Indraprastha Shelters Pvt. Ltd. Vs the State of Karnataka

INDRAPRASTHA SHELTERS PVT. LTD., A COMPANY REGISTERED UNDER THE PROVISIONS OF THE COMPANIES ACT, 2013, HAVING ITS REGISTERED OFFICE AT 4TH FLOOR, PRESTIGE CORNICHE, 62/1, RICHMOND ROAD, BANGALORE-560052. REPRESENTED BY PRAJWAL SHENAVA

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…APPELLANT

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Digitally signed by VASANTHA KUMARY B K Location: HIGH COURT OF KARNATAKA

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(BY SRI UDAYA HOLLA, SENIOR ADVOCATE FOR SRI VAMSHI KRISHNA C, ADVOCATE)

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AND:

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THE STATE OF KARNATAKA REP. BY THE UNDER SECRETARY TO THE DEPARTMENT OF REVENUE, M S BUILDING, DR. B R AMBEDKAR VEEDHI, BANGALORE-560001.

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THE DEPUTY COMMISSIONER BANGALORE URBAN DISTRICT,

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K G ROAD, BANGALORE-560009.

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M/S UMRAH DEVELOPERS REP BY ITS PROPRIETOR, MR. YOUSUF SHARRIF @ D BABU, NO.222/1, MILLERS TANK BUND ROAD, KAVERIYAPPA LAYOUT, BANGALORE-560052.

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…RESPONDENTS

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(BY SRI V G BHANUPRAKASH, AAG A/W

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SRI MOHAMMAD JAFFAR SHAH, AGA FOR R-1 & R-2; SRI D R RAVISHANKAR, SENIOR ADVOCATE FOR SRI GAURAV N, ADVOCATE FOR R-3)

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THIS WRIT APPEAL IS FILED U/S 4 OF THE KARNATAKA

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HIGH COURT ACT, 1961, PRAYING TO SET ASIDE THE ORDER DATED 22.01.2024 PASSED BY THE LEARNED SINGLE JUDGE IN W.P.NO.15823/2021 (KLR) AND ALLOW THE INSTANT WRIT APPEAL AND CONSEQUENTLY ALLOW W.P.NO.15823/2021 (KLR) AND ETC.

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THIS APPEAL, COMING ON FOR PRELIMINARY HEARING, THIS DAY, JUDGMENT WAS DELIVERED THEREIN AS UNDER:

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CORAM: HON'BLE MR. JUSTICE D K SINGH and HON'BLE MR. JUSTICE S RACHAIAH

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ORAL JUDGMENT

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(PER: HON'BLE MR. JUSTICE D K SINGH)

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The present intra Court appeal has been filed by the appellant/petitioner against the judgment and order dated 22.01.2024 passed by the learned Single Judge in W.P.No.15823/2021.

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The aforesaid writ petition was preferred by the appellant challenging the two Communications dated 01.04.2010 and 20.03.2010 issued by the Principal Secretary to the Revenue Department directing the Deputy Commissioner, Bengaluru Urban District, to allot 6 acres 27 guntas of land situated at Doddajala Village, Jala Hobli, Bengaluru North (Additional Taluk) in Survey No.46 to the respondent No.3 as an alternate to similar extent of land in Survey Nos.80 and 81 of Kithaganur Village, Bidarahalli Hobli, Bengaluru East Taluk.

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FACTS OF THE CASE:-

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The State Government had issued a Notification dated 19.10.2007 under Rule 12(2) of the Karnataka Land Grant Rules, 1969 (for short 'the Land Grant Rules') for disposal of certain lands through public auction process, which was scheduled to be held on 29.10.2007. The land measuring 9 acres 21 guntas in Survey No.46 of Doddajala Village was one of the subject matter of the Notification dated 19.10.2007.

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The auction was conducted as scheduled on 29.10.2007. The respondent No.3 viz., M/s. Umrah Developers, a real estate concern, was the successful bidder with respect to the lands in Block Nos.3, 4 and 5.

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The respondent No.1, however, cancelled the auction held on 29.10.2007 on the ground that the value of the lands was much higher than what was offered by the bidders and it was not commensurate with the prevailing market rate. The said ground for cancellation of the auction was as per the opinion of the Karnataka Public Lands Corporation Limited in its report dated 25.03.2010 and the endorsement dated 03.01.2012 issued by

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the Deputy Commissioner to the Secretary of the Revenue Department.

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Subsequently, 5 acres 20 guntas of land in Survey No.46 of Doddajala Village, Jala Hobli, Bengaluru North Taluk (hereinafter referred to as 'the schedule property') was put for public auction vide Notification dated 12.08.2008 including certain other lands. The auction was scheduled on 05.09.2008.

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The petitioner submitted the bid documents in the office of

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the Assistant Commissioner (Enforcement Cell) in terms of the public notice and paid a sum of Rs.55 lakhs being 10% of the bid amount in respect of the schedule property as per the notification.

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The respondent-authority, instead of going ahead with the auction proceedings, had cancelled the auction without assigning any reason and the 10% bid amount i.e. Rs.55 lakhs paid by the petitioner was refunded. No further auction was notified in respect of the schedule property till date.

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It is stated that whenever the petitioner enquired about the future auction proceedings in respect of the schedule property, it was informed that the same was still in process and notification in that regard would follow. However, no notification for auctioning the schedule property was ever published.

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In the meantime, the respondent No.2-Deputy Commissioner, Bengaluru Urban District, issued another Notification dated 13.11.2008 notifying several lands for auction in Survey Nos.80 and 81 situated at Kithaganur Village, Bidarahalli Hobli, Bengaluru East Taluk (gomal land). The auction was scheduled on 25.11.2008 for a total extent of 12 acres 24 guntas. In the said auction, the respondent No.3 -M/s. Umrah Developers was the successful bidder. Vide Letter dated 26.12.2008, the auction was confirmed in favour of the respondent No.3 under Section 177 (1) of the Karnataka Land Revenue Act, 1964.

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For reasons such as encroachment and litigation pending in respect of the lands in Survey Nos.80 and 81, which were the subject matter of the auction proceedings dated 25.11.2008, only

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5 acres and 37 guntas out of 12 acres and 24 guntas of land was handed over to the respondent No.3 and Sale Certificate dated 14.01.2015 came to be issued in favour of the respondent No.3.

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The respondent No.3 made a representation to the Hon'ble Minister of Revenue Department seeking that the schedule land be allotted to him as an alternate land owing to various issues with respect to the remaining 6 acres 27 guntas of land in Kithaganur Village. The Managing Director of the Karnataka Public Lands Corporation Limited, vide Letter dated 10.03.2010 addressed to the Secretary to the Government, Department of Revenue, had opined that it was totally illegal to entertain such a request from a successful bidder for allotment of an alternate piece of land as there existed no such provision in the Legislation permitting allotment of alternate land without holding public auction.

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The Managing Director of the Karnataka Public Lands Corporation Limited addressed another Letter dated 25.03.2010 to the Secretary to the Government, Department of Revenue, by making reference to his earlier Letter dated 10.03.2010, and the

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Communication dated 20.03.2010 and sought for withdrawal of the approval given under the Letter dated 20.03.2010 for allotment of the schedule property in favour of the respondent No.3. The said letter also took note of the fact that on an earlier occasion, the Government had called for auction of the lands in Survey No.46 of Doddajala Village in the year 2007 and the highest bid of Rs.76.67 lakhs per acre was not accepted as the same was not commensurate with the prevailing market rate. Despite the same, the respondent Nos.1 and 2 were considering allotment of the schedule property in favour of the respondent No.3 at Rs.60 lakhs per acre.

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The Principal Secretary, Revenue Department, without any application of mind, had issued another Communication dated 01.04.2010 to the respondent No.2 stating that the consideration to be paid for allotment of the schedule property in favour of the respondent No.3 as an alternate land should be equivalent to the Sub-Registrar's guideline value and the respondent No.2 was permitted to allot the schedule property as an alternate land in favour of the respondent No.3. Even as per the guideline value,

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the land value was Rs.90 lakhs per acre for the residential converted land, but the respondent No.2 confirmed and issued sale certificate directing the respondent No.3 to pay Rs.60 lakhs per acre (guideline value for agricultural land).

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Certain villagers of the Doddajala Village, Jala Hobli, Bengaluru North Taluk, being aggrieved by the allotment of the schedule property in favour of the respondent No.3, had challenged the Communication dated 20.03.2010 before this Court in W.P.No.11246/2010 on the ground that the schedule property was earmarked for providing housing sites to the villagers under the Ashraya Scheme and as such, the respondent Nos.1 and 2 could not have allotted the schedule properly to the respondent No.3.

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The said W.P.No.11246/2010 was dismissed by this Court vide order dated 14.09.2010 by making an observation that the State Government had only fulfilled its obligation in making available 12.24 acres of land to the respondent No. 3, for which the auction proceedings were conducted on 25.11.2008 in respect of the lands in Survey Nos.80 and 81. However, the

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question whether the State had the power to allot an alternate land on its failure to convey the auctioned land was not considered in the said writ petition.

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Thereafter, the schedule property was conveyed in favour of the respondent No.3 for a consideration of Rs.3,40,50,000/-. The respondent No.3 filed writ petitions in W.P.Nos.33397/2013 and 33434/2013 seeking allotment of further alternate land to an extent of 1 acre 22 guntas in Survey No.13 of Challaghatta Village, Kengeri Hobli, Bengaluru South Taluk, on the ground that the State had failed to refund 25% of the bid amount. The said writ petitions came to be allowed by this Court, vide order dated 29.07.2013, directing the State Government to allot an alternate land to an extent of 1 acre 22 guntas to the respondent No.3 within two months as per the old rate fixed by the respondent-authority.

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The said order passed by the learned Single Judge dated 29.07.2013 came to be challenged in W.A.Nos.75/2014 and 731/2014. A Co-ordinate Bench of this Court, vide order dated 22.01.2015 passed in the said writ appeals, held as under:

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"The offer of remaining 75% of the amount also could not create any new right in favour of the respondent to claim any alternative land as a matter of right. Therefore, there was no legal basis to direct the appellant to allot any alternative land as per the old rate fixed at the time of auction in which respondent had been the highest bidder. It is however necessary in the interest of justice and on equitable consideration that the respondent should be refunded the amount deposited by it at the time of bidding in the year 2008 and the amount which is stated to have been subsequently deposited on 11.11.2013. Accordingly, while allowing the appeals and setting aside the impugned order, it is directed that the respondent shall be refunded the amounts lying deposited with the appellant on or before 30.03.2015 with interest at the rate of 7.5% per annum calculated on the basis of date of deposit and date of payment."

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The petitioner, who had participated in the auction proceedings in respect of the schedule property, which was notified vide Notification dated 12.08.2008, came to know in the year 2021 that the schedule property had been clandestinely allotted to the respondent No.3 as an alternate site. Therefore, the petitioner filed an application under the Right to Information Act, 2005 (hereinafter referred to as 'the RTI Act') seeking information about allotment of the schedule property to the respondent No.3, from the Department of Revenue, State of Karnataka. The petitioner received the information that the

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schedule property was allotted to the respondent No.3 as an alternate to the shortfall of the land for which the auction was held on 25.11.2008 in Survey Nos.80 and 81 of Kithaganur Village. The petitioner thereafter filed a writ petition in W.P.No.15823/2021 seeking the following reliefs:-

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"a. Issue a writ of certiorari, writ or direction by quashing the impugned Order of the First Respondent bearing No. RD 18 LGB 2010 dated 01/04/2010 Vide ANNEXURE-G;

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b. Issue a writ of certiorari, writ or direction by quashing the impugned Order bearing No.RD 18 LGB 2010 dated 20/03/2010 issued by the First Respondent vide ANNEXURE-H;

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c. To issue any other Writ of Mandamus or direction to the Respondent No. 1 and 2 to cancel the Sale Certificate and re-auction the land in Sy.No.46 of Doddajala village, Jala Hobli, Bangalore North Taluk, by providing opportunity to the petitioner to participate in the bidding process as per the provisions of law and Rule 12(2) of Karnataka Land Grant Rules and to grant such other and further reliefs as this Hon'ble Court deem fit to grant under the circumstances of the case, in the interest of justice and equity."

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The learned Single Judge, vide impugned judgment and order dated 22.01.2024, has held that as the Division Bench, in

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the Public Interest Litigation (PIL) bearing W.P.No.11246/2010, had repelled the challenge to the allotment of schedule land in favour of the respondent No.3, and the said decision would be a binding precedent on the writ Court. If the issue is covered by the decision of the Division Bench, similar issue cannot be raised by the petitioner and the same would be hit by the principles of res judicata . The learned Single Judge has not gone into other questions and the writ petition came to be dismissed only on the ground of res judicata .

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ISSUES:-

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The questions which fall for consideration in this appeal may be summarized as under:-

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Whether the State Authority, being

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the trustee of the public property (including land)/natural resources, can dispose of the property without following the procedure as prescribed under the relevant statute/rules?

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When the State decides to dispose

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of the public property/land, whether the same should be disposed of in an open, just, fair and transparent manner by putting the property in auction?

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Whether the State Authorities are entitled to allot alternate land for the shortfall in land for which the auction was conducted on 25.11.2008 that too, much below the prevailing market rate?

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Whether the allotment of the schedule land in favour of the respondent No.3 is a colourable, mala fide and arbitrary exercise of power by the State Authorities?

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SUBMISSIONS:-

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Mr. Udaya Holla, learned Senior Counsel appearing for the appellant has submitted that the dismissal of the writ petition on the ground of res judicata is unsustainable. The doctrine of res

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judicata could not be applicable in the present case inasmuch as the petitioner was not a party in W.P.No.11246/2010. Secondly, the issues raised by the petitioner in the writ petition were not directly and substantially the same as raised in W.P.No.11246/2010. In the present writ petition, the petitioner, who was the bidder in respect of the schedule land, has challenged the allotment of the schedule land in favour of the respondent No.3 in violation of the statutory prescription in colourable exercise of the powers by the State Authorities in a mala fide and arbitrary manner. The said issue was neither raised nor adjudicated earlier. Under the provisions of the Karnataka Land Revenue Act and the Karnataka Land Grant Rules, there is no provision for exchange or allotment of alternate land without conducting auction, and this issue was never decided by the Division Bench in the PIL i.e., W.P.No.11246/2010. It is further submitted that the earlier auction was cancelled on the ground that the amount offered at Rs.77 to 78 lakhs per acre was much lower than the prevailing market rate whereas, the respondent No.3 has been allotted the same site at Rs.60 lakhs per acre substantially lower than even

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the prior bids much against the public interest in exercise of arbitrary power.

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It is further submitted that the auction is the best method to maximise the public revenue through competitive bidding. The value of the land varies depending on location and potential development. The allotment of alternate land in a different place, where even though the guideline value was Rs.90 lakhs per acre for residential converted land, was inherently illegal, arbitrary and mala fide against the public interest. It is further submitted that as soon as the petitioner came to know about the schedule land having been clandestinely allotted in favour of the respondent No.3, it has filed the writ petition. However, the learned Single Judge, without considering the legal and fundamental issues involved, has dismissed the writ petition on the incorrect ground of the writ petition being hit by the principles of res judicata.

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It is submitted on behalf of the State Mr. V.G. Bhanuprakash, learned Additional Advocate General that the writ petition was not maintainable as the petitioner had

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failed to establish his enforceable legal right warranting interference under Article 226 of the Constitution of India. The relief sought by the petitioner was wholly unsustainable and the writ petition should have been dismissed on this ground itself. The petitioner would not get a right to challenge the allotment of land in favour of the respondent No.3 only on the basis of the petitioner having participated in the auction proceedings conducted in pursuance to the Notification dated 12.08.2008 in respect of the schedule land, which came to be cancelled. The participation in the auction would not create any vested right in favour of the petitioner for conducting the auction once again of the schedule land.

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The respondent No.3 emerged as the successful bidder in respect of the land measuring 12 acres 24 guntas in Survey Nos.80 and 81 of the Kithaganur Village, Bidarahalli Hobli, Bengaluru East Taluk, for Rs.4,74,30,000/-. However, the entire land could not be made available to the respondent No.3 because of the serious objection raised by the villagers and therefore, the respondent-Authority was well within the power to

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allot shortfall in the schedule land in favour of the respondent No.3.

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It is next submitted that the writ petition suffers from gross delay and laches. The allotment of the schedule land was made in favour of the respondent No.3 in the year 2010 whereas, the writ petition was filed in the year 2021 and therefore, the writ petition was not liable to be entertained for the unexplained delay and laches.

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Mr. D.R. Ravishankar, learned Senior Counsel appearing for the respondent No.3 has submitted that the grant of alternate land by the Government for the shortfall in the schedule land which was auctioned by the State Government on 25.11.2008 where the respondent No.3 was the successful bidder, was neither arbitrary nor illegal. The respondent No.3 was allotted alternate land in the schedule land at Rs.60 lakhs per acre as per the guidance value and it was done only to fulfil the Government's obligation arising from the confirmed auction sale. The respondent No.3 has also said that the challenge to the said allotment of land in favour of the respondent No.3 was subject

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matter of W.P.No.11246/2010 which was dismissed and therefore, the learned Single Judge has rightly held that the writ petition filed by the petitioner was barred by the principles of res judicata . He further submitted that Rule 12(2) of the Karnataka Land Grant Rules, 1969 merely provides for auctioning of valuable lands, however, it does not prohibit alternate allotment of land. The said provision has since been omitted, it cannot invalidate the allotment of land.

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ANALYSIS AND CONCLUSION:-

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We have considered the submissions.

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The Division Bench of this Court in W.A.Nos.75/2014 and

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731/2014 instituted by the respondent No.3 against the judgment and order dated 29.07.2013 passed in W.P.Nos.33397/2013 and 33434/2013, wherein the learned Single Judge had directed the State to allot an alternate land for an extent of 1 acre 22 guntas to the respondent No.3 within two months for failure of the State to refund 25% of the bid amount, dismissed such a plea vide judgment and order dated 22.01.2015 holding that there was no legal basis to direct the Government to allot an alternate land as

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per the old rate fixed at the time of auction, in which the respondent No.3 had been the highest bidder. The observations of the Division Bench in the judgment dated 22.01.2015 has already been extracted in paragraph 18 above.

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The existing Rule 12 of the Land Grants Rules provides for disposing of the valuable lands by putting it on public auction. There is no provision under the Land Grant Rules to allot an alternate land to a bidder who was successful, but the entire land could not be allotted in his favour. The Managing Director of the Karnataka Public Lands Corporation Limited, in the two Communications dated 10.03.2010 and 25.03.2010, had flagged the illegalities in entertaining the request of the respondent No.3, who was the successful bidder, for allotment of an alternate piece of land. However, without assigning any reason, the said concern was brushed aside by the Principal Secretary of the Revenue Department. The Managing Director had also stated that in the auction of lands in Survey No.46 of Dodaajala Village in the year 2007, the highest bid was Rs.76.67 lakhs per acre, however, that was not accepted on the ground that the said rate

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was not commensurate with the rate prevalent in the market. Despite this, the respondent Nos.1 and 2 had allotted the land in favour of the respondent No.3 for a sum of Rs.60 lakhs per acre much below the guideline value which was Rs.90 lakhs per acre for residential converted land and far below than the prevailing market rate.

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The State holds natural resources in public trust and must act in common good. The natural resources can be disposed of subject to the constitutional limits that is, in observance of the public trust duties and in accordance with the applicable statute and regulations. Competitive bidding is a strongly preferred mechanism when a resource is allocated for private commercial profits. When the Land Grant Rules particularly, Rule 12(2) provides for alienating the land by putting it in public auction, the allotment of land in favour of the respondent No.3 without placing the land in public auction is nothing but a mala fide and arbitrary exercise of power by the respondents.

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Rule 12(2) of the Land Grant Rules as existed on the relevant date would read as under:-

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" 12. Price payable for the land granted under these rules.

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(2) Notwithstanding anything contained in sub-rule (1), where the land is very valuable, the Deputy Commissioner or the other Officer authorised by him in this behalf may sell such land by public auction."

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Here again, it is required to fetch best value for the valuable land under the statutory scheme and non-auction of the land and allotting it in favour of the respondent No.3 was in violation of Articles 14 and 39(b) of the Constitution of India. The allotment of land in favour of the respondent No.3 without putting it in auction does not satisfy fairness, transparency, objectivity and a rational nexus to declared public/society's objectives. The arbitrariness, favoritism and discrimination or absence of prescribed legislative procedure would always attract judicial intervention in State action, particularly when public interest has been compromised by the State Authorities. We are, therefore, of the view that the allotment of the land in favour of the

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respondent No.3 was without statutory authority and outside the procedure prescribed under the Land Grant Rules and liable to be set aside.

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We may also add that the allotment of land in favour of the respondent No.3 is not for any legitimate welfare or social policy aims and it cannot be justified on any ground. The State does not have an absolute discretion to allot natural resources of the land etc., in favour of a person of their choice. They can dispose of the natural resources only as per the prescribed procedure under the relevant statute and within the constitutional limits as prescribed under Articles 14 and 39(b) of the Constitution of India.

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If the State could not allot the entire extent of land in Survey Nos.80 and 81 as per the auction proceedings held on 25.11.2008, the respondent No.3, who was the highest bidder, did not have any vested right for allotment of alternate land for the shortfall. The highest bid does not by itself create a vested right for allotment of the entire land of 12 acres 24 guntas in Survey Nos.80 and 81. If the respondent No.3 was aggrieved, it

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could have asked for refund of the amount, but there was no question for him being allotted an alternate land in the schedule property by the State Authorities. The State has power to cancel, re-advertise and re-auction. If the entire land was not available, the State could have re-advertised the land by putting the same in auction again, but the allotment of land in favour of the respondent No.3 despite serious concerns and illegalities having been flagged by the Managing Director of the Karnataka Public Lands Corporation Limited was nothing but an illegal, arbitrary, mala fide exercise of the power against public interest and the State interest. We are, therefore, of the firm view that there is no provision for allotment of alternate land under the Karnataka Land Grant Rules and therefore, such an exercise of the power is wholly illegal, unconstitutional, mala fide and cannot be approved.

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When the petitioner was not privy to the dealings between the respondent No.3 and the State Authorities, the question of delay would not arise. It is evident that as soon as the petitioner got the information under the RTI Act, it has approached the

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High Court by filing the writ petition. The petitioner has locus to challenge the allotment of land in favour of the respondent No.3 inasmuch as the petitioner was the bidder in respect of the schedule land which was conducted in pursuance to the Notification dated 12.08.2008. However, later on, it was cancelled on the ground that the amount of Rs.78 lakhs per acre offered was below the market price, but the same land has been allotted in the year 2010 for Rs.60 lakhs per acre. We are of the view that the petitioner has locus to challenge the allotment of the land in favour of the respondent No.3 in such an arbitrary, illegal, mala fide and unconstitutional manner against the public interest.

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The question of principle of res judicata would not be applicable in the facts of the present case for the reason that the petitioner was not a party in W.P.No.11246/2010 which was a PIL and the issues raised by the petitioner in the present writ petition were not substantially the same issues which were raised in the PIL. The PIL was filed only on the ground that the said land was reserved for Ashraya Scheme and the question of

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allotment of alternate land to the respondent No.3 was not an issue which was substantially raised in the said PIL.

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In view of the above, we set aside the judgment and order dated 22.01.2024 passed by the learned Single Judge in W.P.No.15823/2021 and declare that the allotment of the land in favour of the respondent No.3 is illegal and unsustainable and the same is therefore set aside.

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The State Government is directed to put the schedule land in public auction by inviting the bids and confirm the bid in favour of the highest bidder.

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In view of disposal of the writ appeal, pending IAs, if any, do not survive for consideration and accordingly, they stand disposed of.

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Sd/- (D K SINGH) JUDGE

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Sd/(S RACHAIAH) JUDGE

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BKV

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List No.: 1 Sl No.: 10

Indraprastha Shelters Pvt. Ltd. v. the State of Karnataka

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Indraprastha Shelters Pvt. Ltd. v. the State of Karnataka

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