Calcutta High Court (Appellete Side)
Rupa & Co. Ltd & Anr vs The State Of West Bengal & Ors on 10 February, 2020
Author: Md. Nizamuddin
Bench: Md. Nizamuddin
IN THE HIGH COURT AT CALCUTTA
Civil Appellate Jurisdiction
Appellate Side
Present:- Hon'ble Justice I. P. Mukerji
Hon'ble Justice Md. Nizamuddin
FMA 299 of 2019
Rupa & Co. Ltd & Anr.
Vs.
The State of West Bengal & Ors.
For the Appellant : Mr. Jishnu Saha, Sr. Adv,
Mr. Mr. Arindam Banerjee,
Ms. Arpita Saha,
Ms. Surabhi Banerjee,
Mr. Sachidananda Pandey,
Mr. Ishan Saha, Adv.
For the State : Mr. Abhrotosh Majumder,
Mr. T. M. Siddiqui,
Mr. Nilopal Chatterjee, Adv.
For HIDCO : Mr. Jishnu Chowdhury,
Mr. Chayan Gupta,
Mr. Sandip Dasgupta,
Mr. Ayan De, Adv.
Judgment on : 10.02.2020
I. P. MUKERJI, J.-
The point involved in this appeal is very interesting.
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.
The entire payment under this letter of allotment was made by the
appellant.
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.
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.
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
2
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.
After exchange of this correspondence, the government decided on 26th
December, 2012 to formally announce its policy.
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 the
State Government or agency funded by the State Government in
any manner:-
(i) The land allotted to any individual/company/institution
etc. under the policy would be transferred to them by the
Government and its parastatals by way of long terms lease
for a period not exceeding 99 years. With the opinion of
renewal of such lease for the like period on the same terms
and conditions and to such other terms and conditions as
may be imposed and included in such renewal lease deed.
(ii)(a) The lessee under any lease granted by the State
Government or its parastatals can mortgage the leasehold
interest only (and not the demised land itself) on the
demised land, whether in full or in part, only with the prior
written permission of the lessor.
(b) The lessee is not entitled to assign his leasehold
interest, whether in full or in part, without prior written
approval of the lessor and assignee shall hold the same on
3
the same terms and conditions as in the original lease and
to such other terms and conditions as may be considered to
be imposed by the lessor while granting such approval. In
case of such assignment of leasehold interest the assignee
concerned shall have to obtain fresh lease after expiry of
the unexpired period of the lease on payment of such
consideration money and annual rent based on the
prevailing market value as may then be fixed by the Lessor
in grating such lease.
..........................
(iv) Land meant for commercial use shall invariably be auctioned to the highest bidder for which adequate publicity should be given including through the internet. Commercial use will mean use for office, shops, shopping malls, housing not meant for EWS, LIG or the poor, cineplexes, theme parks, hospitals, educational institutions etc. and would include all other activities except those activities for which a different mode of disposal is prescribed.
Reserve Price should not be fixed by the Government before the bidders submit their financial bids, so that there is no chance of the bidders knowing the Reserve Price fixed by the Government. The Government, while fixing the Reserve Price, should not have knowledge of the price bids submitted so that the fixing of the Reserve Price is not influenced by such knowledge. The Advisors do not finalize Reserve Price, as a conflict of interest may arise with them trying to keep them a low Reserve Price. The bidders are provided full comfort that their bids, submitted, can in no way be tampered with by any agency.
..............................
(vi) For projects leading to industrial development, the highest price need not be the main criteria nor should auction be the only mode of allotment. The department or the entity shall prepare and publish a list of its land assets. It may also indicate the kind of industrial development it is seeking (big, medium, small, micro, non polluting, knowledge based etc.) along with the tentative price which may be determined on the basis of acquisition price, cost of 4 capital, development charges and premium as applicable. This information should be freely available in the public domain for at least a month before offers are received/invited.
The offers should be evaluated on pre-specified and pre- announced criteria e.g. specified purpose, employment potential, likely tax revenue, development of backward regions, economic development of disadvantaged communities, lower pollution levels, standard norms for land requirements for specific type of industries, and the past record of the investors, Evaluation should be done by a Transaction Advisor, to be selected from the empanelled list of Transaction Advisors drawn up by the Finance Department through a transparent and competitive process and notified vide No. FS-116(PPP Cell)/2012 dated 10.09.2012."
On 14th January, 2013 HIDCO replied to the 21st December, 2012 letter. The following addition was proposed to be made in the lease deed. The appellant was not allowed to sub divide or sub lease the demised land and building. It is difficult to understand the following provision which said that: "However, sub-letting/assignment of constructed floor space may be allowed ............................ Keeping the principal use unchanged and on receipt of specific proposal .................... the Appellant was not transferred the demise land or any part thereof."
The appellant did not like this. They approached this court in or about February, 2013 by filing the instant writ application. They challenged the decision taken in the meeting of the directors at HIDCO on 30th July, 2012 cancelling the allotment. They also challenged the letter of cancellation of allotment dated 24th August, 2012 made by HIDCO. They also attacked the letter dated 12th October, 2012 forwarding the draft lease deed as also the letter dated 6th December, 2012 and 14th January, 2013 of the organization.
5 The question which falls for consideration is not unknown in administrative law. Yet it is of great importance in the administration of land matters in this state. HIDCO, which is an organ of the Government of West Bengal entered into a contract with the appellant by issuing the letter of allotment of this large parcel of land, to be conveyed as a freehold to them. The entire consideration was paid by the latter. After receiving the entire consideration HIDCO resiled from this transaction citing policy considerations. HIDCO was no longer interested in conveying this land freehold but proposed to grant a lease with conditions attached to it like restrictions on sub-leasing, division etc. Could the obligations accepted by the government be avoided by citing policy? In fact, the formal policy came on 26th December, 2012 after cancellation of the allotment on 24th August, 2012. The essence of the policy was that it was not proper on the part of the government to have offered the land freehold. It could only be offered on freehold terms. The question is whether there was at all an enforceable contract between the government and the appellant because the letter of allotment was not properly stamped or registered to assume the character of an agreement for sale. Another significant issue is whether this court in the exercise of its writ jurisdiction should entertain this matter or it should be relegated to a civil court or civil forum?
Before proceeding to discuss the issues, I propose to give a summary of the arguments of learned counsel appearing for the parties. Mr. Saha, learned senior counsel, appearing for the appellant viewed the transaction between the parties as conferring a right to acquire property which he described as a constitutional and human right, which could only be taken away in accordance with law. He relied on Bishambhar Dayal Chandra Mohan & Ors. Vs. State of Uttar Pradesh & Ors reported in (1982) 1 SCC 39, Chandigarh Housing Board Vs. Major-General Devinder Singh (Retd.) & Anr. reported in (2007) 9 SCC 67 and State of 6 Madhya Pradesh & Anr Vs. Thakur Bharat Singh reported in AIR 1967 SC 1170.
Then he argued that unilateral termination of a contract, which had been done in this case was illegal referring to Bharat Sanchar Nigam Limited Vs. Vodafone Essar Gujarat Limited reported in (2016) 16 SCC 1. To prove his argument that an allotment was a concluded contract, he cited Kumari Shrilekha Vidyarthi Etc. Vs. State Of U.P. & Ors reported in AIR 1991 SC 537. Lastly, he contended that an executive action should be prospective.
Thereafter, arguments were made for the state by the learned Additional Advocate General.
He referred to Article 246 of the Constitution as the source of power of the state legislature. Then he referred to Entry No.18 of List II of the 7th Schedule to the Constitution which empowered the state to enact laws with regard to land. He argued that in the absence of any legislation in that field, under Article 162 of the Constitution the state had executive power over the matters with regard to which its legislature had power to make laws. The policy of the government of 26th December, 2012 was an exercise of such power to convert agreements or allotments of freehold land into leasehold transactions.
Learned counsel submitted that the policy decision of HIDCO and the government was in consonance with the law laid down by the Supreme Court. Akhil Bhartiya Upbhokta Congress Vs. State of Madha Pradesh and Ors. reported in (2011) 5 SCC 29 declared and reiterated this law. He further said that there was no difference between sale and lease admitted in the letter of the appellant dated 16th November, 2012. Learned counsel also said that the government had only interfered with the allotments made in the above area from the last quarter of 2010-11 and not interfered with any allotment made prior to that period.
7 An action to cancel an allotment of lease in similar circumstances was supported by the Supreme Court in City Industrial Development Corporation Vs. Platinum Entertainment and Ors. reported in (2015) 1 SCC 558. Even if the transaction was described as a contract entered into by HIDCO and the Government of West Bengal under Article 299 of the Constitution of India, the appellant could not show that they had a right to property under Article 300A of the Constitution, inasmuch as the contract could not be termed as "a concluded one". He referred to Jilubhai Nanbhai Khachar & Ors. Vs. State of Gujarat & Anr. reported in (1995) Supp 1 SCC 596 and Andhra Pradesh Industrial Infrastructure Corporation Ltd. & Ors. Vs. S. N. Raj Kumar & Anr. reported in (2018) 6 SCC 410. Furthermore, a contention was made that this policy decision had been taken by the government to discharge its obligation under Article 14 of the Constitution to maintain equality amongst the applicants for allotment or amongst the allottees and also to maintain the basic constitutional principle of equality before the law and equality in the protection of the laws, in the matter of land allotment.
Lastly, learned counsel argued that the subject matter of the dispute involved, inter alia, interpretation of contractual terms, adjudication of alleged breach of contract, law of specific performance, damages and so on which could be more properly adjudicated in a suit in a civil forum. He made a statement that HIDCO was prepared to refund the amount deposited with them by the appellant.
Mr. Jishnu Chowdhury, learned advocate made submissions, thereafter, on behalf of HIDCO. He reiterated the submission made by the learned additional Advocate General. He had a few things to add. He said that the contract was non-statutory. Contractual rights had been modified by an administrative act proposing to convert freehold into a lease. The remedy if at all was a civil forum.
8 He cited Chiranjit Lal Chowdhuri Vs. Union of India & Ors. reported in AIR 1951 SC 41 to assert that a contractual right was not a right to property. He also referred to Union of India & Ors Vs. M/S. Indo-Afghan Agencies Ltd. reported in AIR 1968 SC 718 and an unreported decision of a learned single judge of this court rendered on 29th August, 2019 upholding cancelation of allotment.
In reply Mr. Saha cited Sunil Pannalal Banthia & Ors. Vs. City & Industrial Development Corporation of Maharashtra Ltd. & Anr. reported in (2007) 10 SCC 674 for the proposition that after an allotment was made or promised the plea of illegality or public policy could not be taken by the government. The letter of allotment of this large parcel of land was issued by HIDCO, an organ of the government on 6th April, 2011, in favour of the appellant. Further the appellant had paid Rs.4.92 crores which was appropriated by the vendor HIDCO. Possession was retained by them, he said.
DISCUSSION AND CONCULSIONS First, I would deal with the point raised by the respondents, of relegating the appellant to the alternative remedy of a civil suit. The fundamental principle is that if the writ court is to relegate a litigant to an alternative remedy, it has to do so at the earliest, preferably at the motion stage before filing of affidavits. Once the writ application is entertained and admitted, normally, it is not desirable to send the writ petitioner to an alternative forum. Here, the writ application was entertained. Directions for affidavits were made. Affidavits were filed. Thereafter, the writ was decided. Now, on appeal, it would not be proper to ask the appellant to seek an alternative remedy. More importantly, the appellant has a substantive right to maintain the writ. The reliefs sought do not ask for specific performance of the alleged agreement or for possession of the land, as would have been the case had an ordinary civil action been 9 instituted. Neither is any damages claimed. The appellant has challenged the decision of the government and HIDCO to convert their promise of transferring the land freehold to them into one for transfer of a leasehold. The various grounds urged in this appeal point towards arbitrariness, unreasonableness and mala fide conduct on the part of the respondents. Now, it is well settled that if a public law element is involved in a commercial transaction between the parties and the dispute can be resolved by affidavit evidence, the court may exercise its discretionary jurisdiction under Article 226 of the Constitution to remedy the wrong, if proved. The appellant, in my opinion has certainly framed a substantial cause of action on the above grounds. Therefore, the writ was rightly entertained. We also propose to entertain the appeal on merits. Hence, the point raised by learned counsel for the respondents regarding availability of and relegation of the appellant to an alternative remedy is rejected. Let us see what happened in this case.
On 6th April, 2011 the allotment was made. Thereafter the consideration was paid. On 30th July, 2012 a board meeting of HIDCO was held where a decision was taken to convert the allotment from "freehold basis" to leasehold, in modification of its decision of 6th April, 2011. This decision was neither in exercise of any executive power nor supported by any legislation.
Once, a decision is taken by the government which has attained finality, without any change of circumstances it cannot be changed. This is because the government is required under Article 14 of the Constitution to act predictably, consistently, fairly, reasonably, uniformly and without caprice. Apart from anything else, the letter of allotment was a firm decision of the government, which ordinarily in the absence of breach of contract on the part of the appellant, the government could not revoke. However, the government could do so by a valid exercise of administrative or legislative powers.
10 When there is no legislation, covering the field, the government can take an administrative decision which includes a policy decision by properly exercising its executive power under Article 162 of the Constitution. When the rights which include property rights of a citizen are affected by a decision it could only be made by a legislative act. The Supreme Court opined in this way in Bishambhar Dayal Chandra Mohan & Ors. Vs. State of Uttar Pradesh & Ors. reported in (1982) 1 SCC 39, by the following words:-
"20............... The executive power of a modern State is not capable of any precise definition. In Ram Jawaya Kapur v. State of Punjab, Mukherjea, C.J., dealt with the scope of Articles 73 and 162 of the Constitution. The learned Chief Justice observed that neither of the two Articles contains any definition as to what the executive function is or gives an exhaustive enumeration of the activities which would legitimately come within its scope. It was observed:
"Ordinarily the executive power connotes the residue of governmental functions that remain after legislative and judicial functions are taken away". It is neither necessary nor possible to give an exhaustive enumeration of the kinds and categories of executive functions which may comprise both the formulation of the policy as well as its execution. In other words, the State in exercise of its executive power is charged with the duty and the responsibility of carrying on the general administration of the State. So long as the State Government does not go against the provisions of the Constitution or any law, the width and amplitude of its executive power cannot be circumscribed. If there is no enactment covering a particular aspect, certainly the Government can carry on the administration by issuing administrative directions or instructions, until the legislature makes a law in that behalf. Otherwise, the administration would come to a standstill.
27. The quintessence of our Constitution is the rule of law. The State or its executive officers cannot interfere with the rights of others unless they can point to some specific rule of law which authorises their acts. In State of Madhya 11 Pradesh v. Thakur Bharat Singh, the Court repelled the contention that by virtue of Art. 162, the State or its officers may, in the exercise of executive authority, without any legislation in support thereof, infringe the rights of citizens merely because the legislature of the State has power to legislate in regard to the subject on which the executive order is issued. It was observed:
Every act done by the Government or by its officers must, if it is to operate to the prejudice of any person, be supported by some legislative authority.
41..........The State Government cannot while taking recourse to the executive power of the State under Article 162, deprive a person of his property. Such power can be exercised only by authority of law and not by a mere executive fiat or order. Article 162, as is clear from the opening words, is subject to other provisions of the Constitution. It is, therefore, necessarily subject to Article 300-A. The word "law" in the context of Article 300-A must mean an Act of Parliament or of a State legislature, a rule, or a statutory order, having the force of law, that is positive or State-made law."
The right to acquire property is a "Constitutional and human right"
declared by the Supreme Court in Chandigarh Housing Board Vs. Major-
General Devinder Singh (RETD) & Anr. reported in (2007) 9 SCC 67. It could only be taken away in accordance with law. In State of Madhya Pradesh & Anr. Vs. Thakur Bharat Singh reported in AIR 1967 SC 1170, the Supreme Court said:-
"5............All executive action which operates to the prejudice of any person must have the authority of law to support it, and the terms of Article 358 do not detract from that rule. Article 358 expressly authorises the State to take legislative or executive action provided such action was competent for the State to make or take.............
6...............Viewed in the light of these facts the observations relied upon do not support the contention that the State or its officers may in exercise of executive 12 authority infringe the rights of the citizens merely because the Legislature of the State has the power to legislate in regard to the subject on which the executive order is issued."
It cannot be disputed that the letter of allotment, unregistered and unstamped did not create a legal right to property (see Chiranjit Lal Chowdhuri Vs. Union of India & Ors. reported in AIR 1951 SC 41). Nevertheless, some right concerning property had been created in favour of the appellant. It could not have been taken away by an administrative act. There was a change of mind or an alteration in the attitude of the government. It was of the opinion that it should not divest itself of the legal ownership of the land. The entire swath of land in New Town should continue to belong to it. So, the conveyance of land in favour of the appellant was to be abandoned. Instead, they would get only a leasehold subject to stringent conditions like restriction on subletting, partition etc., as the government did not like fragmented holdings in that area. In my opinion, the government should have realized this when they proposed to make the allotment in the appellant's favour. Once having consciously taken the decision to make the allotment and having made it, they could not change this decision unilaterally. In the contractual field it could be changed only by mutual agreement. The unilateral decision to change the terms of allotment by converting it into an allotment of leasehold interest with the above restrictions without a valid piece of legislation or a lawful administrative act or policy was arbitrary, unreasonable, wrongful and illegal.
The subsequent policy of the government, even assuming it to have been validly made, which was prospective in its letter and spirit announced on 26th December, 2012 could not have cured this irregularity, with retrospective effect. Any decision if at all may have been taken after announcement of the policy.
13 Look at the equities. The intending purchaser had paid the entire consideration which HIDCO had accepted and appropriated. Surely, the appellant had altered their position, anticipating a speedy transfer of the freehold. This was their legitimate expectation.
I also observe that the learned judge has supported the action of the government on the ground that the allotment was made without following a transparent "selection" process. First of all this point does not seem to have been properly raised or argued by the respondents.
Secondly, having taken a conscious decision to make the allotment in favour of the appellant after legitimate negotiation, the government could not victimize the appellant by turning around and saying that the process of allotment was not transparent or fair. This plea is most arbitrary, unfair and is rejected. Hence City Industrial Development Corporation Vs. Platinum Entertainment and Ors. reported in (2015) 1 SCC 558 has no application, in my opinion.
For those reasons, the appeal and the writ succeed. The decision taken in the 67th Meeting of the Board of Directions of HIDCO on 30th April, 2011 the letter of HIDCO dated 24th August, 2012, 6th December, 2012 and 14th January, 2013 are set aside. The appeal (FMA 299 of 2019) is allowed. The impugned Judgment and order dated 7th March, 2019 is set aside. No order as to costs.
Certified photocopy of this order, if applied for, be supplied to the parties upon compliance with all requisite formalities.
I agree,
(Md. Nizamuddin, J.) (I. P. MUKERJI, J.)
14
FMA 299 of 2019
LATER
After pronouncement of the judgement and order, learned counsel for HIDCO prays for stay of operation of this order.
Such prayer is considered and refused.
I agree,
(MD. NIZAMUDDIN, J.) (I. P. MUKERJI, J.)
15