Case: Dipak Babaria  Vs. State Of Gujarat

2. This appeal by Special Leave seeks to challenge the judgment and order dated 30.8.2012 rendered by a Division Bench of the Gujarat High Court dismissing Writ Petition (PIL) No.44 of 2012 filed by the appellants herein. The Writ Petition had various prayers, but essentially it sought to challenge the permission granted by the Collector, Bhuj, to sell certain parcels of agricultural land situated in district Kutch, which were said to have been purchased earlier by the respondent No.4 herein, one Indigold Refinery Limited of Mumbai, for industrial purpose in favour of respondent No.5 i.e. one Alumina Refinery Limited, Navi Mumbai, as being impermissible under the provisions of the Gujarat (earlierprior to the amendment in its application in the State of Gujarat) Tenancy and Agricultural Lands (Vidarbha Region and Kutch Areas) Act, 1958 (Tenancy Act, 1958 for short). It was submitted that under Section 89A of this Act, agricultural land can be permitted to be sold by an agriculturist to another person for industrial purpose provided the proposed user is bona- fide. In the event, the land is not so utilised by such a person for such purpose, within the period as stipulated under the act, the Collector of the concerned district has to make an enquiry under sub-Section 5 thereof, give an opportunity to the purchaser with a view to ascertain the factual situation, and thereafter pass an order that the land shall vest in the State Government on payment of an appropriate compensation to the purchaser which the Collector may determine. It was contended that there was no provision for any further transfer of agricultural land from one industrial purchaser to any third party, once again, for industrial purpose when the first purchaser of agricultural land had defaulted in setting up the industry. Apart from being in breach of the law, the transaction was stated to be against public interest, and a mala-fide one resulting into a serious loss to the public exchequer. The Writ Petition criticised the role of the Collector and the Revenue Minister of the State Government, and sought an inquiry against them in the present case, and also a direction to the state authorities to resume the concerned land.3. The impugned judgment and order rejected the said writ petition on two grounds, firstly that there was delay in initiating the said Public Interest Litigation (PIL), and that the writ petitioner had suppressed the material facts before the Court concerning the investment claimed to have been made by the respondent No.5.4. The writ petition, and now this appeal raise the issues with respect to the underlying policy and purpose behind the relevant provisions of the Tenancy Act, 1958. In that connection, it also raises the issue with respect to the duties of the revenue officers on the spot, such as the Collector, the importance of the role of senior administrative officers of the State Government, and whether a Minister of the Government can direct the administrative officers and the Collector to act contrary to the provisions and policy of the statute. The Secretary of the Department of Revenue of the Government of Gujarat, and the Collector of District Kutch at Bhuj are joined as respondent Nos. 2 and 3 to thisfacts leading to this appeal are asIt is pointed out by the appellants that the respondent No.4 Indigold Refinery Ltd. (Indigold for short) which is a company having its office in Mumbai, purchased eight parcels of land owned by one Virji Jivraj Patel and Jayaben Virji Patel residing at Bankers Colony, Bhuj, admeasuring in all 39 acres and 25 gunthas (i.e. roughly 40 acres) by eight sale deeds all dated 30.1.2003, for a consideration of about Rs.70 lakhs. These eight sale deeds are supposed to have been signed for respondent No.4 Indigold by one Hanumantrao Vishnu Kharat, its Chairman-cum-Managing Director. The lands are situated in villages Kukma and Moti Reldi in the district of Kutch. The sale deeds indicated that the purchaser had purchased these lands for industrial purpose, and that the purchaser will obtain the permission from the Deputy Collector, Bhuj for purchasing the said land within one month from the date of those sale deeds. The respondent No.4 is said to have applied for the necessary permission under Section 89A of the Tenancy Act, 1958 on 31.1.2003, and the Collector of Bhuj is stated to have given the requisite certificate of purchase of the lands under sub-section (3) (c) (i) of the said section. It appears that thereafter no steps were taken by respondent No.4 to put up any industry on the said land.6. Five years later, the respondent No.4 is stated to have applied on 6.12.2008 to the Deputy Collector at Bhuj for permission to sell these lands. The Collector of Bhuj sought the guidance from the Revenue Department, and in view of the direction of the Revenue Department, the Deputy Collector granted the permission on 15.1.2010, to sell the lands to respondent No. 5 treating it as a special case, and not to be treated as a precedent. Thereafter, the respondent No.4 conveyed the concerned lands to respondent No.5 by sale deed dated 19.1.2010. Respondent No.5 also obtained permission from the Industries Commissioner on 8.3.2010 for putting up the industry. Subsequently, the Collector issued the certificate as required under Section 89A (3) (c) (i) of the Tenancy Act, 1958, on 21.5.2010, that respondent No.5 had purchased the land for a bona-fide purpose. The permission for a non-agricultural user was given to the respondent No.5 on 5.1.2011. The Gujarat Mineral Development Corporation (GMDC) – which got itself impleaded in this appeal as respondent No.6 has entered into a Memorandum of Understanding (MOU for short) on 30.11.2011 with M/s Earth Refinery Pvt. Ltd. which is the holding company of respondent No.5 to purchase 26% of equity in a joint venture company to be set up by them, and which will own the industry.7. It appears that a Gujarati Dailyin an article dated 20.8.2011 reported that there was a huge loss to the State exchequer in the sale of these lands to a private company almost to the tune of Rs.250 crores. The newspaper reported that although the respondent No.4 had purchased the concerned lands at village Kukma and Moti Reildi on 30.1.2003, no industrial activity was started till 2008 as required by the law, and after a long period of five years the land was to be sold to Alumina Refinery Limited (Alumina for short). One Mr. Nitin Patel is the Managing Director of this Alumina, and Mr. Nilesh Patel who is his brother is its Director (Legal and Human Resources). The newspaper stated that Alumina had written a letter to the Chief Minister Mr. Narendra Modi, on 18.6.2009 that the Government should grant the necessary permission. It is further stated that on the said proposal being placed before them, the officers of the Revenue Department had placed negative remarks, and yet a permission was granted to sell 2 lakh sq. yds. of land at a throw away price when the rate of land was Rs.3500 – 4000 per sq. yd.. It was alleged that there was a direct involvement of the Chief Minister in this scam, and with a view to avoid Lokayukata enquiry, although a commission was appointed underMr. Justice M.B. Shah, a former Judge of Supreme Court of India to enquire into a number of other controversial projects, this scam was excluded therefrom.8. There was also a news item in another Dailyon 1.2.2011 that the Alumina Refinery Limited was given permission by breaching rules and regulations. The farmers of the nearby villages were worried, and some 200 farmers had protested against the proposal as it would affect their agricultural activities due to pollution. It was stated that they had sowed plants of tissue-culture Israeli dry-dates. They had planted lacs of Kesar Mango trees. They were also cultivating crops of Papaiya, Aranda, Wheat, Cotton, groundnuts etc. If the refinery work starts in this area, it will affect the agricultural work badly. There was also a fear that the blackish and toxic air of the factory will spoil the plants.9. All this led the appellants to file the earlier mentioned writ petition, for the reliefs as prayed. The petition enclosed the above referred news reports, as also the information obtained through enquiry under the Right to Information Act, 2005 by one Shri Shashikant Mohanlal Thakker of Madhapur Village of Taluka Bhuj. This information contained the documents incorporating the file notings of the revenue department and the orders granting permission. The aforesaid writ petition was filed on 28.2.2012. An affidavit in reply to the writ petition was filed by above referred Nitin Patel on behalf of respondent No.5, and the appellants filed a rejoinder. Respondent No.5 filed a sur-rejoinder thereto. The respondent No.1 State of Gujarat filed an affidavit in reply on 16.8.2012, and the petitioner filed a rejoinder to theaffidavit on 10.11.2012. After the writ petition was filed on 28.2.2012 an order of status-quo was granted on 1.3.2012, and it continued till the dismissal of the petition on 30.8.2012 when the order of stay was vacated. However, when the present SLP was filed, an order of status-quo was granted by this Court on 4.1.2013, and it has continued till date.

Court's reasoning:
) Therefore, when Indigold informed the Collector on 6.12.2008 that they were ‘no moreto put up any industrial project, and were disposing of the entire piece of land to their prospective client, the Collector was expected to hold the necessary enquiry. This was the minimum that he was expected to do. After holding the enquiry, if he was convinced that the industrial activity had not been started, he was expected to pass an order that the land will vest in the State which will have to be done after determining the compensation payable having regard to the price paid by the purchaser. In the instant case, the respondent No.4 claims to have purchased the land for Rs.70 lakhs. As pointed out by Mr. Krishnan Venugopal himself, as per the jantri price of the lands at that time, i.e. even at the Government rate in 2008, the land was worth Rs.4.35 crores. The collector was expected to dispose of the land by auction which is the normal method for disposal of natural resources which are national assets. Out of that amount, the compensation payable to the respondent no.4 would have been around Rs.70 lakhs having regard to the amount that the respondent No.4 had paid. This is because respondent no. 4 had purchased agricultural land to put up an industry, and they had taken no steps whatsoever for over five years to set up the industry. They were not expected to purchase the land, and thereafter sell it for profiteering. The Jantri price is an official price. In actual auction the State could have realised a greater amount. In permitting the sale inter-se parties, the State exchequer has positively suffered.(ii) On the other hand, in the event, the Collector was to form an opinion after receiving the bids or otherwise that it was not worth disposing of the land in that particular way, he could have divested Respondent No. 4 of the land by paying compensation, and re-allotted the same to the Respondent No 5 at an appropriate consideration. The statute required him to act in a particular manner and the land had to be dealt in that particular manner only, and in no other manner, as can be seen from the legal position, accepted in various judgments based on the proposition in Taylor vs. Taylor.55. Thus inspite of the Secretaries repeating their advice, the Minister of Revenue Smt. Anandiben Patel has insisted on treating this case as a special case for which she has recorded no justifiable reasons whatsoever, and orders were issued accordingly. Under Section 89A(3), the Government is the appellate authority where the Collector does not grant a certificate for purchase of bonafide industrial purpose. Thus what has happened, thereby is that the powers of the statutory authority have been exercised by the Government which is an appellate authority.As noted earlier, the State Government is an Appellate Authority under sub-section 3 of Section 89A, and it could not have given a direction to the Collector who was supposed to take the decision under his own authority. We may profitably refer to a judgment of a Constitutional Bench in State of Punjay vs. Hari Kishan reported in AIR 1966 SC 1081 . In that matter, the respondent desired to construct a cinema at Jhajhar. He submitted an application and under the orders of the State Government all applications were directed to be referred to the State Government. Therefore, though his application was initially accepted, the SDO informed him that the application was rejected. He appealed to the State Government and the appeal was rejected which has led to the petition in the High Court. The Punjab High Court framed the question as to whether the State of Punjab was justified in assuming the jurisdiction which was conferred on the licensing authority by the act. The Supreme Court held in paragraph 4 of the judgment, that the course adopted by the State of Punjab had resulted in the conversion of the appellate authority into the licensing authority. That was not permissible, and so it is in the present case. The reliance by the State Government on the overall control of the State under Section 126 of the Tenancy Act cannot be used when in the instant case the power is with the Collector and the appellate power is with the State Government. The power under Section 126 can be utilized for giving general guidelines, but not for interference or giving directions in individual cases.59. The submission that condition No.4 of the permission to purchase, obtained by respondent No.4 in 2003 permits the Collector to pass such an order is equally untenable. There is nothing in the statutory scheme to suggest that a second sale, inter se parties, after the failure of a purchaser to set up an industry is permissible. In such an event, the statute requires an enquiry to be conducted by the collector. If he is satisfied that there is a failure to set up the industry, the compensation to be paid to the purchaser is determined. After this stage the land vests in the Government. It is thus clear that the condition No 4 in the permission obtained by Respondent No. 4 is bad in law, not having its basis in any statutory provision. Even assuming that the Collector had that power to lay down such a condition, the authority to permit the sale as per the said condition had to be exercised by him in the manner contemplated under Section 89 A (5) viz. after holding the enquiry as prescribed. Here the enquiry itself was dispensed with. Rule 45(b) of the Bombay Tenancy and Agricultural Lands Rules, 1959 also cannot be pressed into service for the reason that, neither under Section 89 nor under Section 89A, a sale inter-se parties is contemplated or permitted.60. Now, what is to be noted is that wherever an agriculturist is in possession of a land, either as an owner or as a tenant protected by the statute, transfer of his land for industrial purposes is subject to the conditions regulated by the Act. It is for the protection and preservation of the agricultural land that the bar against conversion is created under Section 89. Thereafter, as an exception, only a bonafide use for industrial purpose is permissible under section 89A. Ownership of respondent No.4 was subject to the conditions of utilization for bonafide industrial purpose, and it was clear on record that respondent No.4 had failed to utilize the land for bonafide industrial purpose. The reliance on Sections 7 and 10 of the Transfer of Property Act is also misconceived in the present case, since the Tenancy Act is a welfare enactment, enacted for the protection of the agriculturists. It is a special statute and the sale of agricultural land permitted under this statue will have to be held as governed by the conditions prescribed under the statute itself. The special provisions made in the Tenancy Act will therefore prevail over those in the Transfer of Property Act to that extent.61. Besides, the present case is clearly a case of dictation by the State Government to the Collector. As observed by Wade and Forsyth in Tenth Edition of Administrativeintervention is in fact the effective cause, and if the power to act belongs to a body which ought to act independently, the action taken is invalid on the ground of external dictation as well as on the obvious grounds of bad faith or abuse ofobservations by the learned authors to the same effect in the Seventh Edition were relied upon by a bench of three judges of this Court in Anirudhsinhji Karansinhji Jadega and anr. vs. State of Gujarat reported in 1995 (5) SCC 302. In this matter the appellant was produced before the Executive Magistrate, Gondal, on the allegation that certain weapons were recovered from him. The provisions of TADA had been invoked. Theapplication for bail was rejected. A specific point was taken that the DSP had not given prior approval and the invocation of TADA was non-est. The DSP, instead of granting prior approval, made a report to the Additional Chief Secretary, and asked for permission to proceed underCourt in para 13, 14, 15 has held this to be a clear case ofThe respondent No.5 had the courage to state that the notings of the Secretaries were inconsequential. As a beneficiary of the largesse of the Government, respondent No.5 could say that, but it is not possible for us to accept the same.63. Now, the effect of all that is stated above is that the land which was purchased by respondent No.4 for Rs.70 lakhs is permitted by the Government of Gujarat to be sold directly to respondent No.5 at Rs.1.20 crores to set up an industry which could not have been done legally. It is undoubtedly not a case of loss of hundreds of crores as claimed by the appellants, but certainly a positive case of a loss of a few crores by the public exchequer by not going for public auction of the concernedis true as pointed out by Mr. Venugopal, learned senior counsel that in a given case the state may invite an entrepreneur and give an offer. However, in the instant case, the sale of the land for industrial purpose is controlled by the statutory provisions, and the State was bound to act as per the requirements of the statute. Thedirection as seen from the record clearly indicates an arbitrary exercise of power. The orders passed by the Government cannot therefore be sustained. As seen earlier, there is neither a power nor a justification to make any special case, in favour of the Respondent No 5. Such exceptions may open floodgates for similar applications and orders, even though the Gujarat Government is contending that this order is purportedly not to be treated as a precedent.64. In our view, considering the scheme of the act, the process of industrialization must take place in accordance therewith. As stated earlier if the law requires a particular thing should be done in a particular manner it must be done in that way and none other. The State cannot ignore the policy intent and the procedure contemplated by the statute. In the instant case, the State could have acquired the land, and then either by auction or by considering the merit of the proposal of respondent No.5 allotted it to respondent No.5. Assuming that the application of the Respondent No 5 was for a bona-fide purpose, the same had to be examined by the industrial commissioner, to begin with, and thereafter it should have gone to the collector. After the property vests in the Government, even if there were other bidders to the property, the collector could have considered the merits and the bona-fides of the application of Respondent No. 5, and nothing would have prevented him from following the course which is permissible under the law. It is not merely the end but the means which are of equal importance, particularly if they are enshrined in the legislative scheme. The minimum that was required was an enquiry at the level of the Collector who is the statutory authority. Dictating him to act in a particular manner on the assumption by the Minister that it is in the interest of the industrial development would lead to a breach of the mandate of the statute framed by the legislature. The Ministers are not expected to act in this manner and therefore, this particular route through the corridors of the Ministry, contrary to the statute, cannot be approved. The present case is clearly one of dereliction of his duties by the Collector and dictation by the Minister, showing nothing but arrogance of power.65. The High Court has erred in overlooking the legal position. It was expected to look into all the earlier mentioned aspects. The impugned judgment does not reflect on the issues raised in the petition. It could not be said that the petition was delayed and merely because investment had been made by the respondent No.5, the court would decline to look into the important issues raised in the PIL.(i) In normal circumstances, the order hereafter would have been to direct the Collector to proceed in accordance with Section 89A(5) viz., to hold an enquiry to decide whether the purchaser viz. Indigold had failed to commence the industrial activity and the production of goods and services within the period specified. In the instant case, there is no need of any such direction to hold an enquiry, in view of the letter of Indigold itself, dated 6.12.2008, wherein, it clearly stated that they were no more interested in putting up any industrial project in the said land.(ii) Consequently, there will be an order that the land shall vest in the State Government free from all encumbrances. This vesting order, however, has to be on payment of appropriate compensation to the purchaser as the Collector may determine. In the instant case, there is no need of having this determination, for the reason that Indigold has received from Alumina Rs. 1.20 crores as against the amount of 70 lakhs, which it had paid to the agriculturists when it bought those lands in 2003. Neither Indigold nor Alumina is making any grievance towards this figure or the payment thereof.In fact, it is the case of both of them that the direct sale by Indigold to Alumina for this amount as permitted by the State Government be held valid. That being so, this amount of Rs. 1.20 crores would be set-off towards the compensation which would be payable by the State Government to the purchaser Indigold, since the land was originally purchased by Indigold, and is now to vest in the State Government.(iii) The third step in this regard is that the land is to be disposed off by the State Government, having regard to the use of the land. The land was supposed to be used for the industrial activity on the basis of the utilization of bauxite found in Kutch, and respondent No. 5 has proposed a plant based on use of bauxite. The disposal of the land will, however, have to be at least as per the minimum price that would be receivable at the Government rate. In the facts and circumstances of this case, having noted that the respondent No.5 claims to have made some good investment, and that the Respondent No.5 has also offered to pay, without prejudice, the difference between Rs.4.35 crores and Rs.1.20 crores i.e. Rs.3.15 cores to the State, the land will be permitted to be disposed of by the State Government to Alumina provided Alumina pays this amount of Rs. 3.15 crores to the State Government. This particular order is being made having further noted that, Alumina has acted on the basis of the commitment made to it by the Government of Gujarat in the Vibrant Gujarat Summit, and in furtherance of the industrial development policy of the State. It is also relevant to note that the respondent No.5 had made an application to the Collector in the year 2009 for permitting the purchase of the land, and has been waiting to set up its industry for the last four years. Mr. Ahmadi, learned senior counsel appearing for the appellants has also submitted that, as such, appellants are not against the development of Kutch area, but they do want the state to follow the law and exchequer not to suffer. In the circumstances, although we do not approve the action of the State Government, and hold it to be clearly arbitrary and untenable, we are of the view that the aforesaid order will be appropriate to do complete justice in the matter.