its Board, therefore, it is within the Authority of the Board to frame such Policy. Policy is not in contravention of any statute or larger public Policy as well.
20. Keeping in view the aforesaid principles of law, we find that none of the tests as mentioned above is satisfied so as to declare the policy illegal and unconstitutional. Therefore, we do not find that in exercise of powers of judicial review, it cannot be said that the Policy framed on
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26.6.2014 is illegal, arbitrary, unjustified or untenable in any manner. Accordingly, the present petition stands dismissed.
(Hemant Gupta) (Rajeev Kumar Dubey)
Chief Justice Judge
Anchal
ANCHAL KHARE
2017.10.25
05:08:15 -07'00'