Karnataka High Court
All India Manufacturers Organisation vs State Of Karnataka And Ors. on 3 May, 2005
Equivalent citations: 2005(3)KARLJ521
Author: B. Padmaraj
Bench: B. Padmaraj
ORDER N.K. Sodhi, C.J.
1. These are three Writ Petition Nos. 45334, 45386 and 48981 of 2004 filed under Article 226 of the Constitution by way of public interest litigation. Writ Petition No. 45334 has been filed by the All India Manufacturers Organisation a company registered under the Companies Act, 1956 whereas Writ Petition No. 48981 has been filed by the Mayor and former Mayor of Mysore City Corporation and the primary prayer made in these writ petitions is for the issue of a writ of mandamus directing the State of Karnataka, its instrumentalities and its agencies for forthwith execute the Bangalore Mysore Infrastructure Corridor Project (for short, "the project"), in its entirety as upheld by this Court in H.T. Somashekhar Reddy v. Government of Karnataka and Anr., 2000(1) Kar. L.J. 224 (DB). Writ Petition No. 45386 has been filed by Sarvshri J.C. Madhuswamy and Srirama Reddy both of whom are elected members of the Karnataka Legislative Assembly and the third petitioner herein claims to be a social worker. Their primary grievance is that land in excess of what was required for the execution of the Project has been acquired by the State Government thereby depriving the agriculturists of their lands and that it allowed itself to be misrepresented in allotting the Project which was originally sanctioned in favour of a Consortium of American Companies to a new company registered as Nandi Infrastructure Corridor Project Limited (hereinafter called 'Nandi'). They allege that a big fraud was played on the State Government in getting the Project allotted to Nandi and the primary prayer made in the writ petition is for a mandamus directing the Central Bureau of Investigation to conduct an enquiry into the manner in which the excess lands came to be acquired and also into the fraud/misrepresentation that was played on the State Government in allotting the Project to Nandi. Some incidental prayers have also been made in the writ petition. They want this Court to declare all acquisitions made beyond the peripheral roads around Bangalore which, according to them, are not required for the Project as illegal. Challenge has also been made to the mortgage deed in respect of the Government lands in favour of ICICI Bank which advanced some loans to Nandi. All the prayers made in this petition and in the other two petitions shall be dealt with in the later part of our judgment. We are disposing of the three writ petitions together because common questions of law and fact arise in them and also for the reason that Writ Petition No. 45386 is a counter to the other two writ petitions.
2. In pursuance to the notice issued by this Court the respondents in the writ petitions have filed their response. In Writ Petition Nos. 45334 and 48981 in which the prayer is for the implementation of the Project the contesting respondents are the State of Karnataka and Sri J.C. Madhuswamy who is petitioner 1 in W.P. No. 45386. Sri J.C. Madhuswamy filed an application under Order 1, Rule 10 of the Code of Civil Procedure and got himself impleaded as a respondent in W.P. No. 45334. He has opposed the writ petitions but has not filed a separate written statement presumably because his writ petition (W.P. No. 45386) is itself a counter to the other two writ petitions. In W.P. No. 45386 filed by J.C. Madhuswamy and others the State Government is supporting the writ petitioners and has filed its written statement supported by an affidavit filed by the Under Secretary to Government, Commerce and Industries Department. The contesting respondents in this writ petition are Nandi which is impleaded as respondent 12 and Major Ramesh who is impleaded as respondent 21 and they have emphatically denied all the allegations made in the writ petition including those pertaining to fraud, misrepresentation and acquisition of excess land for the Project.
3. Before we deal with the allegations and the prayers made in the three writ petitions, it is necessary to refer to the background in which the project came to be allotted to Nandi and also to the previous litigation relating thereto.
4. Bangalore is the State capital and Mysore is an important tourist centre and also a fast developing city both in commerce and industry. The distance between these two cities is about 130 kms. and the traffic intensity is very high. Since the traffic between these two cities is very dense, smooth movement of traffic is a big problem and accidents are on the increase. A proposal was mooted as far back in the year 1988 to provide an Expressway between the two cities. A project report was prepared for getting the work executed through a private entrepreneur who would spend his own money and recover the same in regard to the expenditure, maintenance, profits, etc., by collection of tolls. Tenders were also invited and in response to this advertisement only one tender was received with some stringent conditions. The bidder demanded that, amongst others, the cost of land acquisition should be borne by the Government and that the bidder be protected by ensuring that there would be no competing road development by the State and its agencies affecting the revenue of the Project. The condition imposed was that the State Highway Nos. 17 and 86 should not be improved from their State in which they then existed other than the routine surface maintenance. As this was not possible the proposal was kept in abeyance. A proposal was then mooted to develop Bangalore as a Mega City and it was proposed to improve some of the towns around Bangalore as a counter magnet to Bangalore City. Under this scheme expressway between Bangalore and Mysore was also considered. An investigation was taken up by the Asian Development Bank and as per the report submitted by it there was need to improve the corridor between Bangalore and Mysore because the population of Bangalore city was likely to be more than eight million by the year 2011. The report also suggested that the State Government should bear 20% of the cost of this Project along with the cost of land acquisition. It appears that the State Government was not possessed of sufficient means and, therefore, it wanted the project to be taken up by some private agency on B.O.O.T. ("Build-Own-Operate and Transfer") basis. In other words, the Government wanted the project to be taken up by some consortium from its own resources and get back and expenditure and profits through the collection of tolls.
5. In February 1995, the Governor of Massachusetts State (U.S.A.) visited India and came to Bangalore to have discussions with the then Chief Minister. The outcome of the discussions was that a Memorandum of Understanding (MOU) was signed on 20-2-1995 between the State Government and the Consortium of M/s. Vanasse Hangen Brustlin Inc., S.A.B. Engineering and Constructions Inc., U.S.A. and Kalyani Group of Companies (hereinafter referred to as 'VHB, SAB and Kalyani' respectively). The Governor of the State of Massachusetts and Sri H.D. Deve Gowda, the then Chief Minister were present at the time of the signing of the MOU and they also appended their signatures thereto. During the course of the discussions the Consortium had shown interest in taking up the project and it appears to have convinced the State Government about its expertise and proven capability in taking up projects of such magnitude. The Consortium agreed to take up a detailed commercial viability and feasibility study of the Project and submit its report for the consideration of the State Government. The State Government on its part agreed to extend support to the proposal if the same was commercially viable and its competitiveness and feasibility were established to the satisfaction of the Government.
6. In pursuance to the MOU the State Government set up a High Level Committee (HLC) under the Chairmanship of the then Minister for Public Works Department. The other members of this Committee were the Principal Secretary, Commerce and Industries Department; Principal Secretary, Housing and Urban Development; Secretary, Public Works Department; Chief Engineer (C and B), Bangalore and the Chairman-cum-Managing Director, Karnataka State Industrial Investment Development Corporation. Shri K.C. Reddy, Chairman, Technical Advisory Committee. Irrigation to whom reference shall be made in the later part of the judgment was the non-official member. This Committee was meeting quite often to review the progress made and necessary advice and clarifications were being given. The Consortium presented on 26-8-1995 its report regarding the Project. HLC considered this report and submitted its report to the Chief Minister. The Project report and the report of the HLC were considered by the Cabinet sub-committee which recommended that the matter be placed before the Cabinet. The report of the HLC and the Project report were accepted by the Cabinet subject to the modification that instead of seven townships as proposed, only five townships were to be developed. A Government Order dated 20-11-1995 was issued in this regard. The relevant part of this order which has a bearing on the submissions made by some of the parties including the State of Karnataka reads as under:
"Order No. PWD 32 SCR 95, Bangalore, dated 20th November, 1995 1.0 The above proposal was examined in detail in Government.
2.0 As explained in the preamble, the Bangalore-Mysore Infrastructure Corridor Project Report submitted by the Consortium of M/s. Vanasse Hangen Brustlin Inc. and SAB Engineering and Construction Inc., USA and M/s. Kalyani Group Limited, is accepted by Government with the modification as detailed below:
(i) Instead of seven townships proposed in the Project report, five townships are to be developed, viz., Corporate Centre (Township No. 1) and Commercial Centre (Township No. 2); near Bidadi a Fanning and Market Centre (Township No. 4); Industrial Centre (Township No. 5) near Ramanagar and Eco-Tourism Centre (Township No. 7) near Srirangapatna. The development of these townships should be done along with the construction of Express Highway.
(ii) Public Works Department should enter into Memorandum of Agreement for executing this project with the Consortium of M/s. Vanasse Hangen Brustlin Inc. and SAB Engineering and Construction Inc., USA and M/s. Kalyani Group Limited duly consulting the Law Department and in the light of the recommendations contained in the High Level Committee's Report (Annexure).
(iii) As implementation of the project by private entrepreneur and getting back their expenditure, maintenance and profits through toll systems is first of its kind in Karnataka, there may be necessity of modification or amendments to the existing rules and regulations in force. As such, if necessary, the concerned administrative departments will examine these and take necessary action and also extend necessary co-operation for implementation of the project.
3.0 This order is issued by considering the opinion of the Finance Department in U.O. Note No. FD/ACS and PS/P-238, dated 7-11-1995.
By order and in the name of the Governor of Karnataka Sd/-
(B.P. Nithyananda) Secretary to Government, Public Works Department".
7. The preamble to the aforesaid Government Order states that the Project work will be constructed completely by the Consortium with their own resources and that they would keep the Project for 30 years to get their return of the expenditure, profit, etc., through collection of tolls. The land acquisition expenditure was also to be borne by the Consortium. To make the Project economically viable the Consortium had proposed seven townships which were reduced to five by the Cabinet at the time of granting approval. It is clear from the Government Order that the Public Works Department was to enter into a memorandum of agreement with the Consortium of VHB, SAB and Kalyani. The three members of the Consortium entered into a Consent and Acknowledgement Agreement dated 9-9-1996 specially assigning their respective rights in regard to the Project under the Government Order dated 20-11-1995 and the MOU in favour of Nandi which had been registered on 16-1-1996 as a company under the Companies Act, 1956 as a Corporate vehicle for the development and implementation of the Project. This agreement was forwarded to the Government of Karnataka on 21-12-1996 for necessary action. A detailed reference to this agreement will be made in the later part of the judgment. In pursuance to the Government Order dated 20-11-1995 and in view of the assignment made by the members of the Consortium of their rights in favour of Nandi, the latter submitted in February 1997 a draft of the Framework Agreement to be executed between it and the State Government. The draft was considered by the Core Committee which had been set up to negotiate the terms with Nandi and the same was referred to the Cabinet sub-committee which suggested various modifications to the Framework Agreement and those were duly incorporated. Ultimately, the Cabinet (State of Karnataka) approved the Framework Agreement on 17-3-1997 and the same was singed on 3-4-1997. This agreement will hereinafter be referred to as FWA. In terms of Clause 4.1.1 of the FWA, the State Government set up an Empowered Committee headed by the Chief Secretary of the State to oversee the Project execution and implementation. This Committee included a few technical experts as well and it held as many as ten meetings from time to time and it last met on 24-7-2004. This Committee was the mechanism by which the Government of Karnataka was to co-ordinate for the purpose of carrying out its obligations under the FWA. In order to enable Nandi to execute the Project, the State Government was to make available 20,193 acres of land as set out in Schedule I to the FWA out of which 6,956 acres was Government land and the remaining 13,237 acres was private land "which the State Government was to acquire. In addition to the land, the State Government had also undertaken under the FWA to amend its laws, rules and regulations so that the Project could be properly executed and in fact the provisions of the Karnataka Industrial Areas Development Act, 1966 (for short 'the Act') were amended by Act 11 of 1997 so as to bring the Project within the provisions of the said Act so that land could be acquired for the purpose. The Government of Karnataka had also undertaken that it shall use its best efforts to cause its instrumentalities to promulgate, facilitate, initiate, advocate and/or amend to the full extent possible any and all enactments, acts and legislations necessary or desirable to enable it or any of its instrumentalities to obtain, procure and transfer the land to Nandi for the purposes of the Project. In pursuance to this obligation the Karnataka Industrial Areas Development Board (in short, 'the Board') set up under the Act entered into an agreement with Nandi on 14-10-1998 for acquisition of private land. Thereafter notifications were issued on 30-10-1998, 31-10-1998, 19-12-1998, 3-6-1999, 3-7-1999 and 21-7-1999 acquiring large chunks of land for the Project.
8. FWA came to be challenged in Writ Petition No. 29221 of 1997 (PIL) filed in this Court in November 1997 by one H.T. Somasekhar Reddy by way of public interest litigation impleading the State of Karnataka and Nandi as the two respondents. The agreement was challenged on all conceivable grounds and the writ petition was strenuously opposed both by the State Government and also by Nandi. The State Government successfully pleaded that the agreement was valid and that the same was in public interest. It was also pleaded on its behalf that 20,193 acres of land required for the Project was the minimum requirement and that no excess land was being acquired.
The questions which arose for consideration of the Division Bench as formulated by it were as under:
"(a) Whether the Government has acted arbitrarily in entering into the agreement with respondent 2?
(b) Whether agreement is illegal as being opposed to public policy?
(c) Whether the agreement contravenes any constitutional provisions or other existing enactments?
(d) Whether the agreement is vitiated by mala fides?
(e) Whether the rights of any individual or groups of individuals is being illegally affected by the execution of the agreement?
(f) Scope and extent of judicial review in matters of State Policy".
One of the grounds on which the FWA was challenged was that the land that was being acquired was far in excess of what was required for the Project. This plea was opposed by the State Government in its written statement in the following words:
"RE-PARA 5.--It is submitted that a mega project like the Expressway involves considerable extent of land. Therefore, this respondent has agreed to provide the minimum extent of land required for the project partly out of the land owned by the State and by acquiring the balance. It is further submitted that the 2nd respondent will not only construct the proposed Expressway but also link roads. Peripheral road, Interchanges, Service roads, toll plazas and Maintenance area etc., in addition to the Townships. It is pertinent to mention that the respondent can develop the Townships only after Expressway is completed. Under Clause 3.5.1 the concession period is 30 years initially and however extendable on mutual consent. This respondent may or may not extend the concession period since it is not obliged to extend the said period. The other allegations, contrary to the above facts, are denied".
(emphasis supplied) Yet another plea was raised before the Division Bench challenging the arbitration clause contained in Clause 18.3 whereunder the parties had agreed that all the disputes if not settled would be referred to arbitration in accordance with the provisions of UNCITRAL Rules for international arbitration and that the laws of India relating to arbitral proceedings shall not apply. It was further agreed that the place of arbitration shall be London (England) or any other place mutually agreeable to the parties. While defending this clause the State Government in its written statement pleaded as under:
"RE-PARA 13.--Respondent 1 submits that all the agreements with International investors where the funding is through the International institutions have the standard clause of resolution of disputes in a 3rd party neutral country. By this arrangement the Foreign institutions get a comfort level for the investment made. The petitioners averment that the confidentiality clause prohibiting the contracting parties from disclosure or use of any information has the potential to become like a Bofors Agreement is baseless and untenable. No middlemen or agent is involved in this contract except the Government of Karnataka and the respondent 2. It is highly improper to compare this agreement with that of the Bofors Agreement. This confidentiality information is inserted just to safeguard the propriety information of the respondents 1 and 2, from falling into other hand who may try to misuse for their unlawful gains".
The validity of the agreement was also challenged and while refuting the allegations made by the petitioner therein the State Government pleaded as under:
"RE-PARA 1.--(a) ..... These allegations of the petitioner are denied by this respondent in toto. It is submitted that this respondent permitted the 2nd respondent to execute the project only after examining the relevant facts and circumstances. This respondent submits that persons authorised are competent to sign the Government orders and contracts on behalf of the Governor of Karnataka.
(b).............
(c) .......... The said project is not detrimental to the interest of citizens of Bangalore but will help in decongesting the city by developing townships which will be self-contained. The expressway also contemplates high-speed roads to connect North and South of Bangalore by the formation of peripheral road to ease out the considerable heavy traffic and congestion, which otherwise would ply through the city".
(emphasis supplied)
9. All the issues that arose in the writ petition were elaborately considered by the learned Judges constituting the Division Bench and they were all answered in favour of the State Government and Nandi and the writ petition was dismissed on 21-9-1998. Some of the findings recorded by the Division Bench which have a bearing on the decision of the present case need to be referred to:
Ashok Bhan, J., (as his Lordship then was) speaking for the Bench observed as under in paragraph 27:
"27. .... No special favour is being shown. The project if completed would be for the benefit of the public in general and for its overall development. The agreement has not been entered in a clandestine manner but in open and with complete transparency".
The same view has been expressed more elaborately in paragraphs 48 and 49 of the judgment which are not being reproduced only to avoid making this order bulky.
In paragraph 39, the learned Judges observed as under:
"39. There was no secrecy involved in the execution of the agreement .... discussions were held officially with the Governor of Massachusetts, USA by the then Chief Minister of the Karnataka. Details of the discussions, the setting up a High Level Committee and the receipt of the Project Report in August 1995, the decision of the Cabinet, and the acknowledgement by the Government of Karnataka on 9-9-1996 on the company's rights on behalf of the Consortium, are all matters of public record".
Again in paragraph 44, the learned Judges observed as under:
"44. There is no favouritism or arbitrariness involved as from the beginning the policy was one of entrustment to a private organisation on the basis of BOOT concept .... Having regard to the nature of work involved and other relevant factors including the financing of the entire project by the agency itself, the Government was justified in entering into an agreement with respondent 2 for executing the Project instead of calling for the global tenders".
Again in paragraph 46 of the judgment the learned Judges concluded as under:
"46. ... After examining the proposal High Level Committee submitted it to the Chief Minister who then put it before the sub-committee of the Cabinet consisting of Minister of Finance, Revenue, Home, Public Works, Major and Medium Industries and Major Irrigation and the High Level Committee Members and other concerned officers. After approval by the sub-committee, the matter was placed before the Cabinet and only thereafter the proposal was accepted .... Every minute detail was explained including the scientific method adopted by the respondent for identification of the land for the Project. .... As the matter was discussed at various levels of the Government including the Cabinet and the Legislature, it cannot be held that the agreement entered into by the Government of Karnataka was entered in an arbitrary manner, in secrecy or in any way in a clandestine manner".
In paragraphs 50 and 52, the learned Judges again said as under:
"50. On factual aspects it may be clarified that in all 20,193 acres of land is required for the Toll Project, out of which the types of land to be acquired is: Kharab-7558 acres, dry-10,817, wet-1662 acres, garden-156 acres, totalling to 20,193".
52. ...... Government of Karnataka in its written statement has said that it has agreed to provide minimum extent of land for the project partly out of the land owned by the Government and by acquiring the balance. Permission has been given to develop the five townships instead of 7, proposed by respondent 2 to make the project viable".
Repelling the argument that the arbitration clause as agreed to between the State of Karnataka and Nandi was contrary to law and against public policy, the learned Judges held as under:
"73. ... Arbitration agreements are outside the purview of Section 28 of the Indian Contract Act, 1872. The choice of any Arbitrator of any nationality, the place of arbitration and the procedure to be agreed upon for such arbitration cannot be said to be opposed to any public policy or legal provisions as the choice in respect of all the above matters is provided for under the Arbitration and Conciliation Act, 1996. The agreement stipulates that the award passed is a foreign award within the meaning of the laws in India. The award thus qualifies to be enforceable under Part II, Chapter I of the Arbitration and Conciliation Act, 1996".
10. It is common ground between the parties that special leave petition filed against the aforesaid judgment of the Division Bench in Somashekhar Reddy's case was dismissed in limine by their Lordships of the Supreme Court on 26-3-1999. It is thus clear that the findings recorded by the Division Bench of this Court have become final and conclusive.
11. As already observed earlier, the State Government and its instrumentalities were obliged under the FWA to make 'Best Efforts' to procure land for the Project which was to be handed over to Nandi. It is common case of the parties that the Board initiated steps for acquiring private land and acquired the same after entering into agreement with Nandi. A large number of writ petitions came to be filed by the landowners in this Court challenging the said acquisitions on various grounds including the one that the acquisition was not for a public purpose and that it was meant only to benefit Nandi for its real estate business. The writ petitions were partly allowed by a learned Single Judge who took the view that 60% of the acquisition of land by the State insofar as it related to the formation of roads, etc., was valid whereas the remaining 40% which was meant for the development of townships, conventional centre, etc., was invalid and to that extent the acquisition was quashed. The landowners, the State Government, the Board and also Nandi felt aggrieved by the order of the learned Single Judge and filed writ appeals. The State Government filed its appeals upto August 2004 wherein it challenged the order of the learned Single Judge quashing 40% of the acquisition. The Board also took a similar stand when it filed its appeals challenging the order of the learned Single Judge. The State Government and the Board while challenging the order had supported the case of Nandi in all its aspects. When the bunch of writ appeals came up for hearing before us in January this year the State Government and the Board withdrew their appeals because by then the State Government had changed its stand and had constituted the Expert Committee to which reference shall be made in the later part of the judgment. Even though they were respondents in the appeal filed by the Nandi and another party, they did not contest their claim as the learned Counsel representing them did not address any arguments. Those appeals were disposed of by us by a detailed order dated 28-2-2005. The appeals filed by Nandi and Indian Machine Tool Manufacturers Association (IMTMA) were allowed whereas those filed by the landowners were dismissed and the order of the learned Single Judge set side and the entire acquisition was upheld. We examined the validity of the notifications acquiring the land for the Project and came to the conclusion that the acquisition was for a public purpose and therefore the notifications were valid. We also referred in detail to the findings recorded by the Division Bench in Somashekhar Reddy's case and observed that the entire acquisition was for a public purpose as held by the Division Bench in the public interest litigation and that those issues could not be re-agitated.
12. While the aforesaid writ appeals were still pending in this Court the present writ petitions came to be filed.
13. We may now refer to the contentions raised by the learned Senior Counsel in these cases. While reiterating the averments made in Writ Petition No. 45334 Mr. Mukul Rohatgi, learned Senior Counsel strenuously urged that the Project is one which was conceived in public interest with a view to decongest the City of Bangalore and promote industrial, commercial and economic growth in the State and that the recent events indicate that the Project is likely to be shelved due to political and extraneous considerations and therefore it is necessary for this Court in public interest to issue a mandamus to the State Government and all its instrumentalities to execute forthwith the Project as it was originally conceived. He referred to the earlier judgment of this Court in Somashekhar Reddy's case and pointed out the various findings recorded by this Court holding the Project to be in public interest and also upholding the validity of the FWA executed between the State of Karnataka and Nandi. He urged that the Project was one of great importance which would benefit the general public and the same should not be allowed to be shelved. He referred to the note of the PWD Minister addressed to the Principal Secretary, PWD in which it was pointed out that Sri H.D. Deve Gowda, former Prime Minister had made a serious allegation sometime back that the Project was being constructed by Nandi for the purpose of running real estate business instead of providing infrastructural facilities. The Minister constituted a Review Committee which was later termed as an Expert Committee to look into the allegations of excess land having been acquired for the purpose of the Project. This Committee submitted a preliminary report in which it found that excess land had been acquired for the Project but it did not identify the same. Referring to these proceedings Sri Rohatgi contended that the Government does not intend to continue with the Project and has adopted this as a novel method to scuttle the same. He further contended that the State Government which defended the Project till recently including the land acquired for the same, is of late trying to change its stand which is not at all in the interest of the general public. Elaborating his submission he referred to the pleadings of the State Government in Somashekhar Reddy's case to contend that the State Government had now taken a somersault. He was emphatic in his submission that the petitioner wanted the Project to be executed expeditiously and it was not their concern as to whether the same is executed by Nandi or any other agency. He relied upon the judgments of the Apex Court in State of Himachal Pradesh and Anr. v. Umed Ram Sharma and Ors., ; Chandra Bansi Singh and Ors. v. State of Bihar and Ors., ; State of Haryana v. State of Punjab and Anr., , Rohtas Industries Limited v. S.D. Agarwal and Anr., to contend that there was no material before the PWD Minister to initiate action and to form an Expert Committee superseding the Empowered Committee which had been constituted in terms of the FWA executed between the State Government and Nandi. The learned Senior Counsel appearing for the petitioner in Writ Petition No. 48981 of 2004 merely supported the contentions urged by Sri Mukul Rohatgi and contended that the Project being in public interest as found by this Court in the earlier case should be allowed to go on as originally conceived.
14. Sri G.L. Sanghi, learned Senior Counsel appearing for the petitioners in Writ Petition No. 45386 filed by J.C. Madhuswamy and others and opposing the other two writ petitions reiterated the averments made in the writ petition and emphatically contended that the FWA executed between the State of Karnataka and Nandi was a result of fraud and misrepresentation played by the latter in grabbing the Project and that the State Government had acquired land far in excess of what was required for the execution and implementation of the Project depriving the landowners of their valuable land around the City of Bangalore. He also strenuously urged that the arbitration clause contained in the FWA which takes the parties to London for the settlement of their disputes was contrary to law. He argued that if the excess land is taken away from Nandi for the implementation of the Project and the arbitration clause is deleted from the FWA then the said agreement was valid and that Nandi could implement the Project. The argument, indeed, is that the arbitration clause and the clause pertaining to the allotment of land referred to in Schedule I to the FWA were severable which according to the learned Senior Counsel were the result of fraud practiced by Nandi and if these were taken away the FWA could be implemented and the Project executed. In addition to these submissions the learned Senior Counsel referred to the allegations made against Major C.R. Ramesh one of the respondents in the writ petition who was at the relevant time Secretary, P.W.D. in the Government of Karnataka. Since these allegations were made in the additional rejoinder filed by the petitioners a copy of which had not been supplied to the Counsel for the respondents, the learned Senior Counsel very fairly gave up the contention and did not press it further. Sale of land to IMTMA was also challenged. He also objected to the mortgage of Government land by Nandi to raise loans from financial institutions including ICICI Bank. He also argued that the alignment of roads as fixed by Nandi would destroy the Gotegere Lake inasmuch as it would prevent the inflow of water into the lake as a result of which it may dry up and adversely affect the ecology of the area. His contention is that the alignment is contrary to the order passed by a Division Bench of this Court in Suresh Heblikar and Ors. v. State of Karnataka, (1969)39 Comp. Cas. 781 (SC) wherein a direction had been issued to lay the ring road around the Gotegere Lake in a manner by providing an overpass without disturbing free flow of water to the tank. It was also contended that the green belts in the area have been used for the Project which is not permissible under the law. Realizing that such areas could be acquired by the Bangalore Development Authority as held in various decisions of this Court, the learned Senior Counsel did not press this plea either. The Advocate on record Mr. Vivek Reddy continued with the arguments on 10-8-2005 from where the Senior Counsel had left and referred to some paras of the writ petition where allegations of mala fides had been levelled against some of the respondents. While concluding the arguments on behalf of the petitioners Sri Reddy specifically stated that the petitioners were not challenging the validity of the FWA as the same had already been upheld by this Court in Somashekhar Reddy's case and the challenge was confined to the subsequent acts of the State Government and Nandi in implementing the Project by acquiring excess land.
15. The learned Advocate General virtually supported the petitioners and contended that Nandi had played a fraud on the State Government and had misrepresented at the time of the allotment of the Project. He was hesitant to openly support the writ petitioners though the written statement filed on behalf of the State Government had supported the stand taken by them. We specifically put it to the learned Advocate General as to what was the stand of the State Government and as to what it proposed to do in future. Since the learned Advocate General could not give us a categoric reply either way, we directed by our order dated 10-3-2005 the Chief Secretary of the State to file a detailed affidavit bringing out the stand of the State Government. The relevant part of that order reads as under:
"In view of the stand now taken by the State Government in its statement of objections, we repeatedly asked the learned Advocate General as to when did the State Government come to know that it had been a victim of fraud and misrepresentation and that having learnt about this fact, what action does it propose to take. He informs us that the State Government learnt about the fraud and misrepresentation only in January this year. As regards the action which the State Government proposes to take, he is unable to give us any positive answer. It appears that the State Government is not very sure of what it proposes to do in the matter. Be that as it may, the stand now taken in the statement of objections is diametrically opposite to what the State Government had pleaded before this Court successfully in the earlier PIL. The statement of objections is supported by an affidavit filed by an Under Secretary in the Department of Industries and Commerce. The stand taken in the statement of objections does not appear to be correct. We, therefore, direct the Chief Secretary through whom the State of Karnataka has been impleaded as respondent 1 in the writ petition, to file a detailed affidavit as a response of the State Government to the writ petition clearly bringing out the stand of the State Government and what it proposes to do in the matter. Let this affidavit be filed on or before 31st March, 2005 with an advance copy to the Counsel opposite".
In pursuance to the aforesaid order, the Chief Secretary filed his affidavit dated 31-3-2005 with an advance copy to the other Counsel. While admitting that there was a change of stand by the State Government, the Chief Secretary sought to justify its new stand by stating as under:
"7. The State Government has since noticed certain facts and circumstances that reveal fraud and misrepresentation ....".
Again in paragraph 12 of his affidavit, the Chief Secretary states:
"Certain subsequent events have taken place and certain materials have come to the knowledge of the Government, which compelled the Government of Karnataka to change its stand and that in public interest".
In paragraph 13, it is stated:
".... That earlier there was a Public Interest Litigation in W.P. No. 29221 of 1997, which was decided on 21-9-1998. In that Public Interest Litigation, the Framework Agreement has been held to be valid. But at that stage, certain facts were not noticed and properly interpreted. ...".
In paragraph 22 of his affidavit the Chief Secretary spells out the reason for the change of stand and stated as under:
"22. ......
The Government was under the impression that for the purpose of corridor project, a Consortium of three parties had established a separate Limited Company by name M/s. Nandi Infrastructure Corridor Enterprises Limited at Bangalore. But it now transpires that the said representation that M/s. NICEL was established by the Consortium of three companies, is not true and the GOK is not a party to the so-called Assignment Deed".
Then again in paragraph 24 the Chief Secretary pleaded as under:
"24. .... By misrepresentation of facts, the Government of Karnataka was made to pass an order. The representation that the Consortium of three companies has established M/s. NICEL is factually not true. Misrepresentation starts here. The Government of Karnataka noticed this fact when it investigated the allegations in the Public Interest Litigation, a copy of which had been served by the petitioners in this writ petition on the Counsel representing the Government of Karnataka".
Paragraphs 32 and 33 and a part of paragraph 34 of the affidavit filed by the Chief Secretary would have some bearing on the issues sought to be raised before us and therefore these three paragraphs are reproduced here under for facility of reference:
"32. There is a reference to an Acknowledgment Agreement dated 9-9-1996. As could be seen therefrom, the said document styled as Consent and Acknowledgment Agreement dated 9-9-1996 has not been produced by M/s. NICEL in any of its pleadings either in the appeal before this Hon'ble Court or in the counter to the writ petitions before the learned Single Judge.
33. Government of Karnataka is not a party to the so-called Agreement dated September 1996. Government of Karnataka has not signed that document. That is why M/s. NICEL has not produced that document anywhere.
34. .... It is submitted that the document dated 9-9-1996 which has been produced by the GOK before this Hon'ble Court completely vindicates that Government of Karnataka is not a party to the alleged Assignment Agreement".
In paragraph 39 the Chief Secretary informs the Court that it was because of misrepresentation that the Government was made to enter into an agreement with Nandi which plea is reiterated in paragraph 40. In addition to the aforesaid pleas of fraud and misrepresentation the Chief Secretary has also taken the plea that excess land than what was required for the Project had been acquired by the Government and that the same ought to be retrieved. In this regard he has justified the Constitution of a Review Committee headed by Sri K.C. Reddy who was also a member of the HLC and is presently Advisor to the Minister for PWD who constituted this Committee. The report submitted by K.C. Reddy Committee has been accepted by the Cabinet on 26-10-2004 and it renamed the K.C. Reddy Committee as Expert Committee. The decision of the Cabinet has been reproduced in paragraph 8 of the affidavit filed by the Chief Secretary which reads as under:
"After detailed discussions, Cabinet reaffirmed the support of Government to the Project. However, in view of criticism regarding acquisition of more lands than necessary for the project, the Cabinet decided to constitute an Expert Committee with the same members as suggested in the Cabinet Note.
All lands, whether the Government or acquired, will hereafter be handed over to the Project Company only on the recommendations of the Expert Committee to the effect that such lands are genuinely required for the project having regard to all relevant factors including road alignment. In respect of lands already handed over to the Project Company, if there is any dispute as regards their necessity for the Project, the same shall be referred to this Expert Committee for its recommendation.
The constitution of the Committee shall however not result in any delay in implementation of the project and the matters referred to it may be disposed off on day-to-day basis. The Committee may co-opt members if necessary. It may also invite and hear the views of the Project Company whenever necessary. The recommendations of the Committee will be valid even if some members were not present for a meeting.
The Committee shall submit periodical reports about its decisions for consideration/information of the Cabinet. First such report shall be submitted within a month. Apart from deciding on need for specific land for the project, the Committee may make any other recommendations concerning the project as it may consider necessary. Such recommendations shall be considered by the Cabinet".
16. At this stage it may also be relevant to refer to the written statement filed by Sri M. Shivalinga Swamy, Under Secretary in the Department of Commerce and Industries. The relevant parts of the written statement are reproduced here under to highlight the stand of the State Government:
"23. ..... In this situation, legal opinion said to have been obtained is highly questionable. What legal opinion was obtained is not available. It is therefore respectfully submitted that the parties to the Memorandum of Understanding of 1995 are not at all parties to the so-called agreement and Nandi has no authority to act for the Consortium.
28. The Government of Karnataka is intrigued to find that it is defined as consenting party to the so-called Consent and Acknowledgment Agreement.
30. Further, the consent of the Government of Karnataka is not at all noticeable in this so-called agreement.
31. It is therefore, respectfully submitted that so-called Consent and Acknowledgment Agreement has not been accepted by the Government of Karnataka. A copy of the same is produced herewith and marked as Annexure-R4.
32. It is submitted that the entire exercise is fraud on the State of Karnataka and renders the so-called Assignment void and void ab initio. NICE Limited, is not entitled to claim any status in law and no locus standi to sustain any claim against the State. This matter came into light only while finalizing this statement during the weekend".
17. Mr. Dushyant Dave, learned Senior Counsel appearing for Nandi in these writ petitions forcefully refuted the allegations made by the petitioners in Writ Petition No. 45386 of 2004. In the written statement and the additional affidavits filed on behalf of Nandi the allegations of fraud and misrepresentation as made by the petitioners and supported by the State Government have been emphatically denied. He sought to demonstrate from the materials on the record that the plea of fraud and misrepresentation as now taken by the writ petitioners and the State Government was an afterthought and a ruse to scuttle the Project only when there was a change in the Government by the end of May 2004. He strenuously urged that the change in the stand taken by the State Government was for political and extraneous reasons and that the pleas taken in the writ petition and also by the State Government in the affidavit filed by the Chief Secretary were not open to them in view of the findings recorded by the Division Bench of this Court in Somashekhar Reddy's case and that those were barred by principles of res judicata and estoppel. He further contended that the plea that excess land had been acquired by the State Government was not open to it in view of the earlier stand taken by it in Somashekhar Reddy's case which had been accepted by the Division Bench. He urged that the writ petition filed by Sri J.C. Madhuswamy and two others had been sponsored and filed at the instance of the State Government and that the latter had selectively furnished important Government documents to the writ petitioners to enable them to file the writ petition taking the plea of fraud and misrepresentation and that the writ petition deserves to be dismissed on this ground itself. He also argued that the plea of fraud and misrepresentation was false to the knowledge of the State Government and that the affidavit filed by the Chief Secretary was incorrect if not false and that his affidavit and that of the Under Secretary were clear examples of 'suppressio veri and suggestio falsi'. He referred to the judgment of the Supreme Court in Brook Bond Lipton India Limited and Anr. v. State of Karnataka and Ors., to contend that action under Section 340 of the Code of Criminal Procedure be taken against the Chief Secretary and the Under Secretary who have knowingly withheld important facts and documents from this Court and filed incorrect affidavits. The learned Senior Counsel took us through the various portions of the Division Bench judgment of this Court in Somashekhar Reddy's case to contend that all the pleas now sought to be raised stand covered against the State Government and that the petitioners cannot be allowed to re-agitate those issues.
18. Having heard the learned Senior Counsels for the parties and the learned Advocate General and after going through their pleadings and other materials on the record, the two primary questions that arise for consideration in these three writ petitions are:
(1) Whether the FWA entered into between the Government of Karnataka and Nandi was a result of any fraud or misrepresentation as alleged by J.C. Madhuswamy and others and the State Government?
(2) Whether any excess land than what is required for the Project had been acquired by the State Government and whether it is open to it to raise such a plea?
As already noticed earlier, some other incidental issues had also been raised by Mr. G.L. Sanghi, learned Senior Counsel which we will deal with after disposing of the aforesaid two issues.
19. Let us first deal with the plea of fraud and misrepresentation. The stand of the State Government in this regard is contained in the affidavit filed by the Chief Secretary and the written statement filed on its behalf by the Under Secretary, the relevant portions of which have already been referred to hereinabove. Petitioners in Writ Petition No. 45386 have alleged fraud pleading that the order of the Government dated 20-11-1995 authorised entering into an agreement with the Consortium comprising of VHB, SAB and Kalyani and thereafter by its order dated 27-3-1997 the same was modified and a direction was issued that agreement be entered into with Nandi. According to the petitioners, when the FWA was executed on 3-4-1997 with Nandi, the Government was given to understand that Nandi was an agglomeration of the three members constituting the Consortium and that the Government would be benefited by the expertise of each one of them but this was not so. It is further alleged that Nandi was constituted under the Directorship of Shri Shivkumar Kheny who is the brother of Shri Ashok Kheny the Managing Director of SAB who is said to be the behind-the-scene operator of the Project. The petitioners further questioned the financial capacity and technical know-how of Mr. Ashok Kheny and Nandi and alleged that the Consortium had represented to the State Government that it has the expertise and proven capability in taking up construction of transportation, infrastructure and also about their capability of having the required managerial, financial and technical capacity to take up the Project which Nandi does not possess and therefore the Government was defrauded. They are reiterated the plea of fraud in their rejoinder filed to the affidavit of the Chief Secretary in the following words:
"The primary allegation of the petitioner was the misrepresentation of NICE that it was a unified Consortium and that the Government had either been misrepresented or had forced itself to believe that NICE was a unified Consortium. Fraud committed by NICE is so apparent and evident in this instance".
In substance, the nature of the fraud as pleaded by the petitioners and supported by the State Government is that at the time of entering into FWA the State Government was made to believe that Nandi was an agglomeration of the three groups constituting the Consortium which was not so. The State Government while supporting the plea of the writ petitioners also urged emphatically that it was not a party to the Consent and Acknowledgment Agreement and therefore Nandi through misrepresentation managed to get the FWA executed. According to the State Government, it wanted to enter into an agreement with the Consortium and not with Nandi. Great emphasis was laid by the learned Advocate General on the Consent and Acknowledgment Agreement pointing out that no one had signed it on behalf of the State Government and therefore it never gave its consent to the assignment of rights by the members of the Consortium in favour of Nandi. We shall now proceed to examine the validity of these assertions on the basis of the materials that have been placed by the parties before us including the Government files.
20. MOU was signed on 20-2-1995 between the State Government and the Consortium of VHB, SAB and Kalyani wherein the Consortium had agreed to take up a detailed commercial viability and feasibility study of the project and it submitted its report to the Chief Minister. HLC set up in pursuance to the MOU examined this report and thereafter it submitted its report to the State Government. Both the reports were considered by the Cabinet sub-committee which recommended that the matter be placed before the Cabinet. The Project report was accepted by the Cabinet with a modification that instead of seven townships only five were to be developed. After deliberations had taken place at the highest level the State Government came out with an order dated 20-11-1995 requiring the Public Works Department to enter into a memorandum of agreement with the Consortium of the three companies namely, VHB, SAB and Kalyani. It appears that the three members of the Consortium agreed that a new company be established according to the laws in India for the purpose of implementing the Project. Accordingly, Nandi was registered as a company in Bangalore on 16-1-1996 as the Corporate vehicle for development of the Infrastructure Corridor. Thereafter on 9-9-1996 the three members of the Consortium unconditionally and irrevocably transferred and assigned jointly and severally to Nandi all their rights, interest and title granted to them individually or collectively with respect to the Project by the Government of Karnataka under the Government Order dated 20-11-1995 and the MOU. A consent and Acknowledgment Agreement came to be signed by the three members of the Consortium on the one hand and Nandi on the other in which the Governor of Karnataka on behalf of the Government of Karnataka. was shown as the consenting party. This agreement is on the Government file which we have perused. A copy of this agreement was forwarded to the State Government along with a forwarding letter dated 21-12-1996 addressed by Bharat Forge Limited which is admittedly a company owned by Kalyani Group. The relevant part of this letter reads as under:
"... As the Government is aware, a Framework Agreement is being negotiated and finalised for implementation of this Project. The 3 Consortium members have decided to implement this Project through a Company in the name and style of Nandi Infrastructure Corridor Enterprises Limited, a Company registered and existing under the Laws of India. All the rights and obligations of the Consortium are being assigned in favour of this company.
Kindly refer enclosed a copy of the consent and Acknowledgment Agreement wherein the Consortium members have assigned their rights to M/s. Nandi Infrastructure Corridor Enterprises Limited. We seek Government of Karnataka's consent for the same so that the Framework Agreement can be signed by M/s. Nandi Infrastructure Corridor Enterprises Limited.
Please advise us your approval so that the Original Agreement can be given to you for your consent".
On receipt of this letter, the Secretary, PWD made a note thereon on the same day which reads thus:
"Consult Law Department reply this letter Sd/-"
The letter was marked to the Deputy Secretary (C and B). This letter is at page 355 of File No. PWD/155/CRM 96. There is then a copy of the letter dated 22-1-1997 addressed by the Deputy Secretary, Public Works Department (C and B) to the Secretary to Government, Law and Parliamentary Affairs, Vidhana Soudha which is found at page 356 of the file and it reads as under:
"Framework Agreement for the above project is under finalisation by the Cabinet Sub-committee. In the meanwhile Consortium members have assigned their rights to M/s. Nandi Infrastructure Corridor Enterprises Limited (NICE) and has sought the State Government consent. A copy of the draft consent and acknowledgment agreement is enclosed to the note for perusal and opinion of the Law Department.
Sd/-
Deputy Secretary to Government, Public Works Department (C and B) Secretary to Government, Law and Parliamentary Affairs, Vidhana Soudha".
The Law Department then sends a reply to the Deputy Secretary, Public Works Department on 3/4 March, 1997 which is found at page 365 of the file and that reply reads as under:
"The Public Works Department is informed that as the Government of Karnataka is finalising an agreement directly with the Nandi Infrastructure Corridor Enterprises Limited, it is felt that the consent of the Government to the proposed acknowledgement agreement may not be necessary.
(Approved by L.S.) Sd/-
Under Secretary to Government, Law Department (Opinion II)".
Thereafter, Bharat Forge Limited, by its letter dated 17-3-1997 sent the original of the Consent and Acknowledgment Agreement to the State Government seeking its consent for the same. The relevant part of this letter which appears at page 22 on the Government File No. PWD 155 DRM 96, Volume II reads as under:
"Kindly find enclosed the original of the Consent and Acknowledgment Agreement (Three original photocopies and one on the Stamp paper) wherein the Consortium members have assigned their rights to M/s. Nandi Infrastructure Corridor Enterprises Limited. We seek Government of Karnataka's consent for the same so that the Framework Agreement can be signed by M/s. Nandi Infrastructure Corridor Enterprises Limited. We request yourself to initial at the bottom on each page of the Assignment Agreement and the signature on the last page".
21. The Law Department had given its advice that it was not necessary for the State Government to give its consent to the Consent and Acknowledgment Agreement because it was finalising an agreement directly with Nandi and therefore the said agreement had not been signed by any one on behalf of the Governor of Karnataka.
22. A reading of the aforesaid correspondence would leave no room for doubt that the Government had been specifically made aware of the Consent and Acknowledgment Agreement and the same was sent to it for its signatures acknowledging consent but it did not sign the same because of the advice tendered to it by its Law Department. It was strenuously urged by the learned Advocate General and also by Mr. G.L. Sanghi that since the Government is not a signatory to the Consent and Acknowledgment Agreement, therefore it is not bound by the same and that it had been defrauded when the FWA came to be signed with Nandi because the Government was under the impression that it was signing the agreement with the three members of the Consortium through Nandi. This plea cannot be accepted in the light of the letter dated 21-12-1996 and the opinion sought from the Law Department. It is true that the State Government is not a signatory to the Consent and Acknowledgment Agreement but that is because it had been advised by its Law Department that it was not necessary to sign the same and not because of any misrepresentation either on the part of Nandi or on the part of the Consortium. One fact is, however, clear that the said agreement was brought to the notice of the State Government informing it that the three members of the Consortium had assigned their rights in favour of Nandi. It cannot, therefore, be said that the State Government did not know as to what was the status of Nandi. Nandi is obviously an assignee of the Consortium and it was Nandi which submitted a draft of the FWA to the State Government which was considered by the core Committee set up to negotiate the terms with Nandi. The said Committee referred the draft agreement to the Cabinet sub-committee which suggested various modifications to the FWA which were incorporated and finally the FWA as approved by the Cabinet on 17-3-1997 came to be signed on 3-4-1997. It is clear from the Cabinet note which was put up in the meeting of the Cabinet held on 17-3-1997 that the Government of Karnataka was fully aware of the fact that the Consortium had formed a company by the name of Nandi with headquarters at Bangalore exclusively for the implementation of the Project. When the matter was discussed and considered in minute detail at different levels right upto the Cabinet, we fail to understand at what stage was any misrepresentation made to the Government and where is the fraud. The plea of fraud and misrepresentation is only an afterthought which has obviously been raised by the State Government through the petitioners in Writ Petition No. 45386 of 2004 who are its mouth piece. The learned Senior Counsel appearing for Nandi was not wrong when he contended that this plea was only a ruse and subterfuge to get over the findings recorded by the Division Bench in Somashekhar Reddy's case. It is unfortunate that the Chief Secretary in his affidavit has supported the false plea raised by the petitioners that the State Government had been defrauded and that Nandi had misrepresented facts at the time of signing the FWA. It is equally unfortunate that the Chief Secretary in his affidavit has suppressed from this Court the letter dated 21-12-1996 and the correspondence exchanged between the Public Works Department and the Law Department referred to herein above. If he had adverted to these documents, he could not have taken the plea that the Government was taken unawares when Nandi was given the contract. These documents clearly belie the submissions so emphatically made by the learned Advocate General on behalf of the Government of Karnataka and by Sri G.L. Sanghi, learned Senior Counsel on behalf of the petitioners that there was no approval of the State Government for the FWA executed between Nandi and the Government following the assignment of the rights by the Consortium members. As already observed the State Government was aware at the highest level about the assignment and had applied its mind before executing the FWA. The affidavit filed by the Chief Secretary is conspicuously silent in regard to the aforesaid documents and we have no hesitation to hold that he has suppressed material facts and documents from this Court in his anxiety to contend that FWA was a result of fraud and misrepresentation. So has Shri M. Shivalinga Swamy in his written statement. Their conduct in this regard is highly reprehensible and needs to be deprecated. The Apex Court in Brook Bond Lipton's case, while cautioning us that we should be very vigilant in accepting as correct a statement even though made on oath on behalf of the State of Karnataka observed as under:
"8. We must caution the High Court of Karnataka, having regard to what we have stated above, that it should be very vigilant in accepting as correct a statement, even though it be made on oath, on behalf of the State Government. It is unfortunate that we should have to say this of a State Government, but the record before us leaves us no option.
9. The learned Counsel for the State Government now submits that we should not make this general observation in respect of affidavits filed on behalf of the State Government. As we have already stated, we have done so because the Chief Secretary of the State of Karnataka does not seem particularly troubled by the fact that a statement was made on oath on behalf of the State Government before the High Court, which was not correct. He does not even think that the said officer was grossly negligent in making the statement that the said Government Order was not gazetted only on the basis of going through the Gazettes for the succeeding three months. We must assume that other officers of the State Government will be encouraged to make statements before the Courts on oath upon as little or no enquiry, expecting from the Chief Secretary the same unconcern".
The strong observations made by their Lordships, as extracted above do not seem to have had any effect on the officers of the State Government including its Chief Secretary. We will have to take some harsher measures to make them realize that it is of utmost importance that statements on oath in the High Court should be made with due care and caution and all necessary facts as they appear on the record must be truthfully placed before the Court without suppressing or withholding any fact or document. This is all the more important because in petitions filed under Article 226 of the Constitution this Court normally accepts the statements made by the official respondents as proof of facts without recording evidence because we presume that such statements are made after consulting the record.
23. Events subsequent to the execution of the FWA which appear on the record further go to show that at no stage was any fraud played on the Government nor was any misrepresentation made by Nandi which facts are known to the Government and yet for reasons best known to it, it had chosen to take up the plea that FWA was the result of a fraud and misrepresentation. FWA was executed on 3-4-1997 and the same was implemented by the parties for no less than seven years at least. Several obligations under the FWA were carried out by the State Government and its instrumentalities and also by Nandi as referred to in the list of events which is Annexure-R12-III to the affidavit filed on behalf of Nandi on 6-4-2005 in response to the affidavit filed by the Chief Secretary. It may be mentioned that this list of events has not been disputed either by the State Government or by the petitioners. As already noticed large chunks of land has been acquired and notifications under the Act had been issued and even compensation paid to some of the landowners. All this expenditure has been incurred by Nandi. Had there been any fraud or misrepresentation then surely at some stage or the other, the matter would have been raked up. The fact that there was no fraud practised on the State Government and that there was no misrepresentation made by Nandi or any one else on its behalf is further clear from the answers given by the PW.D Minister on the floor of the Legislative Council. Even though the Under Secretary filed the written statement on behalf of the State Government on 24-1-2005 and the Chief Secretary filed his affidavit on 31-3-2005 the PWD Minister answered the questions on the floor of the House on 28-3-2005, which are reproduced hereunder:
"Question A.--To provide the details of the agreements entered into between the Government and the company since inception relating to Bangalore Mysore Infrastructure Corridor Project, along with the dates?
Answer A.--On 20-2-1995, Government signed a Memorandum of Understanding with the Kalyani Group of Companies of Indian Origin and VHB and SAB Companies of American origin. And on 3-4-1997 Government signed the Framework Agreement with NICE Limited.
Question B.--What is the Government stand about the said Project? And what are the reasons for that?
Answer B.--As per the agreement entered by the Government regarding the said Project, Government is providing all necessary support for its speedy implementation. The implementation of the Project will enable to have faster connectivity between Bangalore and Mysore and also for the industrial and Economical development.
Question D.--What are the impediments since 1995? What are the final decisions of the Courts in this regard?
Answer D.--Even though Government signed the Memorandum of Understanding with the Company for the implementation of the Project in 1995, we have been waiting till now for various approvals from Central Government, State Government and Government instrumentalities. After obtaining the approvals, NICEL, which has undertaken the responsibility of implementation of the Project, has started the work on 5-2-2004 for the Phase I of the Project. The High Court of Karnataka and Supreme Court have already upheld the Framework Agreement entered by Government with Group Companies in various Public Interest Litigations and writ petitions".
The answers given to the various questions clearly indicate that even on 28-3-2005 the Minister does not refer to any fraud or misrepresentation on the part of Nandi - rather the specific stand taken is, which was also reiterated in the affidavit of the Chief Secretary, that the State Government is interested in the project and reaffirms its support to it. It is quite intriguing that on the one hand the State Government alleges that Nandi had misrepresented the facts to it in order to grab the project and that it has defrauded the State and on the other hand the Government is keen to continue with the project and wants the same to be implemented through Nandi. Normally if the Government had been satisfied that Nandi had played a fraud on it, the first thing it should have done was to throw Nandi out and cancel the project in its favour and it could have brought in another entrepreneur. Even otherwise the plea of fraud and misrepresentation cannot be allowed to be raised at this stage when the FWA has already been upheld by this Court in Somashekhar Reddy's case and to which reference has also been made by us in the writ appeals pertaining to the acquisition proceedings referred to earlier.
24. Before concluding on the aspect of fraud and misrepresentation, we need to examine the role played by the three members of the Consortium in the implementation of the project and the status of Nandi vis-a-vis those members. It has become necessary to examine this aspect because the primary allegation made by the writ petitioners is that Nandi was a unified Consortium and the Government was made to believe so when in fact the three members of the Consortium had nothing to do with Nandi. As already noticed, the Consortium consists of three members viz., VHB, SAB and Kalyani. At the time when the MOU was executed, the Kalyani group represented that it had the professional expertise, the financial resources and the vision to advance and complete the project. VHB represented that it will be the Lead Engineer and shall be responsible for all plannings, engineering construction and management. SAB represented that it will assist in providing engineering designs of Utilities, Infrastructure and Communication Systems as well as Construction Management. This aspect is clear from the summary of the Project technical report which was submitted to the State Government by the Consortium. This has been produced as Annexure-R12-VI by Nandi which has not been disputed by the State Government. This apart, the members of the Consortium seem to have divided the responsibilities between themselves. Kalyani group and SAB have together undertaken the execution of the Project through Nandi, whereas, VHB and Kalyani Groups have undertaken the responsibility of providing construction activities including observation of construction of field activities. They together have formed a company known as India International Infrastructure Engineers Limited (IIIE) which was incorporated in Bangalore on 19-1-1996. Mr. Richard E. Hangen of VHB who signed the MOU on its behalf is a Director of IIIE since 12-5-1997. It is, thus, clear that VHB and Kalyani group own and control IIIE. The MOU was also signed by Mr. Ashok Kheney as President of SAB and it is not in dispute that he is also the Managing Director of Nandi. Annexure-R12-ZV produced by Nandi which has not been disputed clearly shows that SAB and Kalyani group are the two major groups of shareholders constituting Nandi. It is again clear that the Project is being executed by the Consortium consisting of its three members viz., VHB, SAB and Kalyani who have together formed two companies Nandi and IIIE for the purpose. The Consent and Acknowledgment Agreement dated 9-9-1996 to which reference has already been made stipulates that the members of the Consortium shall at all times maintain directly or indirectly a collective beneficial equity interest in Nandi to the extent of 15 per cent which according to Nandi is being maintained. The assertions made by Nandi in this regard have not been refuted. In view of these facts which have been brought on the record, the apprehensions expressed by the petitioners and the State Government that the members of the Consortium after executing the MOU had runaway from the Project leaving Nandi to execute the same is without any basis and misconceived. We are therefore satisfied that the members of the Consortium are continuing to retain their interest in the project as is envisaged in the Consent and Acknowledgement Agreement though they have assigned their rights in favour of Nandi. Our finding is further fortified from the letter dated March 10, 1997 addressed by Nandi to the State Government wherein the latter was informed as under:
"Kindly recall our discussions regarding the composition of Nandi Infrastructure Corridor Enterprises Limited. We wish to inform that this Company comprising of the Kalyani group, VHB International Limited and SAB International Limited are partners in the development and implementation of the Bangalore Mysore Infrastructure Corridor Project. It may also be noted that these three companies have a joint equity interest in the Nandi Infrastructure Corridor Enterprises Limited (the Company). A copy of the consent agreement is herewith enclosed for your perusal and information".
This letter which appears at page 5 of the Government File No. PWD 155 CRM 96, Volume II makes it clear that even prior to March 10, 1997 some discussions regarding the composition of Nandi had taken place and Nandi had informed the State Government that all the three members of the Consortium have a joint equity interest in it and this was done before the draft FWA was approved by the Cabinet on 17-3-1997. The Chief Secretary in his affidavit has suppressed this letter as well and wants the Court to believe that the State Government did not know as to what was the constitution of Nandi and that it was defrauded when it entered into the agreement with it. Nothing could be farther from truth.
25. At this stage, we may also take note of another objection raised on behalf of the petitioners and the State Government. They strenuously urged that the State Government intended to execute the agreement with the Consortium and not with Nandi and that the members of the Consortium could not have assigned their rights in favour of Nandi. This argument is being noticed only to be rejected. As already observed, Consortium comprises of three groups viz., VHB, SAB and Kalyani. Kalyani is a group of companies owned by the Kalyani family and the other two members are companies registered in USA. Consortium as such was not a legal entity and it could act only through some person or body corporate and therefore the members of the Consortium decided to incorporate Nandi as a Corporate vehicle for the implementation of the project. Having known all these facts, the State Government after examining the FWA critically at all levels entered into the agreement with Nandi for the implementation of the Project and therefore it does not lie in its mouth to contend that it was a victim of fraud and misrepresentation. The State Government without demur or protest executed FWA with Nandi and performed its obligations thereunder. It is therefore estopped on, the doctrine of acquiescence and waiver from challenging the validity of FWA.
26. We are therefore clearly of the view that the change of stand by the State Government was not because of any fraud or misrepresentation as the Chief Secretary in his affidavit wants us to believe. The stand of the State Government was however changed when the new Minister for Public Works Department sent a note on 6-7-2004 to the Principal Secretary, PWD. In that note he pointed out that Sri H.D. Deve Gowda, a former Prime Minister had some time back made serious allegations that the Project to be constructed by Nandi had been allowed to be converted into a real estate business instead of providing infrastructural facilities. Therefore in order to know the facts and figures in respect of the various decisions taken for the implementation of the Project he directed that the particulars along with the supporting documents in regard to the various aspects of the Project may be placed before him within two weeks. In the meanwhile, he directed the withdrawal of instructions to the Board for issuing final notifications for acquiring 2,317 acres of land for the Project Directions in this regard had also been issued to the Project Co-ordinator. It is from this stage that the process of stalling the Project had been initiated and the learned Senior Counsel Sri Rohatgi appearing for the petitioners in one of the writ petitions was right in contending that all this happened soon after the change of the Government in the end of May 2004 and that the Project was likely to be shelved because of political/extraneous considerations. As is clear from the note, the PWD Minister had only received a complaint about the real estate business being carried on by Nandi because of the alleged excess acquisition of land for the Project and it was nowhere stated that there was any fraud or misrepresentation as is now sought to be alleged before us. It appears that in pursuance to the aforesaid note the files were put up to the PWD Minister and K.C. Reddy Committee was constituted to go into the allegations of excess land acquired by the Government for the implementation of the Project. That Committee submitted a report which has been accepted by the Government after deliberations by the Cabinet. The State Cabinet in its meeting held on 26-10-2004 reaffirmed its support to the project but it had its reservations regarding acquisition of more lands than necessary for the Project and therefore it decided to constitute an Expert Committee. It may be mentioned that the Review Committee set up earlier by the PWD Minister was renamed as the Expert Committee and was also headed by Sri K.C. Reddy, Advisor to the PWD Minister. This Expert Committee has been assigned the task to find out whether the lands acquired or to be acquired are genuinely required for the Project or not having regard to all the relevant factors including road alignments. If there were to be any dispute in regard to the necessity of the land already handed over to Nandi the same shall also be referred to this Expert Committee for its recommendations. In other words, the Cabinet has constituted this Expert Committee virtually in supersession of the Empowered Committee envisaged by Clause 4.1.1 of the FWA. Even till this stage there is no whisper about any fraud or misrepresentation having been practised on the State Government. The Expert Committee has been authorised to submit its periodical reports to the State Government from time to time and surprisingly one of the recommendations made by it in its interim report dated December 2004 is that the Board should identify the excess land village wise and survey number wise, though it is of the view that land in excess of what is required for the Project has been acquired. By constituting this Committee the State Government has ensured that the Project gets stalled. It is interesting to note that Sri K.C. Reddy who is the Chairman of the Expert Committee was also a Member of the HLC which had approved the Project and was associated with it till the signing of the FWA which provides for 20,193 acres of land to be made available. Sri K.C. Reddy did not record his dissent in those proceedings and at no stage did he ever point out that the land that was sought to be provided for the Project was in excess of what was required but now as the Chairman of the Expert Committee he has, without identifying the excess lands which he has left for the Board to identify, opined that excess land has been acquired for the Project. We cannot appreciate such a conduct.
27. In view of the aforesaid discussion we are clearly of the view that the plea of fraud and misrepresentation as now sought to be raised is not only an afterthought but also false to the knowledge of the State Government. It is unfortunate that the petitioners and the State Government have chosen to raise this bogie to defeat the public project subserving public interest.
28. We shall now take up the other issue which was also strenuously urged before us. It was forcefully argued by Mr. G.L. Sanghi, learned Senior Counsel for the petitioners and also by the learned Advocate General on behalf of the State that land far in excess than what was required for the project had been acquired by the State Government at the instance of Nandi for its real estate business. In support of this contention they made reference to the preliminary and final reports submitted by the K.C. Reddy Committee which later came to be termed as Expert Committee. This Committee, as already observed, had been appointed by Government Order dated 4-11-2004 as a Review Committee by the PWD Minister on receipt of a complaint from Shri H.D. Deve Gowda, a former Prime Minister of the country to, look into the question whether any excess land had been acquired for the project. By a subsequent Government Order dated 17-12-2004, the Review Committee was modified as Expert Committee and it has submitted its preliminary and final report to the State Government. The argument, indeed, is that since excess land had been acquired, the Government is justified in reducing the extent of land which was originally agreed to be handed over to Nandi for the implementation of the Project in terms of Schedule I to the FWA. Shri Dave, the learned Senior Counsel appearing for Nandi emphatically refuted the contention advanced on behalf of the State Government and urged that any attempt to reduce the land as originally agreed would adversely affect the viability of the entire Project. He referred to the stand taken by the State Government in the written statement filed on its behalf in Somashekar Reddy's case, the relevant part of which has already been reproduced in the earlier part of this judgment and contended that it is not open to the State Government to plead that any excess land had been acquired because its earlier stand was that the minimum possible land had been provided for the implementation of the project. He also referred to the findings recorded by the Division Bench of this Court in Somashekar Reddy's case and argued that the said findings were binding and final so far as the State Government was concerned and they would operate as res judicata. He further contended that the petitioners are no other than the mouthpiece of the State Government and they too should be held bound by those findings. He went to the extent of contending that this Court cannot reopen that issue which had become final and conclusive insofar as this Court is concerned.
29. Having heard the learned Counsels for the parties and the learned Advocate General we find considerable force in the submissions made by Shri Dave. It is common case of the parties that the validity of FWA had earlier been challenged in Somashekar Reddy's case, on all conceivable grounds including the one that land in excess of what is required for the project had been acquired by the State Government. It is also not in dispute that the State Government successfully defended that writ petition by taking a plea that the minimum possible land had been acquired for the project. The relevant part of the written statement filed by the State Government in Somashekar Reddy's case, has already been reproduced hereinabove and also the findings recorded by this Court in that case on this issue. In view of the earlier stand taken by the State Government and the findings recorded by the Division Bench we are clearly of the view that neither the State Government nor the petitioners could be allowed to agitate that issue again. The writ petitioners and the State Government have pleaded that excess land had been acquired on account of fraud and misrepresentation practiced by Nandi. The plea of fraud and misrepresentation has already been negatived by us and we have found that the same is not only misconceived but is also false to the knowledge of the State Government. When there was no fraud or misrepresentation and parties had agreed that 20,193 acres of land as set out in Schedule I to the FWA was the minimum land required for the Project, the State Government cannot be allowed to urge that any excess land has been provided for the implementation of the project. The State Government cannot be allowed to raise this plea and is estopped by its own conduct and by its own written statement filed in Somashekar Reddy's case. The findings recorded by the Division Bench in that case would also operate as res judicata so far as the State is concerned. Moreover, the Project was given to Nandi in April 1997 and since then a lot of ground work has been undertaken by it as admitted by the State Government in its grounds of appeal filed in this Court challenging the order of the learned Single Judge in acquisition proceedings which appeals were later withdrawn. Nandi claims that it has invested more than Rs. 300 crores in the Project so far. Since the Project has been implemented by Nandi for the last more than seven years, we do not think that the State Government can be permitted to change its stand and contend that the land allotted for the Project is in excess of what is required. We have already found that the writ petitioners have been sponsored by the State Government to put up its changed stand through this public interest litigation which, to say the least, is misconceived. The petitioners who are only projecting the cause of the State Government too cannot be allowed to agitate the issue that any excess land was provided for the implementation of the Project. They as representatives of the people or ordinary citizens of the State could, at the most, be interested in the implementation of the Project but whether any excess land had been taken for the Project or not could not be their concern. The Court cannot allow its process to be abused by politicians and others to delay the implementation of a public project which is in larger public interest nor can the Court allow anyone to gain a political objective. These legislators who have not been successful in achieving their objective on the floor of the Assembly have now chosen this forum to achieve their political objective which cannot be allowed. Nandi may not be wrong in asserting that J.C. Madhuswamy and two others have filed the writ petition with an oblique motive. It is alleged that despite the fact that the land around Bangalore which has been acquired for the Project and vests in the State Government has been allowed to be sold by the original landowners in favour of some influential persons and that the State authorities have registered the sale deeds. A few instances have been given by Nandi as it is asserted that the writ petition has been filed only to protect the interests of such influential persons. If that be so, the petitions of such busy bodies deserve to be thrown out at the threshold and in appropriate cases with exemplary costs. The plea that excess land had been acquired by the State Government is also being raised by the petitioners at the behest of the State Government with an oblique motive and they deserve to be non-suited. Once it is held that FWA is valid and proper, the extent of land required for the Project forms part thereof in terms of Schedule I and findings in this regard having become final and conclusive, it is not open to the State Government nor to J.C. Madhuswamy and others and not even to this Court to reopen those issues once over again. In the result, we answer, the second part of Question No. 2 as posed in paragraph 18 of the judgment in the negative holding that it is not open to the State Government and not even to J.C. Madhuswamy and others to contend that excess land had been acquired for the Project. In this view of the matter, we refrain from answering the first part of second question as that would mean deciding the contractual disputes between the parties which is not the scope of the present proceedings.
30. Having dealt with the two primary issues that were canvassed before us, we shall now examine the ancillary contentions raised on behalf of J.C. Madhuswamy and others in their writ petition. We shall deal with the allegations made against Major C.R. Ramesh who is respondent 21 in the writ petition. He was at the relevant time Secretary, PWD when the FWA came to be executed. He admits having signed the same on behalf of the State of Karnataka. Some allegations have been made against him by the petitioners in their additional rejoinder a copy of which had not been supplied to his Counsel. It had not even been supplied to the Counsel for Nandi and therefore neither of them had an opportunity to refute those allegations. When this was pointed out to Shri G.L. Sanghi, learned Counsel for the petitioners he fairly conceded that he would not press the allegations and left the issue at that. The allegations are deemed to have been dropped. The Chief Secretary has, however, in his affidavit made some allegations against this respondent. He has stated that it was respondent 21 who filed an affidavit in support of the written statement filed in Somashekar Reddy's case and that after his retirement he has become an employee of Nandi. He has further alleged in his affidavit that respondent 21 never referred the matter to the Cabinet and went on signing any number of documents in favour of Nandi as Secretary to the Government, PWD on behalf of the Governor of Karnataka. Respondent 21 has filed his affidavits refuting the allegations made by the Chief Secretary. It is true that respondent 21 had filed the written statement on behalf of the State Government in Somashekar Reddy's case, but it is not the case of the Chief Secretary that respondent 21 had made any incorrect averments in the written statement. He signed the written statement because the State of Karnataka in that case had been impleaded through Secretary to Government, PWD. He was the Secretary, PWD and therefore in that capacity he signed the written statement. We do not think that anything hinges on this. As regards respondent 21 having become an employee of Nandi after his retirement, the same has been emphatically refuted by this respondent. It is stated that he is an Engineer by profession and after his retirement he started his private consultancy and became a consultant to guide a few organisations including Nandi. He has placed on record a document showing that at the time of his retirement from service in the year 1999 his services were recognised as outstanding as he was sanctioned five premature increments at the time of superannuation. He was elected President in the year 1998 of the premier body Indian Road Congress because he was an outstanding engineer. The Chief Secretary, in our view, has been rather uncharitable towards him and the allegations made by him have been effectively refuted in paragraphs 9 to 11 of the additional affidavit filed by this respondent. It is true that this respondent had been signing as Secretary to Government, PWD on various documents but that was because of the authorisation made in his favour by the Government Order dated 27-3-1997 a copy of which is on the record. It clearly indicates that the Cabinet while approving FWA on 17-3-1997 had authorised the Secretary, PWD to sign the FWA on behalf of the State Government. There is no material on the record to show that this respondent ever compromised his powers or authorities or ever acted contrary to the interest of the State. The Chief Secretary very conveniently forgets that in the written statement filed in Somashekar Reddy's case, the stand taken by the State Government was that all Government orders and contracts had been signed by persons authorised by it. It appears that the State Government has tried to make him a scapegoat in order to project its false plea of fraud and misrepresentation as discussed herein above. We can only describe it as unfortunate as there is no merit in any of the allegations made against him.
31. The other objection raised on behalf of the petitioners is that 38 acres of land had been unauthorisedly sold by Nandi to IMTMA and that the said sale be declared illegal. This contention need not hold us for long. This issue was raised even in Writ Appeal Nos. 3326 and 3327 of 2004 filed by IMTMA in the acquisition proceedings and we upheld the sale by our order dated 28-2-2005. We held that the Government by its order dated 18-9-2003 had directed Nandi to execute the sale deed in favour of IMTMA and Nandi executed the same on 13-11-2003. There is, thus, no illegality in the sale of land in favour of IMTMA because the same had been sanctioned by the State Government itself.
32. This brings us to the next objection raised by Shri G.L. Sanghi, learned Senior Counsel for the petitioners. It is alleged by the petitioners that Nandi had illegally mortgaged Government lands with various financial institutions including ICICI Bank and had raised a loan of more than Rs. 150/- crores to meet the acquisition expenses. This, according to the petitioners, was illegal and indicative of the fact that Nandi was not possessed of sufficient finances to carry out the Project. The argument of the learned Senior Counsel is being noticed only to be rejected. There is a provision in FWA entitling Nandi to mortgage and pledge its rights thereunder to raise loans from the financial institutions and this was done with the consent of the State Government and its Instrumentalities. Even the Board in its resolution dated 3-2-2003 had noticed the fact that ICICI Bank Limited was financing Nandi for the acquisition. Since the FWA provides for the same there is nothing illegal about it. In any case, this fact does not go to show that Nandi was not possessed of sufficient finances to implement the Project. It is well-known that such Projects are always financed by raising loans from financial institutions and that is precisely what Nandi did. As already observed, the Kalyani group was backing Nandi in this Project.
33. Another grievance projected by the petitioners is that Nandi in order to favour some politicians had changed the original alignment of roads thereby destroying the Gotegere lake which would adversely affect the ecology of the area. The learned Senior Counsel referred to the Division Bench order of this Court in Suresh Heblikar's case to contend that the alignment now made by Nandi would violate the said order. There is no merit in this contention. We have gone through the order passed by this Court in Suresh Heblikar's case and find that a direction had been issued to the respondent therein not to lay any road bisecting the Gotegere tank disturbing the inflow of water into the lake. The Court further directed that in case any road was constructed there should be an overpass without disturbing free flow of water to the tank. No material has been placed on the record to show that the alignment as made by Nandi for the execution of the Project will bisect the lake or will in any way affect the inflow of water to the lake. The mere ipse dixit of the petitioners cannot be accepted particularly when the same has been denied by Nandi. We may, however, observe that Nandi while making alignment of roads through that area will keep in view the directions issued by this Court in Suresh Heblikar's case.
34. As already noticed, the petitioners have also alleged in the writ petition that areas reserved as green belts could not be utilised by Nandi for the implementation of the Project and, that, according to the petitioners, is illegal. This plea was dropped by the learned Senior Counsel realising that there were several judgments of this Court which took the view that such areas could be acquired for development.
35. It was then urged that the arbitration clause contained in the FWA requiring the parties to settle their disputes by reference to arbitration in accordance with the provisions of UNCITRAL Rules for international arbitration and that the laws of India relating to Arbitral proceedings shall not apply is illegal. It was also contended that the arbitration clause which requires that the place of arbitration shall be London or any other place mutually agreeable to the parties is also illegal because no part of the cause of action arises in England. This contention need not detain us. This plea had been raised before the Division Bench in Somashekar Reddy's case and the same was rejected and the arbitration clause was held to be valid. The relevant part of the findings recorded by the Division Bench have already been reproduced in the earlier part of this judgment. Since this issue had earlier been raised and decided the same cannot be allowed to be reagitated. Moreover, we are in agreement with the view expressed in Somashekar Reddy's case that the arbitration clause is valid and we also feel bound by the findings recorded therein. We therefore reject this contention without any hesitation.
36. Sri G.L. Sanghi, learned Senior Counsel while concluding his arguments on 9-3-2005 made a request that some incidental issues pertaining to mala fides which were also to be pressed may be allowed to be argued by the Advocate on record on the following day as he was to return to Delhi. The prayer was granted and we heard Sri Vivek Reddy on 10-3-2005. He took us through some paragraphs of the writ petition, in which allegations of mala fides have been levelled against some of the respondents. Those allegations have been stoutly denied by the respondents in their written statements. Having gone through the allegations, we find that they are ill-founded and without any basis. There is no material on the record to substantiate any of those allegations. It is therefore, not necessary for us to discuss those allegations in any further detail because it is easy to make such allegations and difficult to substantiate the same.
37. Lastly, we are of the view that the writ petition filed by J.C. Madhuswamy and others deserves to be dismissed on the ground of delay as well. Admittedly, FWA had been executed between the State Government and Nandi on 3-4-1997 and the same has been implemented by the parties for more than seven years. The present petition came to be filed in the end of the year 2004 by which time both the parties have carried out their respective obligations under the agreement and large chunks of land have been acquired for the Project which acquisition has been upheld by this Court. In these circumstances, we find that the delay is unreasonable for which no explanation much less satisfactory has been furnished. To say that the petitioners have now learnt about the fraud played by Nandi is not much of an explanation and it does not impress us nor would it explain the inordinate delay. This apart, the petitioners have also attached with the writ petition copies of some confidential documents from the official records. They have not furnished any explanation as to how they came into possession of those documents because the petitioners in the normal course should have no access to them. The only explanation which Shri G.L. Sanghi, learned Senior Counsel could offer at the time of arguments was that two of the petitioners are legislators and could, therefore, have access to the documents. We are not impressed with this explanation. Government records are not available to the legislators and this is one of the reasons which weighed with us in holding that J.C. Madhuswamy and others have filed the writ petition at the behest of the State Government. It is obvious that the documents were selectively supplied to the petitioners to enable them to project the cause of the State Government. We wonder why did it become necessary for the State Government to put up the petitioners to sponsor its cause. Could it not itself have taken action in the matter and cancelled the contract and thrown Nandi out when it is now pleading that it had been defrauded by Nandi which had made some misrepresentations. Obviously, this course was not adopted because the State Government knew that there was no fraud nor any misrepresentation and it would not have been correct to cancel the contract. Perhaps, it wants a declaration from this Court that excess land had been acquired for the project which appears to be the main concern of the State Government and the theory of fraud and misrepresentation has been introduced only to get over the findings of this Court in Somashekar Reddy's case, which have become final and conclusive. It is settled law that a party to the earlier proceedings can avoid the previous judgment only if it is able to show that there was a fraud or collusion in obtaining the judgment in terms of Section 44 of the Indian Evidence Act. The onus of proving collusion or fraud in the previous proceedings is on the party who alleges it. In the instant case, the State Government and the petitioners are alleging fraud and misrepresentation and they have both miserably failed to establish the plea. For these reasons as well the writ petition deserves to be dismissed with costs.
38. We may mention that the learned Senior Counsel appearing on either side had cited some decisions of the Apex Court which we have carefully gone through and find that there is no quarrel with the propositions of law laid down therein. We have kept in view those principles while dealing with the facts of this case and in view of the findings recorded by us hereinabove, it is not necessary to deal with those decisions separately.
39. Before concluding, we may mention that all the pleas raised by the petitioners in Writ Petition Nos. 45334 and 48981 are supporting the cause of Nandi and the learned Senior Counsel Mr. G.L. Sanghi and the learned Advocate General were not wrong in contending that these had been filed at the behest of Nandi. That may be so, but at the same time we find that the prayers made, therein though, support the cause of Nandi, subserve the interest of the public at large. As already noticed, they are making a prayer for a direction to the State Government and its instrumentalities to forthwith execute the Project in its totality as originally conceived and upheld by this Court in Somashekar Reddy's case. Learned Counsels for all the parties including the State Government and J.C. Madhuswamy and others have with one voice pleaded before us that the Project is in public interest and it should be implemented. The Chief Secretary in his affidavit dated 31-3-2005 has stated that the Government throughout had been acting in public interest and was interested and is even now interested in the Project being completed at an early date. He has further stated in paragraph 48 of his affidavit that the Government wants Nandi to execute the Project though with reduced land. Even the Cabinet in its meeting held on 26-10-2004 reaffirmed the support of the Government to the Project. In this background we are of the view that even though the two aforementioned writ petitions may in a way advance the cause of Nandi but since they subserve public interest the prayers made therein need to be granted. If the Project is to be implemented, the Expert Committee now set up by the Government must go. Consequently, the Government Orders dated 4-11-2004 and 17-12-2004 constituting a Review Committee and Expert Committee to go into the question of excess land and all the reports submitted by them and all subsequent actions taken incidental thereto deserve to be quashed. We are quashing the appointment of these committees as they were set up only with a view to scuttle the Project without formally cancelling it. It is really surprising that the State Government on the one hand wants to honour the Framework Agreement and at the same time reduce land which was originally provided for the implementation of the Project. This is a novel and sure way adopted to destroy the Project which is to subserve public interest.
40. It also needs to be mentioned that not being satisfied with the written statement filed on behalf of the State Government, we directed the Chief Secretary to file a detailed affidavit to let the Court know about its stand. As already observed, a detailed affidavit dated 31-3-2005 was filed him. After he had filed his affidavit, Nandi filed a rejoinder to it on 6-4-2005 and in order to controvert the plea of fraud and misrepresentation as pleaded by the Chief Secretary, it placed on record two letters showing that the State Government was aware of the fact that the rights of the Consortium members had been assigned to Nandi and that a plea to the contrary was false to the knowledge of the State Government. That prompted us to direct the learned Advocate General to produce Government files which he did and on a perusal of the same we find that the Chief Secretary and the State Government had withheld some material documents and facts from this Court.
Withholding the documents to which reference has already been made in the earlier part of the judgment, the Chief Secretary filed his affidavit contending that the FWA is the result of fraud and misrepresentation which plea we have found to be false. For the same reason, the written statement earlier filed on behalf of the State Government and supported by the affidavit of Shri M. Shivalinga Swamy, Under Secretary, Department of Industries and Commerce is also false and they have both deliberately withheld material documents and facts from this Court and made statements which were not correct and tried to mislead the Court. For this reason we are of the view that they need to be prosecuted under Section 340 of the Code of Criminal Procedure.
41. No other point was raised:
42. In the result, the writ petitions are disposed of as under:
(1) Writ Petition No. 45386 of 2004 filed by J.C. Madhuswamy and others is dismissed with costs which are assessed as Rs. 50,000/- which the petitioners shall pay to the Karnataka State Legal Services Authority within four weeks from the date of receipt of a copy of this order failing which the Member-Secretary of the said authority will take steps in accordance with law to execute this order.
(2) Writ Petition Nos. 45334 and 48981 of 2004 are allowed directing the State of Karnataka and all its instrumentalities including the Board to forthwith, execute the Project as conceived originally and upheld by this Court in Somashekar Reddy's case and implement FWA in letter and spirit. Consequently, Government Orders dated 4-11-2004 and 17-12-2004 constituting the Review Committee and Expert Committee are quashed. The reports submitted by these committees in pursuance to these orders and all subsequent actions taken incidental thereto are also quashed. Nandi is also directed to implement the Project as expeditiously as possible. Parties will bear their own costs in these two cases.
(3) We further direct that Shri K.K. Misra, Chief Secretary to the Government of Karnataka and Shri M. Shivalingaswamy, Under Secretary, Department of Industries and Commerce be prosecuted as envisaged by Section 340 of the Code of Criminal Procedure for knowingly withholding important facts and documents from the Court and making false statements in their affidavits filed in this Court. Accordingly, Registrar (Judicial) of this Court is directed to file a complaint against them in the Court of competent jurisdiction.
A copy of this judgment be sent to the Member Secretary, Karnataka State Legal Services Authority, Bangalore for necessary action.