IN THE HIGH COURT OF PUNJAB & HARYANA AT CHANDIGARH Date of Decision: 19.04.2011 1) CWP No. 10319 of 2006 Horizon Rubber Products Ltd. and others ...Petitioners Versus State of Haryana and others ..Respondents. 2) CWP No. 19208 of 2006 Cdr. (Retd) Attar Singh Saroha ..Petitioner Versus State of Haryana and others ..Respondents. 3) CWP No.20229 of 2006 M/s Sundweep Engineers Pvt. Ltd. and others .. Petitioners Versus Director of Industries Haryana and others ..Respondents. 4) CWP No. 12304 of 2006 M/s TRG Packaging Pvt. Ltd. ..Petitioner Versus State of Haryana and others ..Respondents. 5) CWP No.13265 of 2006 M/s N.B.G. Printographic Machinery Company Pvt. .. Petitioner Versus State of Haryana and others ..Respondents. 6) CWP No.13266 of 2006 Mukesh Garg and others ..Petitioners CWP No. 10319 of 2006 Versus State of Haryana and others ..Respondents. 7) CWP No.17766 of 2006 Shanti Devi and others ..Petitioners Versus State of Haryana and others ..Respondents. 8) CWP No.15949 of 2006 Veenus Manufacturing Co. (P) Ltd. ..Petitioner Versus State of Haryana and others ..Respondents. 9) CWP No.17795 of 2006 Ajay Gupta and another ..Petitioners Versus State of Haryana and others ..Respondents. 10) CWP No. 13309 of 2007 Anil Aggarwal ..Petitioner Versus State of Haryana and others ..Respondents. 11) CWP No 13924 of 2007 Ms. Hema Ahuja ..Petitioner Versus Haryana Urban Development Authority & another ..Respondents. 12) CWP No. 15215 of 2007 Smt. Shobha Yadav ..Petitioner Versus State of Haryana and others ..Respondents 13) CWP No. 9928 of 2008 M/s Shivam Brieght Steel Industries ..Petitioner - CWP No. 10319 of 2006 Versus State of Haryana and others ..Respondents. 14) CWP No. 16834 of 2008 M/s Venus Sheet Metals Components Pvt. Ltd. ..Petitioner Versus State of Haryana and others ..Respondents. 15) CWP No.833 of 2009 Hivac Industries and another ..Petitioners Versus State of Haryana and others ..Respondents. CORAM: HON'BLE MR. JUSTICE RANJAN GOGOI, CHIEF JUSTICE HON'BLE MR. JUSTICE SURYA KANT 1. Whether Reporters of local papers may be allowed to see the judgment ? 2. Whether to be referred to the Reporters or not ? 3. Whether the judgment should be reported in the Digest? Present: Mr.Pawan Kumar, Senior Advocate, with Mr. Saqib Ali Khan, Advocate. Mr. Chetan Mittal, Sr. Advocate with Mr. Vishal Garg, Advocate for the petitioner in CWP Nos. 15949, 13265 and 13266 of 2006. Mr. Lokesh Sinhal, Advocate, for the petitioners in CWP No. 12304 of 2006 and 13309 of 2007 Mr. Rajesh Punj, Advocate with Ms. Ritu Punj, Advocate for the petitioners in CWP No. 17766 of 2006. Mr. Kulbhushan Sharma, for the petitioners in CWP Nos. 20229 of 2006 and 9928 and 16834 of 2008. Ms. Sonia Jain, Advocate for Mr. Saurabh Mohunta, Advocate for the petitioner in CWP No. 833 of 2009 Mr. S.K.Lamba, Advocate, for the petitioner in CWP No. 15215 of 2007. - CWP No. 10319 of 2006 Mr. Anil Mehta, Advocate, for respondents No. 5 and 7 in CWP No. 15215 of 2007 Mr. Jagdish Manchanda, Advocate, for respondent No. 9 in CWP No. 15215 of 2007. Mr. Arun Jain, Sr. Advocate with Mr. Manoj Bajaj, Advocate for the petitioners in CWP No. 17795 of 2006. Mr. Girish Agnihotri, Sr. Advocate with Mr. Pankaj Maini, Advocate, for the petitioner in CWP No. 13924 of 2007. Shri Arun Palli, Sr.Advocate, with Shri Tushar Sharma, Advocate for respondents No. 7 in CWP No. 10319 of 2006 and respondent no. 13 in CWP No. 13265 of 2006. Mr. Arvind Seth, Advocate. Mr.A.K.Jain, Advocate, for respondent No.5 (in CWP No.17795 of 2006) Mr.Sanjeev Sharma, Sr. Advocate, with Shri Vikram Sharda, Advocate for respondent No. 6 (in CWP No.10319 of 2006) Mr.Tarunvir S.Lehal, Advocate, for respondent No.7 (in CWP No.10319 of 2006) Mr. A.K.Chopra, Sr.Advocate with Ms. Rupa Pathania, Advocate, for respondents No. 8, 12, 14, 15, and `17 in CWP No. 10319 of 2006, for respondents No. 8 to 12, 14, 15 and 17 in CWP No. 13265 of 2006, for respondents No. 4,6,7, 9, 14 to 17 in CWP No.13266 of 2006, for respondents No. 8 to 12, 14, 15 and 17 in CWP No. 17766 of 2006, for respondents No. 4 to 8,10,11 and 13 in CWP No. 12304 of 2006, for respondents Nos. 4,6,9, 14 and 17 in CWP No. 15949 of 2006, for respondents No. 8 to 15 and 17 in CWP No. 17795 of 2006, for respondents No. 4 to 8 and 10, 11 and 13 in CWP No. 13309 of 2007, for respondents No. 8 to 12, 14 and 17 in CWP No. 9928 of 2008, for respondents no. 8 to 12, 14, 15 and 17 in CWP No. 20229 of 2006. Ms. Deepali Puri, Advocate, for respondent No. 6 in CWP No. 10319, 17766, 17795, 20229 of 2006, and 13924 of 2007, 16234 of 2008 and 9928 of 2008, for respondent No.12 in CWP No. 13265 and 15949 of 2006, for respondent no. 16 in CWP No. 12304 of 2006, Mr.Arun Walia, Advocate, & Mr. Ajay Nara, Advocate - CWP No. 10319 of 2006 for HUDA. Mr. Kulvir Narwal, Addl. A.G. Haryana. Shri Amit Sharma, Advocate. Mr. Ajay Kaushik, Advocate. Mr. R.S.Chahar, Advocate. **** RANJAN GOGOI, C.J.(Oral) Common questions of law on more or less identical facts having arisen, this group of cases were heard together and is being disposed of by this common order. The recitation of the facts in Civil Writ Petition No. 10319 of 2006 would suffice as the same would be fairly indicative of the facts involved in all the cases under consideration. Fourteen of the writ petitions deal with allotment of industrial plots in Faridabad whereas Civil Writ Petition No. 19208 of 2006 deals with similar allotment in Gurgaon. In the month of July, 2004 brochures were published by the Haryana Urban Development Authority (HUDA) inviting applications for allotment of industrial plots on free hold basis. 158 plots were offered in different sectors of Faridabad. All such plots were of different sizes and the price thereof were also different. In the case of Gurgaon 44 plots were available for allotment. The petitioners in Civil Writ Petition No. 10319 of 2006 had submitted their applications for allotment and they along with all other applicants were interviewed in the month of August, 2005. According to the petitioners, the result of the interview and the fate of their - CWP No. 10319 of 2006 applications were not made known to them inspite of repeated representations and requests made to the HUDA. Eventually, in the month of March, 2006, from the newspapers, it transpired that 14 plots have been allotted in Faridabad whereas certain allotments were also made in Gurgaon. Such allottees have been impleaded as respondents No. 5 to 18 in Civil Writ Petition No. 10319 of 2006 and as respondents No. 3 and 4 in Civil Writ Petition No. 19208 of 2006. At this stage, it would be appropriate to notice that the allotments were proposed to be made, as stated in the brochures, under the industrial policy of 2005. Such allotments were primarily meant to attract willing and enterprising entrepreneurs to undertake industrial activities in the State. At this stage, a specific notice must be had to the following clause appearing in the brochure under the head 'Procedure for Allotment' :- “Mere submission of an application, however, would not necessarily entitle an application for entitlement, since allotment of plot will be after due assessment of the application/project report and on the basis of individual merits/financial capabilities of the entrepreneurs.” The challenge to the allotments made has primarily been on the ground that the allotment in favour of the respondents No. 5 to 18 and the rejection of the cases of the petitioners disclosed no reasonable basis. According to the petitioners, all of them were eligible and entitled for allotment and the rejection of their cases was not founded on any acceptable ground. Similarly there is no distinguishing feature in the profile of the allottees to justify the allotments made. - CWP No. 10319 of 2006 The reply on behalf of the Haryana Urban Development Authority has been short and precise. Allotment on the basis of applications, as distinguished from public auction, is a permissible mode under the provisions of Section 15 of the Haryana Urban Development Authority Act, 1977 (hereinafter referred to as 'the Act'). Accordingly, a four member committee, which was a high powered body, was constituted to scrutinize the claims made by various applicants. The committee on due application of reasonable, relevant and valid parameters, identified 14 applicants for allotment of industrial plots advertised in Faridabad and similarly some eligible applicants for allotment in Gurgaon. It would also require due notice that during the interregnum, pursuant to the interim order of the Court, the cases of all the petitioners were re-scrutinized and five of the petitioners were found to be eligible and allotments have been made/proposed to the aforesaid five eligible persons. At this stage, it would be relevant to take notice of an order dated 12.11.2009 passed by a Division Bench of this Court in a proceeding registered and numbered as Civil Writ Petition No. 2677 of 2008 and other connected cases wherein a similar issue with regard to the allotment of industrial plots in District Bhiwani by the Haryana Urban Development Authority was considered. Such allotment being under the same industrial policy and, by-and-large, on application of the same principles and parameters, naturally, the order of the Division Bench dated 12.11.2009, was meticulously scrutinized by us. The long and elaborate order containing reference to several illuminating judgments of the Hon'ble Apex Court dealing with the power of the State Government in the matter of distribution of public largesse ends - CWP No. 10319 of 2006 with the conclusion that the parameters applied for making the allotments do not conform to the minimum requirements of law and are, therefore, arbitrary. Accordingly, all the allotments made in Bhiwani were set-aside by the said order dated 12.11.2009. A direction was also issued to frame a more acceptable policy for allotment of industrial plots. The order dated 12.11.2009 has been accepted by the Haryana Urban Development Authority inasmuch as the said body has not carried the order in appeal to the Hon'ble Apex Court. However, a fresh policy in terms of the directions contained in the said order has not been framed as yet. The Court has also been informed that as against the order dated 12.11.2009 some of the aggrieved allottees, whose allotments had been set-aside, have moved the Hon'ble Apex Court, though, without any success. In such circumstances, the Court will have to proceed on the basis that order dated 12.11.2009 has attained finality of law. Under the provisions of Section 15 of the Act, auction of industrial plots is not the only method of making allotment, in fact, under the provisions of the Act such allotment can be made on the basis of the applications received. However, the second alternative, though optional, has the potential of conferring a large measure of discretion in the authorities. This is precisely why the Hon'ble Supreme Court in New India Public School and others V. HUDA and others (1996) 5 Supreme Court Cases 510 had taken the view that wherever discretionary powers are exercised the same must be so exercised by laying down pre-set parameters of evaluation against which applications submitted can be considered. - CWP No. 10319 of 2006 In the present case apart from the specific clause contained in the brochure under the heading “Procedure for Allotment” which has already been extracted above, there is nothing on the record to satisfy the Court that any pre-set or pre-determined criteria laying down the manner of consideration of applications had been evolved by the Haryana Urban Development Authority. As held by the Hon'ble Supreme Court in New India Public School's case (supra) laying down of known criteria of consideration would have the effect of introducing objectivity in the decision making process. Absence thereof has the potential of making the exercise a subjective process, therefore, calling for a closer and intense scrutiny by the Court. The HUDA has brought on record, perhaps at the instance of the Court, the detailed reasons which had led the said authority to allow some of the applications by grant of allotments and to reject the others. The aforesaid compilation, which is available on record, has been perused by us. Having perused the said compilation we are of the view that, by way of illustration, the reasons which had led HUDA to make the allotments in some of the cases and to reject the same in others should be extracted and made a part of this order:- PERSONS TO WHOM ALLOTMENTS MADE Sr. No. Applicat- ion No. Name & Address of the applicant Project to be set up Estimated project cost (in ` Lacs) Committee Decision - CWP No. 10319 of 2006 14. 1620/ 21.07.2004 Shri Amarjeet Lamba M/s Good Well Industries Verma Udyog Complex, # 15/1, Mathura Road, Faridabad Mfg. Supply of Speciality stainless steel fabrication. 33.77 Sh. Amarjeet Lamba attended the interview. The applicant is a sole proprietorship concern and intends to shift the existing unit. The applicant is already engaged in design, mfg. and supply of speciality stainless steel fabrication for milk and food processing plants, potable water treatment plants and sheet metal components for automobile industry in the home markets since 1977 from rented place of 7000 sq. feet. Covered area. The committee gone into the project details as made available in the project report submitted alongwith the application and further as explained by the applicant during the interview. It was observed that the applicant was a promising entrepreneur and will be able to run this project. He was also so eager to implement the project/shift the unit. Recommended for allotment. 36. 2135/ 31.8.2004 Sh. Ajit Singh, M/s Jeet Enter- prises, H. No. 302, Sector 8, Faridabad. Mfg. of printing machine rollers and components 53.30 Sh. Ajit Singh attended the interview. The applicant is a company and intends to shift the existing unit running in village of Sihi in an area of 450 sq. mtrs. The committee gone into the project details as made available in the project report submitted alongwith the application and further as explained by the applicant during the interview. It was observed that this applicant was prepared to shift the unit immediately. He has justified the land requirement. Seems to be a genuine entrepreneur. Recommended for allotment. - CWP No. 10319 of 2006 56. 2566/ 24.9.2004 Sh.H.L. Bhutani, # 1174,Sector 19 Faridabad. Mfg. of Hydarulic fittings and Allied products. 28.80 Sh. H.L.Bhutani attended the interview. The applicant is a sole proprietorship concern and intends to shift the existing unit. He is Double Graduate Engineer (Mech.& Metl.) and has sought voluntary retirement from the Deptt. of Industrial Training and Vocational Education Haryana in 1993. Thereafter, he has started his own unit for mgh. of High Pressure Hydraulic Fittings. The turnover of the unit for the year ending 31.3.2004 was ` 59.71 lacs. Last year turn over 1.04 crores. The committee gone into the project details as made available in the project report submitted alongwith the application and further as explained by the applicant during the interview. It was observed that the applicant has firm plans with regard to his implementation of project. The plot if allotted will be gainfully utilized by him within a reasonable time period. Seems to be a genuine entrepreneur. Recommended for allotment. 98. 2431/ 29.10.2004 Sh. Rajinder Kumar Dua, H. No. 383, Sector 9, Faridabad. Mfg. of different type of profiles, used in auto-industry, construction industry, bus and truck body building and other industry mfg. machinery and equipments. Sh. Prem Batra attended the interview. The applicant is a partnership concern and intends to shift the existing same line successfully running a unit with annual turnover of 30 lacs. unit. They are already engaged in the unit. The committee gone into the project details as made available in the project report submitted along with the application and further as explained by the applicant during the interview. It was observed that the entrepreneur was ready to shift & implement the project at the earliest possible. He has already arranged adequate capital, to fund the project. Seems to be promising entrepreneur, should be encouraged. Recommended for allotment. - CWP No. 10319 of 2006 PERSONS TO WHOM ALLOTMENTS NOT MADE Sr. No. Application No. Name & Address of the applicant Project to be set up Estimated project cost ( in ` Lacs) Committee Decision 15. 3228/ 27.7.2004 Sh. Surya Bali Singh M/s Aurag Iron & Steel Co., Plot No. 57, Sector 6, Faridabad. Mfg. of alluminium alloy ingots and pressure die coats. 60.00 Sh. Surya Bali Singh attended the interview. The applicant is a sole proprietorship concern and intends to shift the existing unit reportedly running in an area of one acre, with annual turnover of Rs. 8.9 Crores. The committee gone into the project details as made available in the project report submitted alongwith the application and further as explained by the applicant during the interview. It was observed that the figures with regard to the cost of project, cost of machinery as well as working capital as given by the entrepreneur were not realistic one. The entrepreneur has admitted that he did not go through these figures even. Does not seem to so serious to implement the project. Not recommended for allotment. - CWP No. 10319 of 2006 35. 1616/ 13.8.2004 Sh.Manjeet Singh, House No. 1052, Sector 14, Faridabad. Mfg. of Jaw Type Stone and Ore Crushing Plants. 87.50 Sh. Manjeet Singh attended the interview. He is MBA. The applicant is a sole proprietorship concern and intends to set up a new unit. The applicant is already engaged in the business of technical development and trading of machinery parts since 1986. The committee gone into the project details as made available in the project report submitted along with the application and further as explained by the applicant during the interview. It was observed that the entrepreneur has not done any spade work to shift his existing unit from Badrpur having turnover of 80 lacs p.a. He has not even arranged own capital of Rs. 40 lacs. Does not seem to be capable to set up and implement the project successfully. Not recommended for allotment. 55. 2566/ 24.9.2004 Sh. Ravi Shankar Gupta House No. 500, Sector 9, Faridabad. To set up a Forging Industry. 43.00 Sh. Ravi Shankar Gupta attended the interview. The applicant is a partnership concern and intends to set up a new unit. The committee gone into the project details as made available the application and further as explained by the applicant during the interview. It was observed that the actual land requirements for this project are on very lesser side and a plot of this category was not justified. Not conversant with the process involved. No past experience. Not recommended for allotment. - CWP No. 10319 of 2006 97. 2540/ 29.10.2004 Sh. Amit Aneja, House No. 5, Sector 15, Faridabad. Mfg. of Iron and steel fabrication. 52.00 Sh. Amit Aneja along with working partner Meenu attended the interview. The applicant intends to set up a new unit. He has Post Graduate Diploma in Management. He has 12 years exp. in Engineering Industries. The turnover of the existing unit is ` 58.00 lacs. The committee gone into the project details as made available in the project report submitted along with the application and further as explained by the applicant during the interview. It was observed that the applicant was not so eager to implement the project in near future. They are already running unit in HSIDC area and may meet their orders within their existing capacity. Not recommended for allotment. The reasoning available in the extracts quoted above would indicate that while making allotments in favour of the respondents and rejecting the allotments claimed by the petitioners, there has been no inter-se comparison of the cases of the claimants viz-a-viz their entrepreneurial skills, the industrial activities undertaken, the project report submitted, and the finance available. The reasons, as evident from what has been quoted above, are tailor-made to suit any particular conclusion. If the authority wanted to make an allotment, one set of reasoning was available for being fitted in and wherever the authority wanted to reject an application, another set of reasons was ready to justify such rejection. Such a course of action is certainly not permissible in law. The consistent endaveour of the law is to determine and disapprove arbitrary exercise of powers. It appears to us that - CWP No. 10319 of 2006 nothing could have been more arbitrary than what has happened in the present case. Everything has been left to the ipse-dixit of the authority who was free to pick and choose and thereafter justify its decision in the light of tailor-made reasons. We, therefore, have no hesitation in holding that all the allotments made both in Gurgaon and Faridabad suffer from the vice of arbitrariness and it would be fair and just to hold that all such allotments are nonest in law. Having come to the above conclusion, the next question that has to be determined is the relief that the petitioners would be entitled to and how the cases of the respondents to whom the allotments have already been made should be dealt with. In so far as the petitioners are concerned, as the policy and the parameters of allotment have been found by us to be highly arbitrary and unacceptable in law, naturally, their cases cannot be directed to be considered in the light of the said parameters. We have already noticed, in an earlier part of this order, that the Haryana Urban Development Authority is yet to frame a fresh policy for allotment of the industrial plots in question. In New India Public School's case (supra), the Hon'ble Apex Court, though, had noticed the alternative modes for allotment of industrial plots had taken the view that, in the given circumstances, the best method could be by way of public auction. This being the view of the Apex Court in the context of the specific provisions of Section 15 of the Act and such a view being the predominant view in the matter of grant of state largesse we unhesitatingly take the view that the Haryana Urban Development Authority in framing its new policy both in terms of the present directions as well as the earlier directions dated 12.11.2009 - CWP No. 10319 of 2006 passed in Civil Writ Petition No. 2677 of 2008 would take its final decision in the matter in the light what has been stated above. Thereafter, the cases of the petitioners will have to be considered, once again, on the basis of fresh applications that the petitioners or some of them may file. This will bring the Court to a consideration of the cases of the respondents No.5 to 18 in CWP No. 10319 of 2006 (Faridabad) and respondents No. 3 and 4 in CWP No. 19208 of 2006 (Gurgaon). Our attention has been drawn to a status report dated 31.10.2008 filed by the Estate Officer, HUDA, Faridabad, with regard to the 14 allottees (respondents No. 5 to 18) containing the dates of allotment, dates of offer of possession, dates of taking over of possession, dates of starting of production etc. While the learned counsels for the respondents have sought to invoke the principle of equity to protect what has been built during the interregnum, learned counsels for the petitioners have pointed out to two earlier orders of this Court dated 15.12.2008 and 21.02.2010 to contend that what the respondents have built till date has been entirely at their own risk and cost which was made clear by the Court. The respondents, therefore, are not entitled to any protection in the exercise of the equity jurisdiction of this Court. The solution to the issue has to be found in between two extreme positions that have been adopted by the learned counsels