Case: Chairman And M.D., B.P.L. Ltd Vs. S.P. Gururaja

2. The Karnataka Industrial Area Development Board (hereinafter referred to as the Board) is a statutory authority constituted under Karnataka Industrial Areas Development Act, 1966. It acquired a vast tract of land inter alia for the purpose of allotment thereof to entrepreneurs who intended to set up industries in the State of Karnataka. The State of Karnataka with a view to accelerate economic development of the State adopted a policy decision of dealing with the applications received from the entrepreneurs through one window system. With a view to achieve the said objective a High Level Committee was constituted. BPL Limited (hereinafter referred to as the Company with a view to set up industries applied for allotment of 500 acres of land for its three projects. The said application was considered by the High Level Committee wherein a decision was taken to allot 175 acres of land in favour of the Company at RS. 92/- per sq.m. The Company was held to be entitled to various other incentives for the aforementioned purposes. Such allotment was made by issuing an order dated 7.4.1995 out of the land acquired by it i.e. 296.26 acres in terms of notification dated 2/4th September, 1991 issued under Section 28(1) of the Karnataka Industrial Areas Development Act, 1966. Public Interest Litigation:3. The respondents filed a public interest litigation questioning the said allotment inter alia on the ground that the statutory purposes for which the Board can acquire the land had been breached by reason thereof. The respondent Nos. 1 to 3 describing themselves to be the social workers in the writ petition raised the following contentions: (a) That the Board can acquire the land only for the purposes (three in number a stated in the Act). (b) That the land to other Entrepreneurs is sold at the rate of Rs. 8,80,000/- per acre whereas it is sold to BPL at Rs. 3,72,324/- per acre. (c) That the allotment being contrary to Regulations is arbitrary and unreasonable. (d) That the allotment is made without inviting applications and without notifying the availability of land to general public. (e) That the exercise of power is mala fide and suffers from legal malice. 4. The contentions of the Board, on the other hand,That the respondents have no locus standi to maintain the writ petition as legal rights of the general public have not been infringed. b) No notice under Order 1 Rule 8 of C.P.C. having published, the writ petition was not maintainable. c) That the Government of Karnataka in exercise of its executive powers under Article 162 of the Constitution of India has established a single window Agency to accord, with significant authenticity, sanction/clearance/approval to the establishment of new Industries of expansion of existing units, which include sanction of infrastructural facilities like and, power, water, finance etc. Wherever an Industrial Project involves an investment beyond fifty crores, the decision to accord sanction/ approval /clearance shall be taken by High Level Committee. d) that the High Level Committee constituted under the said Government orders in its meeting held on 10.10.1994 and 24.1.1995 recommended that: i) 220 Acres of land be made available immediately to BPL group at Dobospet Industrial Area for implementing colour picture tube and batteries project. ii) Additional land acquisition be initiated by the Karnataka Industrial area Development Board on the basis of justification of total land requirement of 500 acres to be furnished by the group. In its 28th meeting held on 29.3.1995, the Committee took notice of the requirements of the BPL India Ltd. and after thorough discussion resolved that Karnataka Industrial Area Development Board (KIADB for short) shall handover 175 acres of land at Dobospet Industrial Area to the BPL India Ltd. e) That thereafter the Government of Karnataka by its order dated 16.5.1995 cleared the three projects of the BPL India Ltd. which involved a total investment of Rs. 663.56 crores. The Government of Karnataka decided to allot 220 acres of land at Dobospet Industrial Area. f) That an extent of 278.42 acres of private land near Dobospet was acquired by the State Government under Section 28(4) of KIADB Act, 1966 for the purpose of development by this Respondent. The final declaration is published in Karnataka Gazette dated 12.11.1992. A layout was planned in consultation with the Director, Town Planning to form 28 plots of varying extent from 1 acre to 210 acres. Plot No.1 and 2 measuring 30 acres and 210 acres are reserved in favour of BPL India Ltd. In the remaining 74 acres small plots are formed to accommodate non-polluting Industries. An extent of 28.80 acres will be occupied by roads, civic amenities etc. g) That this respondent while developing an industrial area undertakes development work like formation of WBM Roads, with block topping, drains with dick also culverts, stream water drains, drains supply through borewell, street lighting, avenue trees and drawing of high tension and low tension power line. The cost incurred has to be borne by allottees. However, the land that is allotted to BPL India Ltd. has not been entirely developed and only peripheral infrastructural facilities would be provided.The Company also filed a counter affidavit alleging that the said allotment was made pursuant to the Boards resolution adopted by the Single Window Agency. The anticipated investment of the Company was Rs. 600 crores. The Composition of the Committee was as follows:6. The application filed by the Company went through various processes and several meetings of the different committees were held. The High Level Committee also considered the matter in a number of meetings, pursuant whereto and in furtherance whereof the aforementioned decision was taken whereafter the Company deposited 99% of the cost of the allotted land amounting to Rs. 6,45,05,133/- with a view to obtain possession. It was further contended that only possession of 149 acres and 5.5 guntas out of 175 acres had been delivered. A lease-cum-sale agreement in terms of the extent regulations was executed on 2.6.1995.7. Various suits thereafter were filed by certain interested parties as a result whereof the Company could not start its constructional activities.8. Ultimately, a lease-cum-sale agreement was executed on 17.4.1996 which came into force with effect from 29.5.1995. The lease was for a period of 11 years and the yearly rent payable therefor was Rs. 55,479/- and maintenance charges at Rs. 74,568/-. It was stipulated that on expiry of the said period of 11 years the property would be sold to the lessee at the price fixed by the lessor.9. Clause 11(b) of the said Agreement to Lease reads assoon as it may be convenient the LESSOR will fix the price of demised premises at which it will be sold to the LESSEE and communicate it to the LESSEE and the decision of the Lessor in this regard will be final and binding on the LESSEE. The LESSEE shall pay the balance of the value of the property, if any, after adjusting the premium and the total amount of rent paid by the LESSEE and earnest money deposit within one month from the date of receipt of communication signed by the LESSOR or any other officer authorised in this behalf by the LESSOR. On the other hand, if any sum is determined as payable by the LESSOR to the LESSEE after the adjustment as aforesaid, such sum shall be refunded to the LESSEE before the date of execution of the sale deed.The appellants also contended before the High Court that the writ petitioners-respondents had been set up by the persons whose lands had been acquired. They were members of political parties also. Directions by the High Court:11. The High Court called for the entire records. Upon consideration of the rival pleadings as also the records of the case, the writ petition filed by the respondents herein was allowedQuash the allotment of land made by this Petitioner in favour of BPL India Ltd. Only in so far as excess land than the land actually utilised so far by the BPL India at any rate not exceeding 30 acres. b) This petitioner is directed to recover possession of remaining land forthwith. c) After recovering possession, this petitioner is directed to form industrial plots and allot the same to prosecutive industrialist after notifying and inviting applications. d) In respect of land that is left with the BPL India Ltd., this Petitioner shall work out the cost of such land at the rate of Rs. 8 lakhs per acre and after adjusting the amount already paid by BPL India, shall refund the balance amount to BPL India together with interest at the rate of 6% per annum from the date of receipt of the amount. e) In order to ascertain the actual utilization of land by BPL India so far the Assistant Director of Land Record was directed to conduct survey of the land which is actually utilized by the BPL India Ltd. in the presence of Petitioner and the Respondents, prepare a sketch thereof and earmark the boundaries so that the Board can recover possession of rest of the land from the BPL India Ltd. f) The cost of Rs. 10,000/- was awarded to writ petitioners to be paid by this Petitioner".Statutes Operating in theIt is not in dispute that the matter relating to allotment of industrial land is governed by Karnataka Industrial Areas Development Act, 1966 (hereinafter referred to as the Act). The appellant-Board has been constituted thereunder. In terms of the said Act, the State Government is empowered to acquire land and to handover the same to the Board for development and allotment to eligible industries. The relevant provisions of the said Act are asDirections by State Government: The State Government may issue to the Board such directions of a general nature as it may think necessary or expedient for the purpose of carrying out the purposes of this Act, and the Board shall be bound to follow and act upon such directions. 41) Power to make Regulations: 1) The Board may, with the previous approval of the State Government, by notification make regulations consistent with this Act and the rules made hereunder to carry out the purposes of this Act. 2) In particular and without prejudice to the generality of the foregoing power, such regulations may provide for:- a) ... b) the terms and conditions under which the Board any dispose of land.Pursuant to and in furtherance of the power conferred upon the State, regulations were framed known as Regulations governing the disposal of land by the Karnataka Industrial Area Development Board. Regulations 7 and 13 of the said Regulations which are relevant for the purpose of this case are asInviting applications: The Board shall notify the availability of land, the manner of disposal, the last date for submission of applications and such other particulars as the Board may consider necessary in each case by giving wide publicity through newspapers having circulating in and outside Karnataka State and invite applications from industries or persons intending to start industries.13. Allotment of plots in Special cases: Notwithstanding anything contained in these Regulations the Board in consultation with the State Government may allot any plot or area other than those in respect of which applications are called for under Regulations 7 to any individual or company for the establishment of an industry or for the provision for any amenity required in the Industrial Area."

Court's reasoning:
20. It is a well-settled principle of law that different considerations arises for the purpose of fixation of price in respect of price of land i.e. for a small area vis-a-vis a large area. The allotment price was Rs. 3,73,324/- per acre which, having regard to the policy decision of the State as also the facts and circumstances of the case cannot be said to be wholly arbitrary warranting interference by the Court. There cannot be any doubt whatsoever that normally allotment of such industrial plots should be done in terms of Regulation 7 aforementioned. But the same by itself did not preclude the authorities of the Board and the State having regard to the fact situation obtaining herein to take recourse to Regulation 13. Once the Court finds that the power exercised by the statutory authorities can be traced to a provision of statute, unless and until violation of mandatory provisions thereof are found out and/ or it is held that a decision is taken for unauthorised or illegal purpose, the court will not ordinarily interfere either with the policy decision or any decision taken by the executive authorities pursuant to or in furtherance thereof.Salient principles of law as noticed hereinbefore, were not considered by the High Court in passing the impugned judgment.34. In the facts and circumstances, we do not find that the Board and the State had committed any illegality which could have been a subject matter of judicial review. The High Court in our opinion committed a manifest error insofar as it failed to take into consideration that the delay in this case had defeated equity. The allotment was made in the year 1995. The writ application was filed after one year. By that time the Company had not only took possession of the land but also made sufficient investment. Delay of this nature shall have been considered by the High Court to be of vital importance.35. Furthermore, the High Court ought to have taken into consideration the factum of resistance in the matter from those persons whose lands have been acquired. Only because the lands are vested in the State upon acquisition thereof, the same by itself would not mean that the persons whose lands were acquired were not interested in getting the allotment. The locus standi of the respondent ought to have been taken into consideration having regard to the specific pleas raised in this behalf by the appellants herein.36. Undue haste also is a matter which by itself would not have been a ground for exercise of power of judicial review unless it is held to be malafide. What is necessary in such matters is not the time taken for allotment but the manner in which the action had been taken. The court, it is trite, is not concerned with the merit of the decision but the decision making process. In absence of any finding that any legal malice was committed, the impugned allotment of land could not have been interfered with. What was only necessary to be seen was as to whether there had been a fair play instate had devolved a policy of Single Window System with a view to get rid of red-tapism generally prevailing in the bureaucracy. A decision which has been taken after due deliberations and upon due application of mind cannot be held to be suffering from malice in law on the ground that there had been undue haste on the part of the State and the