Case: J S LUTHRA ACADEMY Vs. THE STATE OF JAMMU AND KASHMIR

2. The brief facts leading to these appeals are that the Appellant-J.S. LuthraAcademy (hereinafter referred to as the ‘Academy?), an educational institution, initially was situated on a Wakf property in Jammu. Vide order dated 27.12.1995 of the authority constituted under the J&K Wakf Act, 1978, the said educational institution was ordered to be evicted from the Wakf property. Against the said order, the Academy approached the Jammu & Kashmir Special Tribunal, and an interim order of stay on eviction was granted by the tribunal on 09.01.1996. During the interregnum, the Academy made representations to the State Government requesting for allotment of a piece of land at any place mentioned in the representations for shifting and running theschool. The concerned minister in the meeting dated 14.1.1998 considered the question of allotment of land in favour of the Academy. Subsequently, a note was prepared by the Managing Director of the J & K Housing Board on 25.1.1999, proposing that the Board had 4 kanals of land in Sector 2 of Channi Himmat, Jammu earmarked for schools which could be considered for allotment to the Appellant at Rs. 8,00,000/- per kanal. In a subsequent meeting on 29.4.1999 after completion of formalities, four kanals in Sector 2 of Channi Himmat were alloted to the Academy at Rs. 8,00,000/- per kanal on lease for 40 years and the Academy was directed to deposit 50% of the saidamount, the remaining amount to be deposited subsequently. In a meeting dated 28.6.2000, a decision was taken by the J & K Housing Board in pursuance of the orders of the Chief Minister, that two kanals of land would be allotted to the Academy at the rate of Rs. 8,00,000/- per kanal and the other two kanals free of cost. Further, in a Cabinet meeting dated 18.8.2000, it was decided that the Jammu Development Authority was to be compensated for the free allocation of land in the form of allotment of alternate land to the Authority. The allotment of land to the Academy was sanctioned by the Principal Secretary, Government of J&K, vide letter dated 24.8.2000. The Academy finally paid a total of Rs.16,00,000/- for two kanals of land and obtained two more kanals free of cost. A lease deed was executed, and possession was handed over on 12.12.2001. The Academy constructed the school building thereon and the school isbeing run on this premises, having shifted from the wakf. The residents of Channi Himmat vide Writ Petition No. 1093 of 2002 questioned the allotment made in favour of the Academy, on the ground that the piece of land was meant for a playground but the same was allotted to the Academy in violation of the original scheme and plan of the Channi Himmat Housing Colony. One Mr. Naresh Kumar, a proprietor of the United Public School situated at Channi Himmat, filed a writ petition being O.W.P. No. 10/2003,questioning the allotment made in favour of the Academy on the ground that the property ought to have been auctioned by the Government, so that he could have also applied for the allotment of the plot, which he required for the upgradation of his school to the higher secondary level. Both the writ petitions were clubbed, heard and decided together by the learned Single Judge of the High Court and were dismissed. However, the Division Bench by the impugned judgment set aside the order of the Single Judge and allowed the writ petitions and consequentlyquashed the allotment made in favour of the Academy with the followingboard is directed to hold public auction of the land for the purpose of leasing the same out on the sameterms and conditions it had leased it to the private respondent, except that the premium thereof shall be fixed at the highest price to be obtained at such auction to be held by inviting people interested in setting up of a secondary school on the plot of land in question by publishing at least two advertisements in newspaperswidely circulated in Jammu and also published therefrom. The Board is directed to fix the minimum bid price at Rs.16.00 lacs plus the cost of construction ascertained in the manner as above. In the event the bid to be had at the public auction does not exceed the minimum reserved bid price, the Board shall execute a fresh leasein favour of the private respondent upon obtaining payment of Rs.16.00 lacs from him. In the event the bid price to be had at the auction exceeds the minimum reserved bid price and the same is not given by the private respondent, the Board shall give an opportunity to the private respondent to meet the same and, ifhe meets the same, to execute the lease in favour of the private respondent upon accepting the amount of such bid, less the cost of construction ascertained in the manner as above, as premium. In the event the private respondent fails to match the bid price, the Board shall grant the lease in favour of the highest bidder and from theamount so to be received, first pay the cost of construction ascertained in the manner as above to the private respondent.The contesting respondentsherein, i.e., the original writ petitioners who were before the learned Single Judge and the Division Bench, have chosen to remain absent before this Court despite service of notice on them.

Court's reasoning:
From the above decisions, the following principles may be culled out:(i) Generally, when any land is intended to be transferred by the state, or any state largesse is to be conferred, resort should be had to public auction or transfer by way of inviting tenders from the people. The state must ensure that it receives adequate compensation for the allotted resource. However, non-floating of tender or non- conductingof public auction would not be deemed in all cases to be an arbitrary exercise of executive power. The ultimate decision of the executive must be the result of a fair decision- making process.allocation must be guided by the consideration of the common good as per Article 39(b), and must not be violative of Article 14. This does not necessarily entail auction of the resource; however, allocation of natural resources to private persons for commercial exploitation solely for private benefit, with no social or welfare purpose, attracts higher judicial scrutiny and may be held to be violative of Article 14 if done by non-competitive and non-revenue maximizing means.Keeping in mind the aforementioned principles formulated bythis Court in the aforementioned judgments, we have considered the entire material on record. It must be determined as to whether the allocation made in favour of the Academy fell foul of the above principles. In the instant case, the allocation has evidently been done to a private educational institution by non-revenue maximizing means.ar asve of theallocation is concerned, in our considered opinion, the Division Bench of the High Court was not justified in rejecting the submission of the Academy that the allocation of land was done keeping in mind theplight of the students of the school. One of the reasons assigned by the Division Bench in rejecting this contention was that there was no discussion about the plight of the students in the correspondencebetween the Appellant-Academy and the Government. However, a mere lack of explicit statements to that effect does not imply that the action was not motivated by welfare considerations, inasmuch as the displacement and uprooting of several hundreds of students from their school was the obvious underlying concern in the representationmade by the Appellant and the order passed by the State Government.a corollary of the above, it is evident that an executive action would not be arbitrary merely because the action is not explicitly stated to have been taken for a particular reason or basedon a particular principle which in itself is reasonable; rather, it would be open to the Court to see whether such a reasonable principle is discernible from the facts and circumstances of the case. Just like the Court has the power to lookinto the underlying purpose of an executive action to determine whether it is motivated by extraneous reasons while examining it for arbitrariness, so also the Court may determine whether there is a germane objective being served through the execution of the action, by examining the surrounding facts and circumstancesin which the executive action was effected. Though the Appellant is a private educational institution, it cannot be said that the action of the government was not backed by a welfare purpose merely because it is not stated in so many words in the correspondence between the Academy and the State Government that the alternative land sought for allotment was to protect the interests of children studying at the school. This is becausethe same is clearly discernible from the facts and circumstances of the case. It has been stated that the Appellant was evicted from the wakf land not because of any wilful default or unauthorized use, but because the wakf required the land for its own use. In such circumstances, having no other alternative, the Appellant approached the government for allotment of suitable land for running the school. It seems that the State Government also preferred to peacefully settle the issue of getting the school vacated from the wakf property, at an early date, without disturbing the education of the students and peace in the. Articles 38 and 39 of the Constitution of India provide that the State must strive to promote the welfare of the people of the State by protecting all their economic, social and political rights. Theserights may cover means of livelihood, health and the general well-being of all sections of the people in the society, of which education is an important. Imparting basic education is a constitutional obligation on the State as well as societies running educational institutions. Children are the future of our nation. Education is a basic tool for individuals to lead an economically productive life and is one of the most vital elements for the preservation of the democratic system of government. The Constitution of India bestows considerable attention to the field of education. It recognizes the need for regulating the various facets of activity of education and also the need for not only establishing and administering educational institutions but also providing financial support for educational institutions run by private societies. (See: Secretary, Mahatama Gandhi Mission v. Bhartiya Kamgar Sena, (2017) 4 SCC 449  , paras 33-36 and 39).Thus, in our considered opinion, the State Government proceeded to allot the land in favour of the Appellant keeping in mind the public interest in the education of hundreds of children as well as considering the urgency of the matter and it cannot be said that the action was not backed by a social or welfare purpose. It is worth emphasizing that the test of Article 14 must be applied from the perspective of substantive rather than formal equality, and must be mindful of the effect of the action or rule that is being tested. While under ordinary circumstances, the usual practice of allocation of sites on the basis of advertisements or auction was being followed, the instant situation warranted a deviation from the standard procedure to prevent prejudicing the future of the children studying at the Academy. In our view, taking a holistic view of the matter, the action taken by the State Government did not suffer from the vice of arbitrarinessas it wasbacked by a welfare. In addition, we do notfind any reason to reject the contention of the State Government that the allotment of 4 Kanals of land to the Appellant was in the nature of an exchange, inasmuch as the State Government wanted to evict the Appellant who was running a school at Wakf land situated in the main city area. Such a decision seems to have been taken by the State Government to avoid any unrest in the locality or city.In such circumstances, we do not find any arbitrariness in the decision taken by the State in allotting 4 Kanals of property. On the other hand, we are of the opinion that the action of the State was fair, reasonable, transparent, unbiased, without favourtism and. In our view, the action of the authorities can be assailed to the extent that the allotment of two kanals free of cost was bad in law.It is evident that the consideration paid by the Appellant was only with respect to two kanals and the remaining two kanals of land were allotted for free to the Appellant. It is not in dispute that Rs. 8,00,000/- per kanal was the average auction saleprice which was fetched around the time of allotment. Keeping this figure in mind, the State Government fixed the allotment price at Rs. 8,00,000/- per kanal. It is clear that there was no arbitrariness in fixing the price at Rs. 8,00,000/- per kanal.However, we are unable to accept the contention that the allotment of 2 Kanals of land for free was justified. This is all the more significant in light of the absence of any material on record to show that the school was being run purely for charitable and educational purposes.aforementioned observations suggest that while in the case of a non profit-oriented educational institution serving the public interest, public property can be allotted to it at a concessional price or for free by imposing stringent conditions for the use of the land, it is questionable whether the same can be done for profit-oriented. Thus, in our considered opinion, there is a loss to the public exchequer to the extent of Rs.16,00,000/- for two kanals as on the date of allotment. However, having regard to the fact that the Appellant-Academy has been running on the allotted site since many years, after constructing a new building, the transfer may be saved by giving the transferee an opportunity to make good the shortfall in the consideration.On an examination of the facts and circumstances of the case in the light of the above observations, it is evident that it is appropriate to give the Appellant the opportunity to make good the shortfall in consideration, as the loss to the public exchequer caused by the free allocation cannot be said to have had an everlasting effect or impact on public interest.Moreover, we do not find any high-handedness on the part of the Appellant in seeking the allotment in its favour, as it acted in a bona fide manner. This would also be in consonance with the principle stated by us in the beginning of the judgment that the public must be adequately compensated for the alienation of natural resources by the State.