As per case facts, the State of Rajasthan allotted industrial land in Kota to JKSL under the 1959 Rules. Later, as a sick company, JKSL's leasehold was transferred to Respondent ...
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REPORTABLE
IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
CIVIL APPEAL NO. 2963 OF 2023
[Arising out of Special Leave Petition (Civil) No. 14970
of 2021]
Bishambhar Prasad … Appellant
Versus
M/s Arfat Petrochemicals Pvt. Ltd. &
Ors.
… Respondents
WITH
CIVIL APPEAL NO. 2965 OF 2023
[Arising out of Special Leave Petition (Civil) No. 13106
of 2021]
The Rajasthan Industrial Development
and Investment Corporation Ltd.
… Appellant
Versus
M/s Arfat Petrochemicals Pvt. Ltd. &
Ors.
… Respondents
WITH
C.A. No. of 2023 @ SLP (C)NO. 14970 OF 2021 ETC.ETC. Page 1 of 113 2023 INSC 406
CIVIL APPEAL NO. 2964 OF 2023
[Arising out of Special Leave Petition (Civil) No. 13008
of 2021]
The State of Rajasthan & Anr. … Appellant
Versus
M/s Arfat Petrochemicals Pvt. Ltd. &
Ors.
… Respondents
WITH
CIVIL APPEAL NO.2966 OF 2023
[Arising out of Special Leave Petition (Civil) No. 960
of 2022]
The President, J.K. Staple & Acrylic
Employees Union & Ors.
… Appellant
Versus
M/s Arfat Petrochemicals Pvt. Ltd. &
Ors.
… Respondents
AND
CIVIL APPEAL NO.2967 OF 2023
[Arising out of Special Leave Petition(Civil) No.5073of 2023]
[Arising out of Special Leave Petition (c) Diary No. 8380
of 2022]
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Rajasthan Trade Union Kendra … Appellant
Versus
M/s Arfat Petrochemicals Pvt. Ltd. &
Ors.
… Respondents
JUDGEMENT
Surya Kant, J.
1.Leave granted.
2.This batch of appeals arises from the judgment dated
20.07.2021 passed by the Jaipur Bench of the High Court of
Judicature for Rajasthan whereby the Writ Petition filed by
Respondent No. 1 – M/s. Arfat Petrochemicals Pvt. Ltd. in all
connected matters was allowed. As a corollary, the decision by
the Cabinet Committee of the State of Rajasthan, and resulting
instructions issued to the Rajasthan State Industrial
Development and Investment Corporation Ltd. (“RIICO”) to
cancel a series of permissions and approvals granted/awarded to
Respondent No. 1 in respect of industrial land in Kota,
Rajasthan, were set aside.
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3.There are different Appellants before us in the respective
SLPs. They include the State of Rajasthan (hereinafter, “State of
Rajasthan” or “State Government”), RIICO, and various
workers unions (hereinafter, “Appellant Unions”). As the nature
and type of relief sought by both the State of Rajasthan and
RIICO, stand on a slightly different footing to that of the
Appellant Unions, we will address the State of Rajasthan and
RIICO (collectively, “Appellants”) separately, to maintain the
distinction between the reliefs sought by them as compared to
the Appellant Unions.
A. FACTS
4.The dispute originates from the allotment of
approximately 271.39 acres of land by the State of Rajasthan
through the District Collector, Kota, in the Large-Scale
Industrial Area, Kota (“LIA, Kota”) to J.K. Synthetics Ltd.
(“JKSL”) on 12.09.1958. Following the allotment, a lease deed
was executed with JKSL by the Collector, Kota, and permission
was granted for setting up its industrial units in the area. JKSL’s
retention of the property was facilitated over the following
decades through the execution of fresh lease deeds with respect
to the same area, as and when the period specified in the earlier
lease lapsed.
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5.Just after the first allotment was initially made, the State
Government exercised its powers under Section 100 of the
Rajasthan Land Revenue Act, 1956 and formulated the
Rajasthan Industrial Areas Allotment Rules, 1959 (“1959
Rules”) to regulate the allocation of land to entrepreneurs and
the development of industrial areas across the State. Section 100
of the Rajasthan Land Revenue Act is provided below:
“100. Sale of land in Industrial and Commercial
Areas – The State Government may make rules
regulating sales of lands in industrial and
commercial areas and may also impose an annual
assessment of such lands, wherever necessary.”
6.Similarly, Rules 2, 8 and 9 of the 1959 Rules are also of
some relevance and the same are reproduced below:
“2. Period for which land may be allotted.- Land
in industrial area may be allotted on lease-hold
basis for a period of 99 years-
(a)for setting of a large-scale industry anywhere
in the state, by the State Government in the
Industries Department and in the case of
large-scale tourism unit, the allotment shall
be made by the Government in the Revenue
Department and
(b)for setting up of other industries –
(i)in Jaipur District, by the Director of
Industries, Rajasthan Jaipur provided
that in case of a tourism unit the
allotment shall be made by the
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Government in the Revenue
Department, and
(ii)in any other district, by the Collector
concerned.
(bb) for the setting up of IT Industries
Government land shall be allotted by the
State Government in the Revenue
Department on the recommendation of the
Department of Information Technology and
Communication.
(c)all allotment of land under clause (a) shall be
made within a period of 60 days and under
clause (b) within a period of 30 days from the
date of receipt of the completed application
in Form-B. In case applicants submit
complete application electronically in Single
window System Portal, it shall be disposed as
per the provisions of the Rajasthan
Enterprises Single Window Enabling and
Clearance Rules, 2011.
Provided that the allotment of land for the purpose
of setting up of Common Effluent Treatment Plant
and related activities, anywhere in the State, shall
be made by the State Government in the Revenue
Department for a period of 10 years which shall be
extendable for a period of 5 years.
xxx xxx xxx
8. Land not to be used for other purpose. – (1)
The land given for industrial purposes shall not be
used for any other purpose except constructing
factory premises and such other residential quarters
as are required for those engaged in that industry.
No constructions shall be permitted which may
have the object of using it as a commercial
undertaking other than the industry permitted to be
established.
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Provided that the State Government, on the
application of the lessee for establishment of
industry other than the industry for which the was
given, may grant permission for establishment of
such industry. But in case of government land
allotted under these rules, such permission shall not
be granted for establishment of tourism units.
(2) The permission for construction of the labour
colony shall be given if required at the time of the
establishment of an industry.
(3) The industrialist shall be free to use an area
upto 200 sq. meter for his own residential purpose
on first floor of the factory premises.
9. Lessee debarred from sale of land etc. – The
lessee shall have the limited ownership on the land
leased till the lease subsists and shall have the right
of assignment only for the purpose of taking a loan
for the development of the industry or for pledging
as collateral security for a loan taken by the lessee
or some other industry owned by the same
management. The lessee shall have no right to sell
the land:
(i)Provided that the land can be pledged as
collateral security only in favour of Industrial
Financial Corporation of India, Rajasthan
Finance Corporation, IDBI, ICICI, LIC,
IRBI, HDFC, SIDBI, EXIM Bank, Co-
operative Banks and any Public Financial
Institution as defined in the Public Financial
Institute Act or Scheduled Banks or private
lending agencies subject to ensuring that the
lessee has cleared all the outstanding dues of
the lessor and the lessee creates first charge in
favour of the State Government and second to
the financing body or bodies.
(ii)Provided further that once the land has been
utilised for the purpose for which it was
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allotted within the period specified in rule 7,
the lessee may, with the permission of the
Allotting Authority transfer his right or
interest in the whole land, so leased out, on
the following conditions:-
(a)In case of government land allotted
under these rules, he shall pay 50% of
prevailing market price of land after
deducting allotment price charged under
rule 3A and the transferee shall pay 50%
of excess amount of yearly lease land
mentioned in rule 5 and other conditions
of lease shall be remained unchanged.
(b)In case of converted Khatedari land
allotted under these rules for industrial
purpose, the transferee shall pay 50%
excess amount of yearly lease rent
mentioned in rule 5 and other conditions
of lease shall be remained unchanged.
(iia) Provided also that if after grant of permission
the transferee has failed to execute the lease deed
and further transferred the allotted land without
prior permission of allotting authority, such
transfer may be regularised by the allotting
authority on payment of penalty of Rs.3000/- for
each transfer. The lease deed may be executed in
favour of such transferee for the remaining period
of lease may be executed in favour of such
transferee for the remaining period of lease.
The transferee shall pay 50% excess amount of
the yearly lease rent mentioned in rule 5 on such
transfer.
(iii)Provide also that in case an industrial plot is
proposed to be divided or sub-divided for any
purpose, whatsoever, prior permission of the
State Government in the Revenue
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Department shall be obtained by the allotting
authority.
(iiia) Provide also that if any industrial plot is
divided or sub-divided without obtaining
prior permission of the State Government,
the lessee shall apply for permission of
division or sub-division to the allotting
authority along with a copy of the challan
depositing an amount of Rs.3000/-. The
allotting authority, with prior approval of the
State Government, may regularise the
division or sub-division.
(iv)Provide also that, in case of sick unit as per
RBI guidelines, the lessee with the prior
permission of the State Government, may
transfer his right or interest in the leased land
sub-divided under the above proviso on the
following conditions: -
(a)That NOC from Financial
Institutions/Bank shall be obtained, in
case land is mortgaged.
(b)that the conditions of lease shall remain
unchanged.
(c)that the transferee shall pay additional
100 percent excess amount of the
proportionate yearly lease rent applicable
from the date of transfer of right or
interest in leased land.
(d)that the transferee shall use the land for
the industrial purpose only.
(e)that in case of government land allotted
under these rules, the transferee shall pay
50% of prevailing market price of land
after deducting allotment price charged
under rule 3A.
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(v)Provided also that no permission of transfer
under the above proviso, shall be allowed in
case of a Government land unless the unit is
declared sick by Board of Industrial and
Financial Reconstruction (BIFR).
(vi)Provided also that in case of any doubt of any
kind the allotting authority shall refer the
matter to the State Government in the
Revenue Department whose decision shall be
final.
Provided also that the developer of micro,
small and medium enterprises clusters, as per
approved plan, may transfer his right or
interest in the whole land, so leased out to
entrepreneurs. The conditions of lease
remaining unchanged. The transferee shall
pay 50% excess amount of the yearly lease
rent mentioned in rule 5 on such transfer.”
7.The first lease deed of 11.08.1967 which governed the
terms and conditions of allotment of land to JKSL, contained,
amongst others, the following conditions:-
“xxx xxx xxx
NOW THIS INDENTURE WITNESSETH AS
FOLLOWS:
…
iv) The lessee shall set up on the said plot of land
Nylon industry for which land has been leased to
him by the lessor within a period of two years from
the date of talking over the possession of the land
as above mentioned and in case of his failure to do
so the said plot shall revert to the lessor unless the
period of two years is extended by the lessor on
valid grounds.
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v) The lessee shall set up, construct, erect and build
on the said plot of land, only such buildings, sheds,
and structures as are required by him for setting up
the industry aforesaid and also such other
residential quarters e.g. watch & ward quarters as
are required for those engaged or to be engaged in
the said factor.
vi) The lessee agrees not to construct or build any
structures or building on the said plot of land or on
a portion of it which may have the object of using
it as a commercial undertaking other than for the
industries aforesaid for which the said plot has
been leased to the lessee.
…”
As is evident from the lease, the object behind the
allocation of the land was for a specific purpose and no other
usage was permissible. Subsequent leases executed between
JKSL and the District Collector contained pari materia clauses.
8.While the above stated leases were subsisting, the
Rajasthan State Industrial and Mineral Development
Corporation Ltd. (“RSIMDC”) was incorporated for carrying
out development projects across the State. The Corporation was
subsequently split into two entities, with RIICO acting as its
direct successor. To regulate RIICO’s activities in respect of the
lands over which it would have control, the RIICO Disposal of
Land Rules, 1979 (“1979 Rules”), were issued under Article
93(xv) of the Articles of Association (“AoA”) of the Company.
The Rules provided a mechanism by which RIICO could grant
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different types of approvals and permissions in relation to
industrial lands and their utilization. On 18.09.1979, an Order
was passed by the State Government to allot all industrial lands
within its territory to RIICO. Thus, the Corporation would, from
that point onwards, step into the shoes of the state government
in overseeing further development of the areas under its
supervision. Whether or not this included the LIA, Kota, is a
point of contention among the parties. The Joint Director of the
Department of Industries at Kota, also issued an Order on
28.09.1979, according to which a number of industrial areas
would be transferred to RSIMDC in compliance with the
Government decision of 18.09.1979. LIA, Kota, was listed
among the areas to be entrusted to RSIMDC in the said
communication.
9.The Government Order dated 18.09.1979 and Joint
Director’s Order dated 28.09.1979, warrant reproduction:
“Government of Rajasthan
Industry Group-2 Department
No.P-4 56/Industry/1/79Jaipur, Dated: 18.9.79
Order
It has been decided in the meeting dated
18.09.1979 of Rajasthan State Level Planning and
Development Coordination Committee that all the
industrial areas of Rajasthan shall only be
developed through Rajasthan State Industrial and
Mining Development Corporation. Further, it has
also been decided that the industrial areas operated
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by the Department of Industry shall be handed over
to Rajasthan State Industrial and Mining
Development Corporation Ltd., Jaipur w.e.f.
01.10.1979.
Therefore, the State Government hereby
issues order to transfer the handing over of
industrial areas operated by the Department of
Industry to Rajasthan State Industrial and Mining
Development Corporation Ltd., Jaipur w.e.f.
01.10.1979.”
x---------------------------x-----------------------------x
“Office of Joint Director, District Industrial Centre,
Kota
Dated: 28.09.1979
Order
With reference to the State Government Order No.
Industry (Group-I) Department, A.P.4 (56)
Industry/1/79 dated 18.09.1979 and Director,
Department of Industry, Rajasthan, Jaipur DO letter
No.F.2 (182) 9A/2305 dated 21.09.1979, the
following Industrial Areas (Departmental) are
hereby transferred to Rajasthan State Industrial and
Mining Development Corporation Ltd., Jaipur
w.e.f. 28.09.1979 (Afternoon):
1. Large Scale Industrial Area, Kota
2. Small Scale Industrial Area, Kota
3. Lakhava Industrial Area, Kota
4. Nanta Industrial Area, Kota”
x---------------------------x-----------------------------x
10.The contents of the 1979 Rules, under which RIICO
would carry out its activities in terms of industrial areas allotted
to it, that are important for our purposes may also be noted at
this stage:
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“20-A. The Managing Director shall have full
powers with regard to the following:
1. Approval of layout plan of the industrial areas
and changes/ modification / revision /subsequent
changes therein and all related matters.
2. Changes in status of any of the land at any
industrial area e.g. conversion from industrial land
to open land, service land, commercial land,
residential land, conversion from open land to
industrial land, commercial land, residential land,
services land, conversion from service land to
industrial, open, commercial, residential and for
other purposes etc., and vice-versa.
20-B. Sr. DGM / SRMs / RMs are authorized
for:
(i)sub-division of plots.
(ii)reconstitution of plots.
(iii)…
20-C
xxx xxx xxx
(A) Following riders/conditions will be observed
while considering the change in land use:
i)No change in land use of allotted plots will be
permitted for residential purpose.
ii)No change in land use of vacant industrial plot
would be allowed. In other words, the allottees
of industrial plot who have not set up an
industry will not be permitted change in land
use for non-industrial purposes. However,
change in land use of part vacant sub-divided
plot would be allowed subject to condition that
the leasehold rights of the sub-divided plot are
held by the allottee of integrated plot.
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iii)No change in land use of allotted institutional
plots will be allowed in the dedicated
Institutional Areas for any other purpose.
iv)No change in land use of plots allotted under
the provisions of Rule 3(E) and 3(W) of
RIICO Disposal of Land Rules, 1979 will be
permitted.
v)Change in land use of plot allotted for non-
industrial use will be allowed for vacant plot
subject to payment of 15% of the prevailing
rate of allotment as additional charges.
vi)Change of land use of the allotted plots for
commercial/institutional purposes as permitted
under this rule will be considered only for the
plots located on the roads having right of way
of 18.00 mtr. and above (total road width).
However, in the land use conversion cases
wherein the criterion of minimum road width
of 24 mtr. or above is specified in the building
regulations/parameters then the same will be
observed while considering the cases of the
land use conversions.
vii)…”
11.Even after the Govt. Order dated 18.09.1979, JKSL
continued to deal directly with the District Collector, Kota.
Another lease, extending JKSL’s utilization of the land in LIA,
Kota, was signed in 06.10.1982 between the Collector and
JKSL, and not RIICO. During the same period, the 1959 Rules
were amended to introduce provisions that would effectuate the
allocation of industrial areas to RIICO, and to then facilitate the
Company administering these lands under the 1979 Rules.
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Relevant sub-clauses of Rule 11A inserted on 23.12.1983, and
Rule 12 added in 13.07.1982, are particularly important in this
context:
“11-A. Allotment of land to the Rajasthan State
Industrial Development and Investment
Corporation Ltd. or Rajasthan Tourism
Development Corporation-
Land shall be allotted to the Rajasthan State
Industrial Development and Investment
Corporation Ltd. or Rajasthan Tourism
Development Corporation for setting up and
developing Industrial Areas, on the following terms
and conditions :-
(i)The land shall be allotted on lease hold basis
for a period of 99 years;
(ii)The premium to be charged for the allotment
of government land for industrial purposes
shall be equivalent to the prevailing market
price of the same class of agricultural land in
the vicinity and shall be determined
accordingly by the Colonization
Commissioner in the Rajasthan Canal Project
Colony Area and by the Collector concerned
in other areas:
Provided that no premium for allotment shall
be charged from Rajasthan State Industrial
Development and Investment Corporation
where the land has been purchased by the
Rajasthan State Industrial Development and
Investment Corporation or acquired for
Rajasthan State Industrial Development and
Investment Corporation after its incorporation
and the compensation is paid by the Rajasthan
State Industrial Development and Investment
Corporation.
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(iii)….
(iv)The Rajasthan State Industrial Development
and Investment Corporation Ltd. [or
Rajasthan Tourism Development
Corporation] may sub-lease the leased land or
part thereof, for industrial purposes including
essential welfare and supporting services,
provided that in the case of Diamond and
Gem Development Corporation to who the
land has already been leased out by RIICO for
99 years, the sub-lessee i.e. DGDC may
further sublet and the terms and conditions
and other provisions contained in the rules in
so far as they relate to RIICO shall mutatis
mutandis apply to DGDC also as if the land in
question has been let out to them by State
Government and rule 11-A ibid.
Provided further that where land was allotted
and converted in favour of Rajasthan State
Industrial Development and Investment
Corporation Ltd. [or Rajasthan Tourism
Development Corporation] after its
incorporation for industrial purpose but land
was used for essential welfare and supporting
services, such allotment [xxx] shall be deemed
to be for industrial purpose.
(iv-a) The sub-lessee of the Rajasthan State
Industrial Development and Investment
Corporation Limited may further sub-lease the
sub-leased land or part thereof on such terms
and conditions as may be mutually agreed
between such sub-lessee and subsequent sub-
lessee. The terms and conditions applicable to
sub-lessee shall also mutatis mutandis apply
to such subsequent sub-lessee.
(v)The Rajasthan State Industrial Development
and Investment Corporation Ltd. [or
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Rajasthan Tourism Development Corporation]
may levy and recover such lease rent and
other charges as may be determined by it, in
respect of the lands sub-leased by it;
(vi)The periods of the sub-leases by the
Rajasthan State Industrial Development and
Investment Corporation Ltd. [or Rajasthan
Tourism Development Corporation] shall be
determined by it, but shall not exceed 99
years, in all, in any case;
(vii)The land shall revert to the Government free
of all encumbrances and without payment of
any compensation in case the Rajasthan State
Industrial Development and Investment
Corporation Ltd. [or Rajasthan Tourism
Development Corporation] or any of its sub-
lessees, use it for any purpose other than
industrial [including essential welfare and
supporting services], or commit breach of any
other condition of the lease or sub-leases;
(viii)The sub-lessees of the Rajasthan State
Industrial Development and Investment
Corporation Ltd. [or Rajasthan Tourism
Development Corporation shall continue to be
governed by all other terms and conditions
prescribed in these rules, and any other
analogues rules that may be promulgated or
orders that may be issued, in this behalf by the
State Government.
12. Allotment of land by Rajasthan State
Industrial Development and Investment
Corporation Ltd. [or Rajasthan Tourism
Development Corporation.
The Rajasthan State Industrial Development and
Investment Corporation Ltd. Jaipur or Rajasthan
Tourism Development Corporation shall be
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empowered to make allotment in accordance with
the Rajasthan State Industrial Development and
Investment Corporation Disposal of Land Rules,
1979 [or any other rules framed by the RIICO and
RTDC for the purpose] of vacant plots to
entrepreneurs in the Industrial Areas notified by the
State Government and transferred to the said
Corporation. The Corporation shall also be
authorised to execute lease deeds, realize
development charges, lease rent and other dues
from the entrepreneurs to whom plots have already
been allotted in accordance with the provision of
these rules, and to take any consequential or
residuary action in regard to the plots allotted the
entrepreneur.
Provided that the Rajasthan State Industrial
Development and Investment Corporation Ltd. or
Rajasthan Tourism Development Corporation shall
be empowered to grant written permission to the
lessee for transfer of rights or interest in the land in
respect of the plots/land located in the Industrial
Areas notified by the State Government and
transferred to the said corporation:
Provided further that any permission granted or
action taken for transfer of rights or interest in the
plots/land by the Rajasthan State Industrial
Development and Investment Corporation Ltd. or
Rajasthan Tourism Development Corporation. after
13-07-1982 in respect of the plots/land saturated in
the Industrial Areas and transferred to the said
Corporation shall be deemed to be valid under the
first proviso to this rule.”
12.In the backdrop of these amendments, confusion arose
regarding whether Rules 11A and 12 of the 1959 Rules would
be applicable prospectively or retrospectively. In this context, a
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clarification was sought by the District Collector, Kota, through
a letter dated 15.05.1986. The Collector was referring in this
context to the deposit of lease rent and to whom the rent in
question should go:
“Therefore, guide in this regard that the above-
mentioned notification dated 13-07-1982, the lease
rent etc. of the land allotted to the factory will be
deposited by RIICO or deposited in the erstwhile
tehsil itself s a state item. Please send guidance in
this regard soon. Till the guidance is received the
decision has been taken to deposit the lease amount
in the Tehsil. Photocopy of the form letter is also
being sent from M/s J K Synthetic in this regard.
Signature
District collector,
Kota
Number:- F-8 (198) Revenue/4435-38
Dt. 15-05-86”
x---------------------------x-----------------------------x
13.In response to this, a notification was issued by the State
Government on 23.05.1987, clarifying that Rule 12 of the 1959
Rules, added on 13.07.1982, would not apply retrospectively
and the lease rent and other items pertaining to different deeds
would remain a state subject.
“Rajasthan Government
Revenue (Group-4) Department
Sr. No. 2 (242) Rajasthan/3/86Jaipur,
Dated 23.05.1987
Sent:- District Collector, Kota.
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Sub:- Regarding development fee, lease rent and
service charge of land allottee to M/s JK Synthetic
Ltd. Kota.
Ref:- Your letter 4434 dated 15-05-1986.
Sir,
According to the above subject, it is written that
the notification dated 13-07-1982 of this
department has not been implemented with
retrospective effect and in earlier cases the amount
of lease rent etc. should be deposited in the tehsil
as a state item.
Yours Faithfully
Katara
Deputy Government Secretary”
x----------------------------x------------------------------x
14.This seemed to remove whatever doubts, if any, and
clarified explicitly that the amendments to the 1959 Rules, of
which Rules 11A and 12 are important for us to keep in mind,
were prospectively applicable. The management and control of
the lands leased out under the 1959 Rules, were apparently not
handed over to RIICO. This understanding was enunciated in a
Government Circular dated 12.01.1995 which indicates that
revenue records would reflect that ownership and the right to
administer the land remained with the State Government.
Further, documents in this regard would be retained by the
District Industries Centre, and not RIICO:
“Government of Rajasthan
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Industries (Group-1) Department
1. Director
Industries Department
Jaipur, Rajasthan
2. All District Collector
3. All General Manager
District Industries Centre
Sr. No. 1(75) Industries/1/94 Jaipur, Dated 12th
January, 1995
1.Land reserved for industrial area Under section
92 of Rajasthan Land Revenue Act, 1956 land
allotted under Rajasthan Industrial Area
Allotment Rules, 1959 all records to be kept
with District Industrial Centre. At present files
with RIICO should also be taken back and kept
with District Industrial Centre. In all these cases
compliance of terms of lease deed and
monitoring of the same to be under supervision
of District Industrial Centre.
2.Before lease deeds are signed for Land allotted
under Rajasthan Industrial Area Allotment
Rules, 1959 entry of change of land use and
ownership should be entered into the revenue
records and only then the land should be
allotted under Rajasthan Industrial Area
Allotment Rules, 1959.
3.After the signing of lease deed the same should
be entered into the revenue records and files
pertaining to it should be kept with District
Industries Centre.
4.Lease deed of the allotted land under Rajasthan
Industrial Area Allotment Rules, 1959 is to be
executed by District Collector/ General
Manager, District Industries Centre. As District
Collector/ Managing Director has to initiate
action in cases of violation of terms of lease
deed, General Manager, District Industries
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Centre to be directly responsible to bring any or
all violations in the notice of Director, District
Industries Centre and District Collector.
Sincerely,
Special Secretary Industry”
x---------------------------x-----------------------------x
15.A circular by RIICO itself, on 27.01.1995, gave RIICO’s
own interpretation of the content and meaning of the Circular
issued by Industries Department, Government of Rajasthan on
12.01.1995. It concurred with the stand that files pertaining to
lands for which allotment and leases had been executed under
the 1959 Rules, would be retained by the State Government and
not the Corporation:
“Rajasthan State Industrial Development and
Investment Corporation Ltd.
Udyog Bhawan, Tilak Marg, Jaipur- 302005
Sr. IPI/P-3(24)47/95
Dated:- 27-01-1995
Circular
Sub:- Proceeding in respect of land under
Rajasthan Industrial Area Allocation Rules, 1959.
In the industrial areas of the corporation (and
those industrial areas which were later transferred
from the Department of Industries to the
Corporation) in violation of the terms of the lease
of land allotment. Action is taken by the unit office
under the Corporation's Land Disposal Rules.
Some such cases (especially in Bhilwara) have
come to notice in which land allocation to
Industrial Units at the state level or district level
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was done under the Rajasthan Industrial Area
Allocation Rules, 1959 and whose lease deed was
also executed by the District Collector (Industry).
But their files were transferred to the unit offices of
the corporation in some such cases proceedings
were initiated by the unit office of the corporation
in cases of violation of the terms of the lease deed.
Such proceedings are irregular.
In the above context, the State Government has
recently issued circular dated 12-01-1995, a copy
of which is being attached for your information. It
will be clear from this that under the Rajasthan
Industrial Area Allocation Rules, 1959 the District
Industry Center/Collector (Industry) will have the
right and responsibility to take action in respect of
violation of the terms of the lease deed. If you have
any documents under consideration in this regard,
please return them to the District Industries Centre.
Enclosed Circular Dated 12-01-1995.
Copy:-
1. All Unit offices For information.
2. RIICO (Headquarters) Officers for information
(S S Chaturvedi)
Advisor (Infra)”
x---------------------------x-----------------------------x
16.In this background, JKSL was continuing its operations in
the leased-out area for several years. However, in the 1990s,
JKSL encountered financial difficulties and was eventually
declared a “sick company” by the Board for Industrial and
Financial Reconstruction (“BIFR”) on 02.04.1998, under the
Sick Industrial Companies (Special Provisions) Act, 1985
(“SICA”). Following the classification of JKSL as a sick
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company, the matter was referred to the Appellate Authority for
Industrial and Financial Reconstruction (“AAIFR”). During this
period, JKSL signed a Memorandum of Understanding with
Respondent No. 1 as part of its plan to sell the Kota unit of its
operations. Section 18 of SICA
1
envisages certain measures
being taken for revival of the company that has fallen on
difficult times and been declared a “sick” company.
17.The prospect of a demerger of the certain units owned by
JKSL became the preferred strategy for effectuating the
1 18. Preparation and Sanction of Schemes —
(1) Where an order is made under sub-section (3) of section 17 in relation to any
sick industrial company, the operating agency specified in the order shall prepare, as
expeditiously as possible and ordinarily within a period of ninety days from the date of
such order, a scheme with respect to such company providing for any one or more of the
following measures, namely:—
[(a) the financial reconstruction of the sick industrial company;]
(b) the proper management of the sick industrial company by change in, or take
over of, management of the sick industrial company;
[(c) the amalgamation of— (i) the sick industrial company with any other
company, or (ii) any other company with the sick industrial company; (hereafter in this
section, in the case of sub-clause (i), the other company, and in the case of sub-clause (ii),
the sick industrial company, referred to as “transferee company”;]
(d) the sale or lease of a part or whole of any industrial undertaking of the sick
industrial company;
[(da) the rationalisation of managerial personnel, supervisory staff and workmen
in accordance with law;]
(e) such other preventive, ameliorative and remedial measures as
may be appropriate;
(f) such incidental, consequential or supplemental measures as may be necessary
or expedient in connection with or for the purposes of the measures specified in clauses
(a) to (e).
…
(6A) Where a sanctioned scheme provides for the transfer of any property or
liability of the sick industrial company in favour of any other company or person or
where such scheme provides for the transfer of any property or liability of any other
company or person in favour of the sick industrial company, then, by virtue of, and to the
extent provided in, the scheme, on and from the date of coming into operation of the
sanctioned scheme or any provision thereof, the property shall be transferred to, and vest
in, and the liability shall become the liability of, such other company or person or, as the
case may be, the sick industrial company.]
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recuperation of the company. Respondent No. 1 emerged as the
favoured entity to take over these units and also entered into
two tripartite settlements on 09.10.2002 and 22.10.2002,
involving JKSL and two worker’s unions, to pay off part of the
dues of the former labourers of JKSL, as well as offer them
employment under Respondent No. 1. The relevant terms and
conditions of the agreement dated 09.10.2002, are as follows:
“IV. TERMS AND CONDITIONS
xxx xxx xxx
2. It is further agreed that while APPL will take
over all the liabilities pertaining the
workmen/employees of Sir Padampat Research
Centre, as determined as per Annexure B even
though the SPRC unit will not be transferred to
APPL and will be retained by JKSL.
3. The APPL will operate the Kota Complex .in the
name and style of Arfat petrochemical Pvt. Ltd.
(APPL) as a new company and new employer.
They will issue their appointment letters as per
requirements in a phased manner subject to
suitability and covering terms of employment etc.
The dues of employment under JKSL would be
settled as full and final payment as summarized in
Annexure-A.
xxx xxx xxx”
The rest of the agreement contains numerous clauses that
are in furtherance of the absorption of the workers into
Respondent No. 1’s operations that were to start after the
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demerger of defunct units owned by JKSL. The second
agreement of 22.10.2002 also contained similar provisions.
18.Eventually, AAIFR sanctioned a rehabilitation scheme for
JKSL on 23.01.2003. The scheme referred to and validated the
tripartite agreements/settlements entered into by JKSL,
Respondent No. 1, and the different labour unions. It was noted
that the liabilities of the workers had been taken on by
Respondent No. 1, alongside its obligation under those
agreements to revive the industrial operations at Kota. A Joint
Venture & Shareholder Agreement (hereinafter, “JV”) was
signed between Respondent No. 1 and JKSL on 13.05.2003,
which cemented the former’s obligation to discharge the
liabilities outstanding on LIA, Kota, as well as the dues of the
labourers. The AAIFR scheme was finalized on 07.01.2005, and
it included an obligation on the part of Respondent No. 1 to
honour the earlier tripartite agreements with the JKSL workers
unions. Part of the rehabilitation scheme involved hiving off
227.15 acres of the land in the LIA, Kota, away from JKSL and
to Respondent No. 1.
19.Respondent No. 1, as part of the aforementioned JV
between itself and JKSL, continued to coordinate with the State
Government on shifting the lease on LIA, Kota, away from
JKSL and to itself. A letter to this effect was sent by Respondent
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No. 1 to the State Government on 07.01.2006, seeking the
demarcation and transfer of the lease over LIA, Kota, to
Respondent No. 1 solely, in light of the AAIFR scheme. The
relevant part of this letter is reproduced below:
“…This has reference to meeting with your
goodself on 04/01/2006 regarding Bifurcation and
Transfer of Lease Hold Land of J.K. Synthetics
Limited, Kota to M/s Arafat Petrochemical Pvt.
Ltd…
…
We request your goodself for an expeditious
approval-
(c) for split of lease deed dated 06/10/1982 in to
2 portions – one covering area of 37.16 acres
pertaining to SPRC which is not to be transferred
as the same will continue in the name of JKSL and
another for balance land.
(d) Permission to transfer to APPL all the
remaining land except the aforesaid 37.16 Acres.
We once again request your good self to kind
accord you approval in the above matter…”
20.As per AAIFR’s recommendations, the State Government
through the Collector proceeded to execute 7 fresh lease deeds
on the same date in favour of Respondent No. 1. The 7 deeds
signed on 17.03.2007, collectively handed over the leasehold on
the land to Respondent No. 1, in the following segments:
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i)1
st
Deed: Plot No. 5A of 48.40 acres, meant for setting
up a nylon plant and colony;
ii)2
nd
Deed: Plot No. 5B of 7.15 acres, for conducting
R&D on acrylic fibre;
iii)3
rd
Deed: Plot No. 5C of 14.45 acres, for setting up a
nylon tyre and cord plant;
iv)4
th
Deed: Plot Nos. 16, 17, & D of 30.56 acres, for
setting up a polyester staple fibre plant;
v)5
th
Deed: Plot Nos. 23-30, A-C, of 70.66 acres, for
construction of CDPH roads;
vi)6
th
Deed: Plot Nos. 19-21B, 32B, 33, 34 & F of 26,16
acres, for setting up another acrylic/staple fibre plant;
vii)7
th
Deed: Plot Nos. 19-21A, 22, 31, 32A & F1 of 29.77
acres, for setting up a synthetic staple fibre plant.
The terms of the lease deeds were largely pari materia.
The relevant portion, contained in each of these fresh leases
granting the land to Respondent No. 1, and relevant for our
purposes, are as follows:
“NOW THIS INDENTURE WITNESSETH as
follows:
…
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(iii) That the lessee shall set up, construct, erect and
build on the plot only such buildings, sheds and
structures as are required by him for setting up the
industry aforesaid and also such other residential
quarters as are required for those: engaged or to be
engaged in the said factory.
(iv) The lessee agrees not to construct or build any
structures or buildings on the said plot of land or on
a portion of it which may have the object. of using
it as a commercial undertaking other than for the
industry promotion aforesaid of or which the said
plot has been leased to the lessee.”
What is clear from this series of documents is the
paramountcy of using the land for its specific intended purpose,
and for there to be no deviation from that industrial purpose for
putting up commercial structures of any kind. The overall
objective behind the lease, despite having changed hands from
JKSL to Respondent No. 1, remained unaltered.
21.The AAIFR scheme contained various requirements that
Respondent No. 1 was mandated to fulfil. Among these
included the revival of the industrial units at the site which
JKSL had no longer been in sufficient financial health to
operate. Further, as also necessitated by the scheme, the
aforementioned tripartite settlement agreements between
Respondent No. 1, JKSL, and the workers unions was to be
given effect to. The settlement agreements fixed the
compensation payable to the workers at Rs. 40.42 Crores, and
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also envisaged that the workers in question would receive
employment in the industrial units that would, henceforth, be
managed by Respondent No. 1. The relevant portions of the
AAIFR scheme are worth reproduction:
“9 Identification of JV Partner
9.1 The Arfat Group are identified by JKSL after an
extensive search undertaken by the Company with
the help of M/s Access International (Access) a
Boston based consultancy Company…
9.2 Disposal of individual assets of Kota units was
not possible or practical without resolution of the
on-going labour disputes and settlement of labour
liabilities. One the important consideration for
revival was assumption of the labour liability by
the prospective buyer as workers dues were very
high and without settlement of the same revival
was not possible. Therefore, in order to evaluate the
offers received. It was decided by the Company in
consultation with Access to analyse them on the
basis of Quantum offer no. of units being restarted
total no. of jobs being created and willingness of
the higher regarding resolution of labour disputes
and assumption of labour liabilities.”
22.Pursuant to the AAIFR scheme, Respondent No. 1
initially restarted one of the units for manufacture of acrylic
fibre. The remaining 6 units remained comatose. Unfortunately,
the sole unit that was rejuvenated suffered a purported fire in
October, 2007, after only a brief period of operation and just 6
months after the transfer lease deeds were signed, which
resulted in the shutdown of the factory. Consequently, the
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overall objective of reviving the industrial units in the LIA,
Kota, was frustrated. The offshoot of this was a decade of
litigation primarily involving the workers unions and
Respondent No. 1, regarding the latter’s failure to revive the
industrial units as contemplated in the AAIFR scheme.
23.The workmen initiated proceedings before multiple
forums including the National Company Law Tribunal, the
Rajasthan High Court, the BIFR and AAIFR, in their attempt to
recover their dues and have the rehabilitation scheme
implemented. Among these litigations was an SLP, and resultant
Review Petitions filed before this Court concerning directions
issued by AAIFR to Respondent No. 1. The directions were in
favour of the workmen and in furtherance of the rehabilitation
scheme that AAIFR had previously approved. However, in
appeal, the Rajasthan High Court ruled that AAIFR had no
jurisdiction over Respondent No. 1 as it was not a “sick
company” under SICA. This was further appealed to the
Supreme Court. The SLP by the Appellant Unions and others,
was dismissed by this Court on 18.11.2016, and the subsequent
Review Petitions were also rejected on 17.08.2017 and
06.03.2018, respectively, affirming that no directions could be
issued to Respondent No. 1 but also noting that the AAIFR plan
should be executed. Some of the other proceedings by
individuals or groups of workers, remain pending in various
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forums and do not require recounting for our purposes. The
relevant part of the order dismissing the SLP on 18.11.2016
2
is
as follows:
“12. Several contentions have been raised by both
sides during the course of hearing of these Appeals
which we have not adverted to as they are not
relevant for adjudication of the dispute in these
appeals. We express no opinion on the jurisdiction
of BIFR under other provisions of the Act. It is
open to the BIFR to review the implementation of
the Sanctioned Scheme and pass suitable
directions.”
24.In the midst of the legal tussle between Respondent No. 1
and the different workers unions, the former made an attempt to
have an affordable housing scheme developed on the LIA, Kota,
under the Chief Minister Jan Aavas Yojana. This application
was made, once again, to the District Collector, Kota. By this
point, the industrial units in the area had been lying dormant for
over 10 years. However, this application to be considered under
the Jan Aavas Yojana was unsuccessful.
25.Subsequently, after having dealt directly with the
Collector for over a decade on matters pertaining to LIA, Kota,
Respondent No. 1 eventually sought a change of land use from
industrial to commercial, to the extent of 23% of the land it
possessed under the lease. However, this proposal was
2 CA Nos. 8597-8599 of 2010.
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submitted to RIICO instead of the Collector. Respondent No. 1
shifted its position, having previously liaised with the District
Collector for the execution of lease deeds in 2007 or for the Jan
Aavas Yojana, to now coordinating with RIICO instead. The
proposals were meant to effectuate the sub-division and change
of land under the 1979 Rules. The proposals were considered by
the Land Planning Committee constituted by RIICO on
03.10.2018 and approval was granted in-principle for the sub-
division and conversion, as recorded in the Minutes of the
Meeting issued by RIICO on 05.10.2018. One day after this, on
06.10.2018, the Rajasthan State Assembly Elections process
began and the Model Code of Conduct came into effect. The
Infrastructure Development Committee of RIICO followed suit
on 08.10.2018 and issued its own approval in this respect.
26.Following the completion of the process, supplementary
lease agreements were executed between RIICO and
Respondent No. 1 on 22.11.2018. Another supplementary deed
for merger of plots was also signed between these parties on
13.12.2018. The conversion subsequently came under scrutiny
after the change of government in the 2018 Rajasthan elections.
The newly elected Council of Ministers constituted a Cabinet
Committee on 01.01.2019 to review decisions made by the prior
ruling government in the 6 months period preceding the
elections. While this internal consideration was unfolding,
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RIICO directed its unit offices to cease grant of permissions for
conversion of use of land under Rule 20(c) of the 1979 Rules on
27.05.2019, until further notice. The Kota branch of RIICO,
however, proceeded to allow sub-division of the LIA, Kota, as
requested by Respondent No. 1, on 05.07.2019. The mistake
became clear only after the sub-division was sanctioned,
necessitating the issuance of withdrawal orders by the office at
Kota in respect of both the conversion of land and the sub-
division of the plot, on 22.07.2019 and 25.07.2019, respectively.
27.Meanwhile, the internal deliberations by the Cabinet
Committee set up by the State Government extended till
03.08.2019, when the Committee resolved to cancel all the
permissions and approvals granted to Respondent No. 1 in
respect of conversion of the property at LIA, Kota.
28.The State Government directed RIICO, by exercising the
powers it believed were vested in it under Article 138 of
RIICO’s Articles of Association, to carry out the requisite steps
to annul the approvals provided to Respondent No. 1. RIICO
issued orders on 11.10.2019 and 14.10.2019, to finally cancel
the permission for conversion of land, as well as cancel the
supplementary leases themselves that had been subsisting in the
name of Respondent No. 1.
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29.Respondent No. 1 was aggrieved by these actions and
made various representations to the State Government, as well
as RIICO, seeking to have its lease and possession over the land
restored. Eventually, it filed a Writ Petition before the High
Court challenging the cancellation of its lease and the
permission for conversion of the use of the land. The arguments
raised included:
(a) Article 138 of the AoA of RIICO did not have
statutory force and a third party could not be adversely
impacted by decisions made or directions issued under it;
(b) Even if Article 138 had statutory force, the manner
in which the approvals and permissions accorded to
Respondent No. 1 were quashed and set aside, was
arbitrary, unreasoned, and unconstitutional due to falling
afoul of Article 14 of the Constitution;
(c) Respondent No. 1 had not even been issued a show
cause notice nor given a chance to defend itself. Thus, the
Principles of Natural Justice had not been followed in the
process of cancelling the allotment;
(d) The procedure under the 1979 Rules had to be
followed, as the LIA, Kota had been transferred to RIICO
under the 18.09.1979 Order.
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30.The State Government and its authorities objected to the
maintainability of the petition on the ground that Article 138 of
the AoA of RIICO were not statutory in nature and, hence, a
Writ could not be filed in this regard. Further contentions were
raised defending the cancellation of the allotment and
permission for conversion of the land, on the ground that the
decision was taken in contravention of the Model Code of
Conduct that had come into effect during the period when the
Land Planning Committee and Infrastructure Development
Committee of RIICO had decided to allow Respondent No. 1 to
convert 23% of the land to commercial use.
31.While the matter was initially placed before a learned
Single Judge, the then Chief Justice of the High Court decided
to transfer the file to a Division Bench presided over by him.
The various Appellant Unions which had been aggrieved by the
non-implementation of the AAIFR scheme were impleaded into
the proceedings. Eventually, the Division Bench heard detailed
arguments and passed the impugned judgment, concurring with
Respondent No. 1’s position. It held:
i)The question as to whether RIICO could be directed
under Article 138 of the AoA to carry out actions
which may abrogate the fundamental rights of a third
party was of vital importance. It required the Division
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Bench to adjudicate the dispute, rather than a Single
Judge;
ii)The decision made by the State Government to direct
RIICO to cancel the allotment of land to Respondent
No. 1 was without following due procedure, and
hence, a Writ under Article 226 of the Constitution
was maintainable against this measure;
iii)The Government Order dated 18.09.1979, allocated all
industrial areas in the State of Rajasthan to RIICO for
the purpose of overseeing and facilitating their
development. Whatever course of action was taken in
respect of these lands from this point onwards would
have to be under the 1979 Rules. These Rules had
been completely ignored by the State Government and
its authorities while quashing the supplementary
leases and the conversion;
iv)The conversion of land was permissible under the
Master Plan for the LIA, Kota. RIICO, given it was
now in charge of these lands, had the authority under
the 1979 Rules read with the Master Plan to allow
conversion of land, if it was deemed necessary and
appropriate;
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v)There was no reason assigned by the Cabinet
Committee for its conclusion on 03.08.2019 that the
leases required cancellation. The Supreme Court in
Mohinder Singh Gill v. The Chief Election Officer
3
had laid down that reasons behind certain actions had
to be included in the final decision itself and could not
be subsequently supplemented via affidavits. A change
of government could not be a permissible catalyst for
abrogation of the decisions made by the previous
government. Further, Respondent No. 1 was kept in
the dark about the deliberations throughout and had no
forum to advocate its case for why the allotment and
conversion of land were legally sound;
vi)The claim that the permission for conversion of the
land from industrial use to commercial use violated
the Model Code of Conduct was suspect, as no other
similarly granted approvals had been set aside on this
basis. It appeared that Respondent No. 1 had been
specifically singled out and targeted;
vii)Respondent No. 1 had already spent significant
amounts on the development of land, based on the
supplementary lease deed and conversion that had
been granted earlier. Hence, the doctrine of legitimate
3 (1978) 1 SCC 405.
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expectations and estoppel would operate against the
State and its authorities from reneging on this
arrangement;
viii)The workers unions had failed to put in an appearance
during the arguments, and their submissions could not
be considered as a result.
Consequently, the High Court quashed the decision of the
Cabinet Committee and the steps taken by RIICO to cancel the
allotment to Respondent No. 1. The Appellant Unions, RIICO,
and the State, have now come before us in appeal in this batch
of matters.
B. ARGUMENTS
32.We have heard submissions from learned Senior
Counsels, Mr. Dushyant Dave and Dr. Manish Singhvi,
representing the State of Rajasthan and RIICO, respectively.
They sought to point out the flaws in the impugned judgment
through the following arguments:-
i)The land allotted to Respondent No. 1 in LIA, Kota,
always remained with the State Government and was
never allocated to RIICO despite the Order dated
18.09.1979 regarding industrial lands being moved
under the control of RIICO. Various communications
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and activities by RIICO over the years indicate that it
was also aware of this fact. Hence, RIICO had no
authority to consider the proposal by Respondent No.
1 for changing the usage of the land from industrial to
commercial;
ii)When the fresh set of lease were executed with
Respondent No. 1 pursuant to the AAIFR scheme and
rehabilitation plan for JKSL, the agreements were
signed by the District Collector, Kota. RIICO was not
involved in this process. Respondent No. 1 had, in
fact, acted all along in a manner which acknowledged
the District Collector and the state revenue authorities
were always managing the affairs of the subject - area;
iii)The land in question was to be regulated through the
1959 Rules rather than the 1979 Rules. This was
because, as RIICO and Respondent No. 1 had already
accepted through their conduct over decades, that the
State Government retained control over LIA, Kota.
Hence, only the State of Rajasthan through the District
Collector, Kota, and not RIICO, could have
considered the proposal for conversion of the land and
the execution of supplementary lease deeds. Rule 12
of the 1979 Rules clearly envisaged that the newly
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inserted provisions would be applicable only to leases
that were signed prospectively. In this instance, JKSL
had already been put in charge of the area in LIA,
Kota, under the 1959 Rules;
iv)Rule 8 of the 1959 Rules clearly states that the land in
question is not to be used for any purpose other than
the objective of industrial development. It is only with
express authorization of the State Government that the
usage can be changed. Rule 9 of the 1959 Rules
mandates that permission of the government be taken
when seeking subdivision of plots as well. Hence, this
procedure had to be followed mandatorily by
Respondent No. 1 if it desired the alteration of use of
land and corresponding subdivision;
v)RIICO has never raised any demand for lease rent or
service charges from Respondent No. 1. From the
series of documents and communications, as already
reproduced earlier, it is evident that RIICO had the
same opinion regarding its own lack of authority and
jurisdiction over the land in question. The land
remained with the State Government at all times;
vi)Respondent No. 1 had abjectly failed to fulfil its
obligation to revive the industrial units at LIA, Kota.
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The mandatory terms of the rehabilitation plan by
AAIFR had not been complied with and, as per SICA,
the consequence of this default had to be the winding
up of the company;
vii)The permission for conversion of the land from
industrial to commercial was meant to benefit
Respondent No. 1 and frustrate the purpose for which
the land had been allotted in the first place. The prior
government and Respondent No. 1 had acted in
concert to hastily push through the process for
changing the usage of the land, in defiance of the
AAIFR scheme as well as the Model Code of
Conduct, causing a loss to the public exchequer and
stymying the industrial development of the Kota
region;
viii)The new government was well within its rights to
examine the decisions by the previous ruling class, as
held by this Court in Krishna Ballav Sahay & Ors. v.
Commission of Enquiry & Ors.
4
Further, Article 138
of the AoA of RIICO explicitly gave power to the
State of Rajasthan to issue directions to it for carrying
out certain measures. This included the cancellation of
the supplementary lease deed with Respondent No. 1
4 [1969] 1 SCR 387.
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and the setting aside of the permission to convert the
land’s usage. A similar clause to Article 138 is
contained in the Articles/Memorandum of almost
every government controlled entity, and has been
upheld in Management of Fertilizer Corporation of
India v. Their Workmen
5
and subsequently affirmed
by a Constitution Bench in Sukhdev Singh & Ors. v.
Bhagat Ram & Ors.
6
;
ix)As an arguendo, even if the land was deemed to be
allocated to RIICO as per the Order dated 18.09.1979
and the Corporation was the competent authority to
issue approvals and permissions vis-à-vis LIA, Kota,
there was still no infirmity in the directions issued by
the State of Rajasthan under Article 138 of the AoA.
The State Government retained complete discretion to
order RIICO to act according to its diktats in public
interest;
x)RIICO itself had subsequently taken a decision to not
allow any conversion in terms of the usage of land.
This deliberation took place following the filing of
Public Interest Litigations before the Rajasthan High
Court. The final decision to freeze any further
5 [1969] 2 SCR 706.
6 (1975) 1 SCC 421.
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conversions of this nature was issued on 05.07.2019 to
the State Government and all RIICO unit offices
across the state. Following this, the permissions
granted to Respondent No. 1 for changing the land to
commercial utilization and sub-division of the plot for
this purpose, were both withdrawn on 22.07.2019 and
25.07.2019, respectively. The supplementary lease
deed was then cancelled on 11.10.2019;
xi)There is no guarantee contained anywhere in the 1959
Rules, or even the 1979 Rules for that matter, against
a change in policy by the Government. It is entirely
permissible for the government to act in accordance
with changing realities, especially when there is a
clear case of public property being utilized for private
gain, with the collusion of the erstwhile Executive
Authorities and the management of RIICO;
xii)There can be no question of estoppel against statute.
The money spent by Respondent No. 1 on the land
would not validate the contravention of the Master
Plan for the LIA, Kota. The Plan clearly contemplated
a purely industrial area which was undermined by
Respondent No. 1’s desire to set up commercial
enterprises instead.
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xiii)Respondent No. 1 had failed to show in concrete
terms, the exact investments it had carried out on the
land. Its equitable entitlement to seek restoration of
the earlier decision permitting conversion of the land
had not been proved from the records. Even if there
was some merit to such claim, this Court in Motilal
Padampat v. State of Uttar Pradesh
7
had ruled that
estoppel would be overridden by supervening public
interest and provisions of binding statutes and/or
rules;
xiv)The transfer of the case from the Single Judge to the
Division Bench by the then-Learned Chief Justice was
unjustified and irregular under the Rules of the High
Court of Judicature for Rajasthan, 1952. On this
procedural ground as well, the impugned judgment
was unsustainable.
33.On the contrary, learned Senior Counsels, Mr. Mukul
Rohatgi and Mr. A.N.S. Nadkarni, appearing for Respondent
No. 1, have attempted to rebuff the submissions by the State of
Rajasthan and RIICO in the following terms: -
i)The Cabinet Committee decision dated 03.08.2019
was solely taken to single out Respondent No. 1 and
7 (1979) 2 SCC 409.
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cancel the permissions/approval accorded by RIICO
during the regime of the earlier government. The
reasons for the cancellation were never provided and
do not exist in either the file or the final decision. The
grounds for cancellation were never mentioned
subsequently either. All the reasons eventually cited
by the Appellants before the High Court, were merely
afterthoughts, such as:
a)The Model Code of Conduct being in force;
b)The sub-division of plots of change of use could
not have been granted by RIICO and the
Corporation did not possess the ability to transfer
lands;
c)Only the Collector had the power to grant
permissions.
ii)The Model Code of Conduct is irrelevant, as the
application for conversion of the land to commercial,
and permission for sub-division, was filed in August
2018, much before the election process even began. In
between, there were several other decisions taken by
the same Land Planning Committee and Infrastructure
Development Committee none of which were
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cancelled. Even in regard to the Land Planning
Committee, several other proposals were considered
and granted during the same period when Respondent
No. 1’s application was pending. There were around
70 cases approved in September 2018, as well as
December 2018, apart from Respondent No. 1’s. None
of these have been subsequently annulled by the
Appellants, clearly showing that this is an act of pure
arbitrariness and the arguments raised on the Model
Code of Conduct are nothing but a lame excuse;
iii)There are 30 other instances of conversion in which
RIICO has acted as the competent authority to grant
permission, from 1996 to 2019. Out of these 30, 3 of
the cases are from LIA, Kota. These three cases
involved conversion of 100% of the land to
commercial usage, as opposed to Respondent No. 1
which only sought conversion of 23%. The residential
colonies that have been raised by Respondent No. 1
have not been objected to by the State. Further, as
recently as in 2022, RIICO has been demanding lease
rent and service charges from Respondent No. 1,
clearly showing that it is in charge;
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iv)The Collector had only signed the initial transfer lease
deeds of 2007 with Respondent No. 1 because the
lease deeds in question were not fresh leases, but were
executed for the remainder of the term of the already
subsisting lease in favour of JKSL. The AAIFR
scheme referred to the consent of the state
government, which also necessitated the Collector’s
participation. This was the only reason for the 2007
deeds to have been executed with the Collector and
not RIICO;
v)It is very clear that the land in LIA, Kota, had been
transferred and allotted to RIICO and the Corporation
was considered to be the sole authority, even by the
State Government, which was capable of dealing with
the land. The Order dated 18.09.1979 by the State
Government states that industrial areas are to be
transferred, pursuant to which the Joint Director of
Industries allotted the land to RIICO on 28.09.1979 by
an order.
vi)Under Section 100 of the Rajasthan Land Revenue
Act, the State Government had framed the 1959 Rules,
which were meant to govern the allotment of
industrial plots across the state and the grant of leases
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over these areas. The 1959 Rules, were purposefully
amended with insertion of Rules 11A & 12. Rule 11A
states that industrial lands are to be allocated to RIICO
for industrial development, and under Rule 12, the
Company is empowered to further distribute land via
leases to different entrepreneurs for development.
Therefore, the allotment to RIICO is a statutory
allotment, validated by the Rajasthan Land Revenue
Act, and the 1959 Rules;
vii)Respondent No. 1 acted pursuant to the approvals
granted by RIICO and, hence, Appellants are now
bound by the principles of Promissory Estoppel and
Legitimate Expectations. Respondent No. 1 has
invested around Rs. 137.75 Crores in the LIA, Kota,
and has also paid off the labour dues of the Appellant
Unions, as agreed upon in the tripartite settlement
agreements;
viii)As Respondent No. 1 has acted on the presumption
that RIICO had validly approved the conversion of
land and the sub-division of the plots, there is no
scope for cancellation subsequently. Promissory
estoppel squarely applies in favour of Respondent No.
1, and the Motilal Padampat (Supra) decision cited
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by Appellants is, on the contrary, beneficial to
Respondent No. 1’s position;
ix)The alteration in the ruling government cannot be the
reason behind the cancellation of a decision taken by
the earlier government. Such behaviour is arbitrary,
discriminatory, and untenable in law. This Court in
State of Tamil Nadu v. Shyam Sunder
8
had held that
an instrumentality of the State cannot have a case
whereby it pleads contrary to the position adopted by
the State itself. Policies adopted in regard to certain
projects should not keep altering as per changing
governments. In a matter of governance of a State or
with the execution of a decision taken by the prior
ruling establishment, when the decision in question
does not involve political philosophy, the succeeding
government is required to see it through to its logical
conclusion;
x)Governments cannot blow hot and cold and are not
permitted to approbate and reprobate. RIICO had
already taken a detailed decision, in compliance with
the 1979 Rules which are the applicable regulations.
They cannot resile from this on flimsy grounds which
are merely afterthoughts. Governance is a continuous
8 (2011) 8 SCC 737.
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process and under the Constitution, there is no general
power of review available to any government to
examine, set aside, and recall the decisions of the
earlier government. The Appellants’ reliance on
Krishna Ballav Sahay (Supra) is also misplaced as
that case concerned an inquiry being conducted on the
basis of serious allegations of corruption against
government officers/ministers. It was only after these
facts were ascertained did the government reverse the
decision by the earlier ruling party. In the present
scenario, no such allegations have been made and no
inquiry was conducted either;
xi)The Appellants were also obliged to follow the Rules
of Business framed under Article 166(3) of the
Constitution when implementing their policies, which
was once again bypassed entirely. Rule 5 of the Rules
states that the Governor, acting on advice from the
Chief Minister, will allocate business of the
government to various Ministers and assign specific
departments to their portfolio. Rule 9 goes on to
require the Minster in charge of a particular
department to be primarily responsible of carrying out
business under that department. Under Schedule I of
the Rules of Business, the Minister for Industries is to
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take decisions in matters connected to RIICO and
industrial matters such as the cancellation of the
supplementary lease deeds and/or revocation of
permissions. The final decision of 03.08.2019 which
directed the cancellation in question did not include
participation by the Minister for Industries. Further,
the decision needed to be placed before the Chief
Minister for authentication before it was finally
issued. This Court, in MRF v. Manohar Parrikar &
Ors.
9
has cemented the mandatory nature of the Rules
of Business;
xii)Article 138 of the AoA of RIICO could not have been
resorted to for directing cancellation of the
supplementary lease deed and permission for using the
land for commercial purposes. Such clauses in the
Articles are for generally setting out the policy of the
Company and not to make decisions that affect the
rights of third parties. The cases relied upon by the
Appellants to uphold the ability to issue orders to
RIICO under Article 138 of its AoA, are unhelpful as
the facts in those instances dealt with indoor
management of the corporations in question. The
action(s) taken in the present case do not concern an
9 (2010) 11 SCC 374.
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internal matter of RIICO, but rather the abrogation of
validly procured permissions and vested rights that
had accrued to Respondent No. 1. An elaborate
procedure for cancellation is already provided under
the 1979 Rules, which needed to be followed if such
drastic measures were to be taken. Unbridled and
unfettered powers cannot be granted to the State
Government to issue instructions to RIICO in this
manner as it may be used brazenly and without paying
heed to any procedure under law. The State
Government has abused this alleged power which it
claims to have been always vested in it;
xiii)This Court has already held in B. Rajagopala Naidu
v. State Transport Appellate Tribunal, Madras &
Ors.
10
that powers such as those provided under
Article 138 of RIICO’s AoA cannot be used as
appellate powers to take vengeance against specific
entities. Such provisions do not accord a carte blanche
authority to quash earlier decisions taken by RIICO,
for oblique and unspecified reasons. Moreover, such
an action is clear evidence of malice in law, as it is
blatantly arbitrary and discriminatory, as described by
10 (1964) 7 SCR 1.
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this Court in Kalabharati Advertising v. Hemant
Vimalnath Narichania & Ors.
11
;
xiv)The Order of 18.09.1979 had stated, in unequivocal
language, that all industrial areas would be transferred
to RIICO and this included the LIA, Kota. This
decision was given effect to by the Joint Director on
28.09.1979 and the area over which Respondent No. 1
retained a lease came under the control of RIICO. The
1979 Rules were brought into force in the same year,
and were meant to provide guidelines on the basis of
which RIICO would carry out its functions, including
permissions for sub-division, change of land use, and
allotment of industrial areas.
xv)The State Government has, in fact, taken a stand in
SLP (Civil) No. 8552 of 2021, filed in respect of
neighbouring land situated in the same industrial area,
whereby it accepts the transfer of such lands to RIICO
has already taken place. It has acknowledged that
RIICO has stepped into the shoes of the State
Government and the Corporation provides services
that are similar to that of a civic body or municipal
corporation in the areas managed by it. That is why
Rule 12 was specifically inserted into the 1959 Rules,
11 (2010) 9 SCC 437.
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to accord all powers that the State Government would
have had, to RIICO as well. Hence, the Corporation
steps into the shoes of the government;
xvi)Further, as the 1979 Rules were mentioned in the 1959
Rules in Rule 12, the 1979 Rules were specifically
incorporated into them. The 1979 Rules were not only
given statutory recognition by virtue of this mention in
the 1959 Rules, but additionally, all the allotments
done under the 1979 Rules also received statutory
endorsement and recognition;
xvii)In a similar matter concerning the Bharatpur Industrial
Area, an allotment had been made by the Collector to
Perfect Potteries. The lease stated that no use other
than industrial use would be permissible. However,
subsequently, the industrial area was transferred to
RIICO and the Corporation granted permission for
subdivision and conversion of the land. The Collector
had terminated the lease as a result. The matter was
referred to a High-Level Committee of the State of
Rajasthan presided over by the Chief Secretary and
comprising of the Advocate General, Principal
Secretary of Law, Principal Secretary of Industries,
and others. The Committee held that by virtue of the
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insertion of Rule 12 of the 1959 Rules, the actions
taken by RIICO were valid and the Collector’s order
of termination was to be set aside. The relevant
extracts of the Committee’s decision are as follows:
“DECISION OF THE COMMITEE
After due deliberations, Members of the
Committee were of the opinion that RIICO
Is having undisputed jurisdiction. In the
matter of all those industrial areas which
were notified/developed by the State
Government and came to be transferred to
RIICO vide order dated 18.09.1979 and in
view of subsequent amendment in Rajasthan
Industrial Area Amendment Rule, 1959 vide
notification dated 13.07.1982 by Insertion of
rule 12.
In view of the above, it was decided
by the committee that the order dated
22.08.2019 of Collector Bharatpur needs to
be set aside. For this purpose, RIICO should
file a revision petition before the Govt. of
Rajasthan in Revenue Department through
Pr. Secretary, Revenue for consideration of
the matter.
The meeting ended with a vote of
thanks to the chair.
Sd/-
(Hukam Singh Rajpurohit)
Secretary to Government
& Member Secretary”
x---------------------------x------------------------x
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xviii)There has also been an admission on oath before the
Rajasthan High Court in another similar matter.
12
The
affidavit submitted before the High Court lays out the
following in terms of the State’s position: a) RIICO
has been authorized to act in accordance with the 1979
Rules in respect to industrial plots. The Rules
themselves have acquired statutory force by virtue of
reference to these Rules in statutory
legislations/enactments. Given this, no other authority
would be able to interfere in the sphere of activities
that are regulated under the 1979 Rules; b) RIICO’s
own authority derives from Rules 11A and 12 of the
1959 Rules, by virtue of which the State Government
had vested the responsibility to develop industrial
areas upon the Corporation; (c) RIICO, as a public
sector undertaking, would not have been able to
function in the manner in which it does if express
authorization had not been provided.
xix)The change of use of the land was permitted under the
Master Plan. As the 1979 Rules were applicable by
virtue of the 18.09.1979 Order transferring industrial
lands to RIICO, the Corporation’s only obligation was
12 Annex. R-47: D.B. WP (Civil) No. 19102 of 2018, “Ravindra Sharma v. State of
Rajasthan & Ors.” – Add. Affidavit on behalf of Respondents, by Mr. Rajendra Singh, Dy.
Comm., JDA, Jodhpur.
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to ensure that the sub-division and alteration of the
utilization of the land was in consonance with said
Rules read with the Master Plan. Moreover, the State
of Rajasthan itself issued a circular on 19.03.2003
allowing conversion of industrial land for other
purposes in order to promote economic growth, in
light of the recession that had taken hold at the time;
xx)The initial agreement for transfer of the lands from
JKSL to Respondent No. 1 was signed by the
Collector, not because the State Government still had
control, but rather because those were the
requirements under SICA and the AAIFR scheme.
Rule 9(iv) of the 1959 Rules had required a lessee
which was declared a “sick company” under SICA, at
that time JKSL, to seek permission from the State
Government for transfer of its lease rights to a third
entity. The permission was manifested through the
District Collector, Kota, under the aegis of the AAIFR
scheme. This was not a fresh lease, but only an
extension of the already existing period of the
subsisting lease. Hence, this was not an
acknowledgement of any kind by Respondent No. 1
that the State of Rajasthan retained control over the
land and was merely a procedural requirement that
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was being fulfilled under the 1959 Rules, due to
JKSL’s status as a sick company. Respondent No. 1
has consistently acted in consonance with the
approach that RIICO has control over the land and the
corresponding power to take further measures in
respect of it, such as for conversion of use and sub-
division of plots;
xxi)The letter dated 12.01.1995 relied upon by Appellants
as a proof that the title over the land was retained by
the State Government was later overridden by a letter
dated 31.03.1995. By virtue of this letter, the files of
transferred lands were directed to remain with RIICO;
xxii)The Jan Aavas Yojana scheme under which
Respondent No. 1 had applied to the Collector, was
purely because it was mandatory to do so under the
Scheme itself. In no way does this act as an
acceptance that the Collector and the State
Government were in charge of the land in LIA, Kota.
In fact, the Collector had sought the opinion of RIICO
in the matter, clearly showing the Collector’s own
conviction that consent needed to be sought from the
Corporation;
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xxiii)The lack of a show cause notice or an opportunity to
Respondent No. 1 to defend itself is fatal to the
Appellants’ case. Swadeshi Cotton Mills v. Union of
India
13
had made clear the need for principles of
natural justice to be followed even for administrative
decisions. A process for cancellation was provided
already under Rule 24(1) of the 1979 Rules, which
had to be adhered to.
14
xxiv)The Appellants are making unfounded allegations
regarding placement of the Writ Petition filed by
respondent No.1 before Division Bench of the High
Court. The Chief Justice being Master being Master
of the Roster, was competent to enlist any matter
before a Single or Division Bench. Challenge to
Article 138 of AoA was an issue of paramount public
13 (1981) 1 SCC 664.
14 24. CANCELLATION
The Corporation shall have the right to cancel the plot allotment after issuing a
45 days registered AD show cause notice to the allottee by the concerned Sr. DGM /
Senior Regional Manager / Regional Manager for breach of any of these rules, condition
of allotment letter or terms of lease agreement. The powers of plot cancellation shall vest
with the Unit Head for all categories of the land/plot allotments except for the land/plots
allotted under Rule 3(W).
In show cause notice the allottee would be asked to show cause why the plot
allotment should not be cancelled, lease deed of the plot should not be terminated and plot
should not be taken in possession, in view of the default committed by the allottee. In the
notice it would also be clarified that, the said default shall be condoned only on payment
of interest/retention charges or removal of breach of terms and conditions/ its
regularisation. In case of no response or reply to the show cause notice without
commitment for deposition of dues, for regularisation of delay / default or removal of
breach of terms and conditions by the allottee, allotment of plot should be cancelled
terminating the lease-deed of plot.
…
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importance, hence the case was rightly placed before a
Division Bench.
xxv)The arguments regarding the failure of the AAIFR
scheme were irrelevant and beside the point. This
Court in its earlier order in the context of the petitions
filed by the workers unions had already affirmed that
SICA would not apply to Respondent No. 1, given it
was not a “sick company”. The land in question had
been obtained as part of the AAIFR scheme by way of
auction, but that did not mean that the BIFR or AAIFR
itself would have jurisdiction over Respondent No. 1.
xxvi)As far as the SLPs filed by the Appellant Unions were
concerned, the Supreme Court’s earlier orders on
17.08.2017 and 06.03.2018 dismissing their Review
Petitions had put a quietus to that issue. Respondent
No. 1 had paid the workers their agreed upon dues
under the AAIFR scheme and no further directions
could be issued to it in terms of the rehabilitation plan.
34.Learned Senior Counsels, Mr. Dave & Dr. Singhvi,
provided the following rebuttals in their rejoinder, besides
reiterating their earlier arguments once again: -
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i)The act of the new government, following elections,
going into the decisions of the earlier ruling party is
legally acceptable. Respondent No. 1 had failed to
prove the alleged mala fide intent behind the
cancellation of the supplementary lease deed and the
quashing of the approval for sub-division and
conversion of the usage of land;
ii)There is no fetter on the power provided under Article
138 of the AoA of RIICO to issue directions to the
Corporation. In terms of the requirement for reasons
to be provided, Justice Chinnappa Reddy’s opinion in
Sachidananda Pandey v. State of West Bengal &
Ors.
15
outlined that the process, deliberations, and
minutes of the meeting preceding a decision would be
taken into account when ascertaining the reason for a
particular measure to be taken. Contrary to
Respondent No. 1’s position, the entire rationale did
not have to be laid out in the conveyance of the final
verdict;
iii)It is only the subsequent government that is competent
and capable of looking into the decisions taken by the
previous regime. The current government had all the
authority and rights to examine earlier decisions, and
15 (1987) 2 SCC 295.
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annul them if irregularities were discovered. The State
Government has acted in pursuance of its mandate and
obligation in this matter;
iv)RIICO is nothing more than a company and the 1979
Rules are framed under its AoA. These Rules are
subject to statutory mandates and requirements. The
1979 Rules are nothing more than a set of internal
regulations of RIICO and are not comparable to the
1959 Rules that were enacted under the Rajasthan
Land Revenue Act, 1956. This Court in Life
Insurance Corporation of India v. Escorts Ltd. &
Ors.
16
has emphasized the character of such
companies and the conduct of their business via the
AoA and internal rules made in furtherance of the
Articles;
v)Rule 11A is the appropriate provision in the 1959
Rules to govern the usage and utilization of the land.
Since the land in question was never transferred to
RIICO, RIICO could not have acted under the 1979
Rules at all. The State Government always continued
to manage and control the subject land under the 1959
Rules.
16 (1986) 1 SCC 264.
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35.The Appellant Unions have also made the following
submissions in support of the rights of the former employees of
JKSL:-
i)The unions have challenged the initial transfer lease
deed to Respondent No. 1 signed in 2007. This
petition has been pending before the HC and its
outcome will have a knock-on effect on all other
proceedings initiated thereafter. This includes the
SLPs before us;
ii)The Appellant Unions had accepted the AAIFR
scheme only on the basis that the industrial units at
LIA, Kota, would be restarted. The workers had been
owed over Rs. 250 Crores in dues, of which they had
agreed to take only a small portion as the
rehabilitation plan envisaged the restarting of the units
and consequent employment for them. As the plan had
abjectly failed and Respondent No. 1 was
unsuccessful in restarting production, the labourers
were owed the entirety of their dues.
C. ANALYSIS
36.With the assistance of the exhaustive and thorough
submissions before us, we may now proceed to examine the
controversy before us.
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C.1. Whether the LIA, Kota has been always under the
management and control of the State Government or
it was transferred to RIICO pursuant to Government
Order dated 18.09.1979?
37.From the recounting of the arguments raised on behalf of
all the parties, the first question that arises for our determination
is whether the LIA, Kota continued under the uninterrupted
administrative control of the State Government, or whether it
was transferred to RIICO. To uncover the answer, it is
necessary to recapitulate the facts which have already been
referred to in extenso. There is broadly no dispute that
Government land was allotted to JKSL on a leasehold basis in
the year 1958. The said allotment was made by the State
Government in furtherance of its industrial policy, read with the
power traceable to the Rajasthan Land Revenue Act, 1956.
Section 100 of the said Act empowers the State Government to
frame rules for regulating the sales of land in industrial and
commercial areas, as well as the power to impose other
conditions like annual assessment etc. In exercise of that
power, the State Government formulated the 1959 Rules. The
allotment of land to JKSL, thus, for all intents and purposes,
came to be regulated under the 1956 Act read with the 1959
Rules. As an offshoot of the allotment of land, the State
Government and JKSL entered into a bilateral relationship of
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lessor and lessee, respectively. It may be beneficial to refer to
Rule 2 of the 1959 Rules at this stage which provides that the
land in industrial area may be allotted on lease hold basis for 99
years “…by the State Government in the industrialist
department….”. Rule 4 contemplates that every such lease may
be renewed for further period of 99 years at the option of the
lessee.
38.We may now advert to Rule 8 of the 1959 rules, as
reproduced in para 6, which mandates that the land given for
industrial purposes shall not be used for any other purpose
except constructing factory premises and such other residential
quarters as are required for those engaged in that industry. Rule
8 further empowers the State Government to grant permission
for establishment of industry other than for which the land was
initially allotted.
39.In this context, the stipulations contained in the first lease
deed executed by State Government in favour of JKSL in 1967
are relevant. Under this lease, the lessee was obligated to use
the allotted land for the prescribed industrial purpose, failing
which the land was liable to be reverted “to the lessor”. This
leads to the inescapable conclusion that the first formal lease of
1967 was strictly in conformity with provisions of the 1959
Rules.
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40.The relationship of lessor and lessee between State of
Rajasthan and JKSL continued uninterruptedly till JKSL was
declared a `sick company’. Respondent No. 1 then stepped into
the shoes of JKSL under the orders of AAIFR, and by virtue of
the tripartite agreements executed with the labour unions, for
the land at LIA, Kota. It is also an admitted fact that neither
under the tripartite settlements dated 9.10.2002 and 22.10.2002,
nor under the sanctioned rehabilitation scheme dated 23.1.2003,
the relationship of lessor and lessee between State, JKSL, or
Respondent No.1, as the case may be, was ever disrupted. This
jural relationship was further cemented between the State and
Respondent No.1 when 7 fresh lease deeds were executed in
favour of Respondent No.1 by the State Government through
the Collector, Kota. The details of these 7 leases have been
provided in para 20 of this order. It is pertinent to mention that
the terms and conditions contained in these fresh lease deed
executed on 17.3.2007 were broadly the same as were
incorporated while leasing out the subject land originally to
JKSL.
41.What clearly emerges from this sequence of events is that
from 1958 to 2007, and further onwards till the present date,
there is no cessation in the relationship of lessor and lessee
between the State and Respondent No. 1, or its predecessor
JKSL. This contractual relationship duly governed under the
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1956 Act read with the 1959 Rules, was never terminated
expressly or otherwise and neither was it substituted by a
supplementary conveyance deed.
42.We may now address some of the important intervening
circumstances, events and Government Orders and circulars,
heavily relied upon by Respondent No. 1. It is a matter of
record that Government of Rajasthan issued an order on
18.09.1979 (reproduced in para 9) whereunder it was decided
that “all the industrial areas of Rajasthan shall only be
developed through Rajasthan State Industrial and Mining
Development Corporation”. The Government Order further
declared that “the industrial areas operated by the Department
of Industry shall be handed over to Rajasthan State Industrial
and Mining Development Corporation Limited, Jaipur w.e.f.
1.10.1979”. In purported compliance of the above-mentioned
Government Order dated 18.09.1979, the Joint Director, District
Industrial Centre, Kota issued an Order on 28.09.1979 (also
reproduced in para 9) thereby transferring certain industrial
areas to the Corporation including “Large Scale Industrial Area,
Kota”.
43.There is an unending debate between the parties with
respect to the scope and import of Government Order dated
18.09.1979 and whether it was given effect to qua the land
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allotted to JKSL in LIA, Kota. It should be remembered that
Respondent No. 1 had not appeared on the scene at the time
when the Government Order in question was passed.
44.Firstly, we propose to analyse the purpose and effect of
Government Order dated 18.09.1979. As we have been able to
understand, all the industrial areas of Rajasthan were to be
transferred to RSIMDC for the purpose of “development” of
those areas. The industrial areas were to be handed over only for
this specific purpose. In other words, RSIMDC was entrusted
with the task of a Local Authority to carry out development
activities in the industrial areas like “(a) construction of roads;
(b) supply of electricity; (c) supply of water; (d) sewerage
system; (e) all related amenities for the workers employed in
industrial areas” etc. etc.
45.It is equally relevant here to appreciate that a lessee is
liable to pay Development Charges for the allotted industrial
land under Rule 3 of 1959 Rules. After subjecting the allottees
with the levy of Development Charges, the State Government as
a lessor was obligated to provide all amenities in the industrial
area on the principle of quid pro quo. Whether such services
and amenities are developed by the State Government at its own
expense or through an agency hired for that purpose, is
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completely inconsequential, insofar as the subsistence of the
relationship of lessor – lessee is concerned.
46.We say so also for the plain reason that the expression
`handed over’ contained in the Government Order dated
18.09.1979 does not and cannot be construed as the transfer of
ownership of the industrial land from State Government to
RSIMDC or RIICO. The word “transfer” used by the Joint
Director in his Order of 28.09.1979 has to be read in
conjunction with the Government Order dated 18.09.1979
which unequivocally says that handing over of the industrial
areas was only for development purposes.
47.It appears to us that ownership or title of an immovable
property cannot be transferred save and except by way of an act
of legislation or a validly executed instrument of transferring
such ownership rights. The omnibus administrative order
issued for a purpose specified therein cannot be stretched to
construe an implied transfer of ownership. There is no hidden
treasure lying underneath Government Order dated 18.09.1979
to infer a non-existent consequence like vesting of lessor’s
rights in RIICO in respect of LIA, Kota.
48.Thus, we have no hesitation to hold that a relationship of
lessor - lessee between State Government and JKSL/RIICO
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continued to subsist and has not been affected in any manner by
virtue of Government order dated 18.09.1979.
49.Another strong plank of argumentation advanced on
behalf of Respondent No.1 is founded upon Rules 11A and 12
of the 1959 Rules which came to be inserted by way of
amendment in the years 1982 & 1983. We accordingly propose
to minutely analyse both the Rules.
50.Rule 11A says that land “shall be allotted” to RIICO and
Rajasthan Tourism Development Corporation “for setting up
and developing industrial areas” on the terms and conditions
prescribed therein. The Rule provides that the land shall be
allotted to RIICO on a leasehold basis and RIICO shall be free
to sub-lease the land on agreed terms and conditions. RIICO
has been further authorised to levy and recover such lease rent
and other charges as may be determined by it, in respect of
lands sub-leased by it. The period of sub-leases shall not exceed
99 years. Clause (viii) of Rule 11A noticeably states that the
land shall revert to the State Government, free from all
encumbrances and without payment of any compensation, in
case RIICO or its sub-lessees use it for any purpose other than
industrial, or commit breach of any other than condition of the
lease or sub-leases. Rule 11A, contemplates allotment of land to
RIICO on lease hold basis for a period of 99 years, with further
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authorization to execute sub-leases strictly for industrial
purposes. The State Government has expressly reserved its
rights to secure the land back free from all encumbrances if
RIICO or its sub-lessees fail to use the allotted land for
industrial purposes or commit a breach of any other condition.
The expression “shall be” signifies allotment of land to RIICO
in the future. Rule 11A is not attracted in respect of the lands
which had already been leased out prior to insertion of this rule
on 23.12.1983.
51.We have no reason to doubt that Rule 11A, per se, does
not advance the cause of Respondent No. 1 for the reason that
Respondent No. 1 has merely stepped into the shoes of JKSL
and lease deeds were executed in the year 2007 directly by the
State Government in favour of Respondent No.1, without
resorting to Rule 11A, namely, through RIICO. Had it been a
case of execution of fresh lease deeds in favour of Respondent
No. 1 by RIICO in 2007, it could be convincingly argued that
such allotment was in furtherance of the authorization conferred
on RIICO under Rule 11A. The facts do not bear out such an
eventuality.
52.That apart, the plain wording of Rule 11A clearly shows
that the Corporation can have merely managerial power over the
land that is allocated to it. As laid down very clearly under Rule
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11A, the allotment to RIICO is done purely on a leasehold
basis, and ownership and title remain unequivocally with the
State Government. RIICO acts as nothing but an agent of the
State in its efforts to increase industrial production and further
economic progress. The State remains the overarching power in
this dynamic and RIICO remains subservient to it.
53.As regard to Rule 12 (reproduced in para 11 of this
order), it may be seen that the same is compartmentalised in two
parts. The first part is a consequence of Rule 11A, namely, if
the State Government has allotted land to RIICO on lease hold
basis under Rule 11A, in that case, this segment of Rule 12
empowers RIICO “to make allotment” in accordance with its
1979 rules of “vacant plots” to entrepreneurs in the industrial
areas notified by the State Government and transferred to the
said Corporation.
54.To be more specific, the first part of Rule 12 authorises
RIICO to execute sub-leases in respect of land which has been
leased out to it by the State Government under Rule 11A of the
1959 Rules.
55.The second part of Rule 12 says that RIICO “shall also be
authorised” to execute lease deeds, realize development
charges, lease rent and other dues from the entrepreneurs to
whom plots had already been allotted under the 1959 Rules. In
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our considered opinion, the second part is an enabling provision
whereunder RIICO has been authorised to execute lease deeds
or realize development charges/lease rents and other dues from
pre-1982 group of allottees. A plain reading of this provision
makes it abundantly clear that RIICO would execute lease deeds
only in a case where land had been principally allotted but a
formal agreement between a lessor and lessee or lessee and sub-
lessee is yet to be executed. If a piece of land had already been
allotted and a formal lease deed stood executed between the
State and such an allottee, there arises no occasion to execute a
second lease deed in respect of the same leased out land. In that
case, only development charges and lease rent etc. are to be
recovered by RIICO for the reasons which we have already
explained, and which is merely a cost factor towards the
development activities to be undertaken by RIICO as per the
Government order dated 18.09.1979. The second part of Rule
12 also does not fortify the claim of Respondent No. 1 for the
reasons that:-
(a)lease deeds in favour of JKSL had been already executed
in the year 1967 before Rule 12 came into force;
(b)no part of the land in dispute was ever allotted to RIICO
under Rule 11A of the 1959 Rules;
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(c)Respondent No. 1 is a substitute of JKSL and that is why
fresh lease deeds were executed in favour of Respondent No. 1
only for the remainder of the period of the already subsisting
lease;
(d)There was no independent lessor – lessee relationship
between the State Government and Respondent No. 1 except
that Respondent No. 1 substituted JKSL pursuant to AAIFR
order;
(e)the non-applicability of second part of Rule 12 was
reinforced when transfer lease deeds were executed in favour of
Respondent No.1 in 2007 by the State Government through the
Collector and not by RIICO;
(f)We are informed that even lease rent has also been
deposited by Respondent No. 1 continuously for years post
2007 with the Tehsildar, Kota, and not with RIICO; and
(g)There has been no formal agreement as lessee and sub-
lessee between RIICO and Respondent No. 1 with the
concurrence of State Government.
56.Another argument raised by Respondent No. 1 was that
the transfer lease deeds were signed pursuant to the requirement
of Rule 9(iv) of the 1959 Rules, which necessitates a sign off by
the State Government for transfer of land from one company to
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another, when the entity that possessed the lease is declared a
sick company. Rule 9 in its entirety has been reproduced in para
6 of this Order.
57.We are, once again, unmoved by this submission. If the
1959 Rules were not even applicable to begin with, there would
have been no need to comply with Rule 9(iv) at all. Rather, the
very fact that compliance with this provision was necessary, is
sufficient indication that Respondent No. 1 was fully aware that
the State Government had ownership, title, and control of LIA,
Kota.
58.Having held so, there is no alternative but to conclude
that the relationship of lessor and lessee between State and
Respondent No. 1 has been validly subsisting at all times and
RIICO was never authorised either by Government order dated
18.09.1979 or under Rules 11A and 12 of the 1959 Rules, to by-
pass the State Government and assume the self-styled role of
the lessor in respect of LIA, Kota. Since, the 1967 and 2007
lease deeds in favour of JKSL and Respondent No. 1,
respectively, were executed by the State Government in terms
of Rule 2 of the 1959 Rules, RIICO had no authority
whatsoever to permit Respondent No. 1 to change the land use
or allow for the sub-division of plot without the prior approval
of the State Government, which is the sole competent authority
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to accord such permission in exercise of its power under Rule 8
of the 1959 Rules. The contrary view taken by the High Court is
plainly erroneous in law and is based on a misconstruction of
the provisions of 1959 Rules read with the binding bilateral
contracts between the parties.
59.Not that we are dependent in any manner upon the
understanding of the Government Order dated 18.09.1979 or
Rules 8, 9, 11A and 12 of the 1959 Rules, by the State
Government or RIICO. Irrespective of their inconsistent stand
taken before different forums with respect to the status of
RIICO qua LIA, Kota, we have drawn our conclusion primarily
on the basis of plain reading of the said Government Order and
the 1959 Rules. We, however, hasten to add that the
correspondence/circulars issued by the State Government and
RIICO subsequently, which we have reproduced and discussed
in paragraphs 12 to 15 of this judgment, unambiguously fortify
our construction of both the Government Order and the 1959
Rules, referred to above.
C-2. Whether the 1979 Rules of RIICO are statutory in
nature?
60.The question regarding whether the 1979 Rules
formulated by RIICO are of statutory character, is more or less
rendered academic as the fate of these appeals does not hinge
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upon this issue in view of our holding in Part C-I. Nevertheless,
since the High Court has opined on this issue, we propose to
answer the question so that there remains no uncertainty in the
minds of State authorities, RIICO or the leaseholders.
61.It must be noticed at the outset that RIICO is not a
statutory body. The Company was brought into being under the
Companies Act, 1956 by the State of Rajasthan, which holds
100% shares in it. The distinction between companies that are
brought into being “by” an Act, and those created “under” an
Act, is that a company incorporated under the Companies Act is
not a creation of the said Act but it has come into existence in
accordance with the provisions of the Companies Act.
62.This was fleshed out further in S.S. Dhanoa v. Municipal
Corporation, Delhi & Ors.
17
which held:
“9. Corporation, in its widest sense, may mean any
association of individuals entitled to act as an
individual. But that certainly is not the sense in
which it is used here. Corporation established by
or under an Act of Legislature can only mean a
body corporate which owes its existence, and not
merely its corporate status, to the Act. For
example, a Municipality, a Zilla Parishad or a
Gram Panchayat owes its existence and status to
an Act of Legislature. On the other hand, an
association of persons constituting themselves
into a Company under the Companies Act or a
Society under the Societies Registration Act owes
17 1981 (3) SCC 431.
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its existence not to the Act of Legislature but to
acts of parties though, it may owe its status as a
body corporate to an Act of Legislature.”
63.The importance of this difference in our context was
summarized concisely in Executive Committee of Vaish
Degree College v. Lakshmi Narain
18
:
“10…In other words the position seems to be that
the institution concerned must owe its very
existence to a statute which would be the
fountainhead of its powers. The question in such
case to be asked is, if there is no statute, would
the institution have any legal existence. If the
answer is in the negative, then undoubtedly it is a
statutory body, but if the institution has a separate
existence of its own without any reference to the
statute concerned but is merely governed by the
statutory provisions it cannot be said to be a
statutory body…”
64.What we have, very clearly, is a company incorporated
“under” the Companies Act, 1956. RIICO does not owe its
existence to a statute, but is rather created under the Companies
Act and is subject to its provisions. It is only governed by the
provisions of the Companies Act and not created by it. The
1979 Rules, which learned Senior Counsel Mr. Rohatgi had
argued contained a “statutory flavour” were issued pursuant to
Article 93 of RIICO’s AoA. It is difficult to see how the status
of “statutory rules” may be accorded to regulations that are
18 1976 (2) SCC 58.
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brought into existence under the Articles of a non-statutory
company.
65.Respondents have cited M.G. Pandke & Ors. v.
Municipal Council, Hinganghat, Dist. Wardha & Ors.
19
to
make their case regarding the 1979 Rules being statutory in
nature. In that case, the State of Maharashtra had come out with
the “Secondary School Code” via executive directions. The
State then promulgated the Maharashtra Secondary Education
Boards Act, 1965, and the associated Maharashtra Secondary
Education Boards Regulations, 1966. Within the latter, a
reference had been made to the Secondary School Code and it
was mandated that schools comply with the Code under
Regulation 19(7)(xvi). When a conflict between the Secondary
School Code and the bylaws of the Respondent Municipal
Council arose, this Court had to determine the legal status of the
Code and proceeded to conclude as follows:
“12. Learned Counsel for the appellants has raised
the following contentions in support of his case:
1. Regulation 19(7)(xvi) of Maharashtra
Regulations which is a statutory regulation makes
it obligatory for the Municipal Council to follow
the provisions of the Code. The Code itself may be
non-statutory but the mandate to follow the Code
flows from Regulations 19(7)(xvi) of the
Maharashtra Regulations which is mandatory. The
field having been occupied by the Code under the
19 1993 Supp (1) SCC 708.
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statutory-mandate, no bye-law to the contrary
could be framed by the Municipal Council.
…
13. When the Code was enforced in the year 1963,
the Act and Regulations were holding the field in
Vidarbha Division. Under the Act and the
Regulations the age of superannuation being 60
years, the Code, while fixing 58 years as the age of
superannuation for rest of Maharashtra, permitted
the Vidarbha teachers to superannuate on attaining
the age of 60 years. The Maharashtra Act which
came into force on January 1, 1966 repealed the
Act and the regulations. In Baboolal's case (AIR
1974 Bom 219) the High Court referred to the
repealing and saving section of the Maharashtra
Act and came to the conclusion that there was no
provision thereunder to save the regulations.
Assuming that the Regulations under the Act stood
repealed, the Code which was framed by the
Maharashtra Government continued to hold the
field. It is not disputed by the learned Counsel for
the appellants that the Code by itself is not
statutory and is in the nature of executive
instructions. But he strongly relies on Regulation
19(7)(xvi) of Maharashtra Regulations and
contends that the said Regulation makes it
obligatory for the Municipal Council Hinganghat
to follow the provisions, of the Code. It is for the
State Government to frame the Code in whatever'
manner it likes but once the Code is in operation
its provisions have to be followed by the
Municipal Council Hinganghat under the
mandate of Regulation 19(7)(xvi) of Maharashtra
Regulations. We see considerable force in the
argument of the learned Counsel. The Code has
been framed with the purpose of bringing security
of service, uniformity, efficiency and discipline in
the working of non-Government High Schools. It
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has to be applied uniformly to the schools run by
various Municipal Councils in the State. It is no
doubt correct that the Municipal Councils have the
power to frame bye-laws under the Maharashtra
Municipalities Act, 1965 but if the field is already
occupied under the mandate of statutory
Maharashtra Regulations, the Municipal Council
cannot frame bye-laws to the contrary rendering
the mandate of the Maharashtra Regulations
Nugatory. We are of the view that the Municipal
Council Hinganghat has out stepped its
jurisdiction in framing bye-law 4 of the bye-laws.
We, therefore, direct that the conditions of service
of the appellants shall be governed by the Code as
enforced by Regulation 19(7)(xvi) of the
Maharashtra Regulations. Bye-law 4 of the bye-
laws shall not be applicable to the appellants.”
66.We fail to see how this decision assists Respondent No. 1.
There was a reference made to the Secondary School Code in
the Maharashtra Regulations but at no point of time was there
an indication that the Code was designated as “statutory”. In
fact, the legal force of the Code was bestowed upon it by the
reference in Regulation 19(7)(xvi) of the Maharashtra
Regulations, which were statutory in nature.
67.This cannot, in any way, be extrapolated to affirm the
proposition that references in legislations and statutory rules,
infuses a “statutory flavour” to regulations that are not of such
character. In the present case, Rule 12 of the 1959 Rules merely
states that lands allotted to RIICO will be further dealt with by
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the Corporation as per its 1979 Rules. At best, this imposes an
obligation upon RIICO to abide by its own guidelines, which it
had issued under Article 93 of its AoA. The obligation for
RIICO to abide by the 1979 Rules stems from its own AoA
under which those Rules came into being. By no stretch, does
this make the 1979 Rules statutory in nature, as was accepted
even in M.G. Pandke (Supra).
68.Thus, it is clear to us that no statutory force underpins the
1979 Rules and there is no question of them prevailing over or
governing the subject area.
C.3 Whether failure to observe Principles of Natural
Justice by the State Government vitiated its decision
to annul the permissions/approvals granted by RIICO
in favour of Respondent No.1?
69.Respondent No. 1, while vehemently objecting to the
usage of Article 138 of RIICO’s AoA to issue directions to the
Corporation for cancellation of the supplementary lease deeds
and attendant approvals/permissions, has equated such
directions by the State Government to a “farman” whereby any
semblance of procedure and due process are abandoned to its
own prejudice. It was asserted that the method of undertaking
these measures had to be followed and an opportunity of
hearing needed to be provided to Respondent No. 1. This was
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further elaborated upon by emphasizing on the failure to
provide Respondent No. 1 with a show cause notice, and blatant
non-adherence to Principles of Natural Justice.
70.Both sides have raised contentions on the need for
reasons behind the cancellation to be specified in the order itself
or not. Learned Senior Counsel, Mr. Dave, had cited the
judgement in Sachidananda Pandey (Supra) to argue that the
consideration of whether reasons were provided would include
the internal deliberations within the State Government, and not
be confined merely to the order itself. The exact passage relied
upon by him read as follows:
“27. Dr. Singhvi cited before us the well-known
decisions of this Court… to urge that even an
administrative decision must be arrived at after
taking into account all relevant considerations and
eschewing irrelevant considerations and that the
reasons for an order must find a place in the order
itself and those reasons cannot be supplemented
later by fresh reasons in the shape of an affidavit
or otherwise. The submission was that neither the
Cabinet memorandum of January 7, 1981 nor the
Cabinet Memorandum of September 9, 1981
revealed that relevant considerations had been
taken into account. What was not said in either of
the Cabinet Memoranda, it was said, could not
later be supplemented by considerations which
were never present to the mind of the decision
making authority. We do not agree with the
submission of Dr. Singhvi. The proposition that a
decision must be arrived at after taking into
account all relevant considerations, eschewing all
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irrelevant considerations cannot for a moment be
doubted. We have already pointed out that
relevant considerations were not ignored and,
indeed, were taken into account by the
Government of West Bengal. It is not one of those
cases where the evidence is first gathered and a
decision is later arrived at one fine morning and
the decision is incorporated in a reasoned order.
This is a case where discussions have necessarily
to stretch over a long period of time. Several
factors have to be independently and separately
weighed and considered. This is a case where the
decision and the reasons for the decisions can
only be gathered by looking at the entire course of
events and circumstances stretching over the
period from the initiation of the proposal to the
taking of the final decision. It is important to note
that unlike Mohinder Singh Gill’s case where that
Court was dealing with a Statutory Order made
by a statutory functionary who could not
therefore, be allowed to supplement the grounds
of this order by later explanations, the present is a
case where neither a statutory functions nor a
statutory functionary is involved but the
transaction bears a commercial though public
character which can only be settled after
protracted discussion, clarification and
consultation with all interested persons. The
principle of Mohinder Singh Gill’s case has no
application to the factual situation here.”
71.We have no qualms with the logic employed by this
Court in Sachidananda Pandey (Supra). However, this citation
may not be helpful to the appellants in the present instance. The
extracted passage refers to “consultation with all interested
persons” and the earlier part of the judgment give the complete
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details regarding how representations and objections had been
sent with regard to the construction of a hotel in the area in
question, especially in the context of its impact on the ecology
and migratory birds. It was in this factual background, coupled
with the fact that the deliberations had been going on for around
2 years, that the Court was satisfied that relevant considerations
had been appropriately accounted for. In our scenario, on the
other hand, the deliberations by the Cabinet Committee which
proceeded for around 7-8 months, do not indicate that
Respondent No. 1 was ever heard or involved in the process.
72.The importance of Principles of Natural Justice, among
which we are concerned with audi alterem partem in this case,
have been deliberated upon by this Court numerous times in the
past. As far back as in Union of India v. P.K. Roy
20
the Court
held:
“12…But the extent and application of the doctrine
of natural justice cannot be imprisoned within the
strait-jacket of a rigid formula. The application of
the doctrine depends upon the nature of the
jurisdiction conferred on the administrative
authority, upon the character of the rights of the
persons affected, the scheme and policy of the
statute and other relevant circumstances disclosed
in the particular case…”
20 (1968) 2 SCR 186.
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73.Further, in A.K. Kraipak v. Union of India
21
the nature of
an administrative power and the obligations reposed upon the
State to function in a just and fair manner was explained:
“13. The dividing line between an administrative
power and a quasi-judicial power is quite thin and
is being gradually obliterated. For determining
whether a power is an administrative power or a
quasi-judicial power one has to look to the nature
of the power conferred, the person or persons on
whom it is conferred, the framework of the law
conferring that power, the consequences ensuing
from the exercise of that power and the manner in
which that power is expected to be exercised.
Under our Constitution the rule of law pervades
over the entire field of administration. Every organ
of the State under our Constitution is regulated and
controlled by the rule of law. In a welfare State
like ours it is inevitable that the jurisdiction of the
administrative bodies is increasing at a rapid rate.
The concept of rule of law would lose its vitality if
the instrumentalities of the State are not charged
with the duty of discharging their functions in a
fair and just manner. The requirement of acting
judicially in essence is nothing but a requirement
to act justly and fairly and not arbitrarily or
capriciously. The procedures which are
considered inherent in the exercise of a judicial
power are merely to facilitate if not ensure a just
and fair decision. In recent years the concept of
quasi-judicial power has been undergoing a
radical change. What was considered as an
administrative power some years back is now
being considered as a quasi-judicial power…”
21 (1969) 2 SCC 262.
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74.In this context, it may be true that the Principles of
Natural Justice entailed giving Respondent No. 1 an opportunity
to defend its rights. However, the most decisive and crucial
factor is whether any legally vested `right’ ever accrued in
favour of Respondent No. 1, which the State Government could
not have despoiled behind its back. It has already been held by
us categorically that RIICO had no authority whatsoever to
accord permission for conversion and sub-division of the
industrial land allotted to Respondent No. 1. We have further
opined that the State Government has always retained its
authority as lessor and was the only competent authority to
grant such permissions to Respondent No. 1 within the
framework of the 1959 Rules. The irresistible conclusion would
be that the self-styled power exercised by RIICO, was without
any sanction in law; it lacked inherent competence and RIICO
acted beyond its jurisdiction in respect of LIA, Kota. The
permissions accorded by RIICO in favour of Respondent No. 1
did not confer any rights whatsoever, much less any enforceable
right in the eyes of law. RIICO usurped the powers vested in the
State Government and passed palpably illegal orders in favour
of Respondent No.1. The agreements between RIICO and
Respondent No. 1 are nothing but brutum fulmen.
75.On the face of these findings, the question that arises is
whether Respondent No. 1, which actively participated in
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RIICO’s decision making process and secured benefits without
any authority in law, can be permitted to complain of a
deprivation of the opportunity of being heard. We are of the
considered opinion that the principle of audi altrem partem
should not be an empty formality nor a compulsory ritual that
must always be performed. The principal issue that arose for
consideration before the Cabinet Committee pertained to the
legitimacy of the power assumed by RIICO in respect of LIA,
Kota, and not whether the permissions granted to Respondent
No. 1 suffered from any propriety or legality. It is true that the
issue was raked up with a political flavour, but eventually the
final resolution centred around the RIICO’s lack of authority.
We do not think that Respondent No. 1 could render any
assistance to the Cabinet Committee in the formation of their
views. In any case, we have carried out an in-depth analysis of
the entire gamut of documents and statutory rules, and have
come to a firm conclusion that it was the State Government
alone which was competent to accord necessary permissions to
Respondent No. 1 under the 1959 Rules, and not RIICO in
purported exercise of its powers under the 1979 Rules. Our
holding is not confined to the decisions taken in favour of
Respondent No. 1 alone, and shall encompass all other similarly
placed lease-holders, with no discretion to the State
Government to blow hot and cold and/or to take ad hoc
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decisions on a pick and choose basis. The only exception can be
in a case where land has been expressly leased out to RIICO
under Rule 11A of 1959 Rules and RIICO has further sub-
leased the same land as per the scheme envisaged under clause
(viii) of the said Rule.
76.We may at this stage refer to the observations made by
this Court in S.L. Kapoor v. Jagmohan & Ors.
22
where the non-
observance of Principles of Natural Justice was not condoned,
but nonetheless forgone, on the following basis:
“17. Linked with this question is the question
whether the failure to observe natural justice does
at all matter if the observance of natural justice
would have made no difference, the admitted or
indisputable facts speaking for themselves. Where
on the admitted or indisputable facts only one
conclusion is possible and under the law only one
penalty is permissible, the Court may not issue its
writ to compel the observance of natural justice,
not because it approves the non-observance of
natural justice but because Courts do not issue
futile writs. But it will be a pernicious principle to
apply in other situations where conclusions are
controversial, however, slightly, and penalties are
discretionary.”
77.Further affirmation on this point is found in K.
Balasubramanian (Ex. Capt.) v. State of Tamil Nadu
23
:
22 (1980) 4 SCC 379.
23 (1991) 2 SCC 708.
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“9…This High Court, has in our opinion rightly
held that the directions contained in orders dated
November 16, 1976, and June 15, 1977, were
invalid being contrary to the provisions contained
in Rule 35 of the General Rules. Since the said
orders were invalid, the petitioners would not
claim any right on the basis of the said orders
and, there was, therefore, no question of
affording them an opportunity of a hearing
before passing the order dated March 3, 1980…”
78.These decisions fortify our conclusion that steps taken
which are themselves vitiated, cannot form the basis for
principles of natural justice to be applied. The supplementary
lease deeds were signed by RIICO without any authority to do
so. It similarly lacked the capacity to grant the permission for
conversion of use for the land to commercial, and the allowance
to sub-divide the plot. Thus, no legally vested right of
Respondent No. 1 has been infringed and it has no legitimate
ground to seek an opportunity to be heard in a matter strictly
between RIICO and State Government.
C. 4 Whether the State Government could have exercised
its powers under Article 138 of the AoA of RIICO to
direct cancellation?
79.It has already been noted that RIICO is a 100%
Government owned company incorporated under the
Companies Act, 1956. RIICO, in deference to the statutory
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requirements of the Companies Act, has formulated its own
Articles of Association (AoA). Article 138 of these Articles
reads as follows:
“138. Directions and instruction of the
Governor.
Notwithstanding anything contained in any of these
articles, the State Government may from time to
time, issue such directions or instructions as he
may consider necessary in regard to the affairs of
the conduct of the business of the Company or
Directors thereof and in like manner may vary and
annul any such direction or instruction. The
Directors shall duly comply with and give
immediate effect to director instruction so issued.”
80.It is a matter of common knowledge that clauses of this
nature are invariably inserted in AoAs of most Public Sector
Undertakings and/or Corporations owned and controlled by the
State. The State Government being the sole investor, its
overriding powers have been acceded to by RIICO through
Article 138 of its AoA. It is pertinent to note that Article 138
opens with a non obstante clause and, thus, the power given to
State Government to issue directions under this provision
cannot be curtailed and is not subject to any other provision
within the Articles. It is categorically provided in Article 138
that the State Government may issue “such directions or
instructions……in regard to the affairs of the conduct of the
business of the Company or Directors thereof…”. Article 138
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also empowers the State Government to “vary and annul any
such direction or instruction”. The Directors are obligated to
comply with the Government directions/instructions.
81.In the present case, the State Government has directed
RIICO to recall its permission for conversion of the usage of
land, sub-division of plots and supplementary lease deeds
executed in favour of Respondent No. 1. All these actions of
RIICO pertained to its business affairs. Since RIICO took these
decisions exceeding its powers and in a completely
unauthorised and illegal manner, the State Government, in our
considered opinion, was well within its rights to invoke Article
138 of AoA and nullify the unauthorised and unlawful decisions
taken by RIICO. The very objective behind reposing power in
the State Government under Article 138 of the AoA is to enable
it to undo and annul the decisions taken by RIICO in the
conduct of its business affairs, which the State Government may
find is derogating from public interest or in conflict with its own
policy. The State Government is entitled to resort to Article 138
where it finds that the business affairs have been conducted by
RIICO detrimental to the State’s interest as a Principal stake
holder.
C. 5Whether the Rules of Business were not followed?
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82.Respondent No. 1 has heavily relied upon the Rules of
Business to urge that failure to comply with the procedure
provided therein would lead to invalidation of the government
decision. This Court’s earlier pronouncement in MRF (Supra)
was cited in support of this contention. The relevant extract of
the judgment addressing this aspect of the matter is to the
following effect:
“67… In the case on hand, we are required to
examine the contentions of the appellants on this
issue with reference to the Business Rules framed
by Governor of Goa under Article 166(3) of the
Constitution of India.
68. Rule 7(2) of the Business Rules of the
Government of Goa states, that, no proposal which
requires previous concurrence of Finance
Department under the said Rule, but in which
Finance Department has not concurred, may not
be proceeded with, unless the Council of Ministers
has taken a decision to that effect. The wordings of
this Rule are different from the provisions of Rule 9
of the Business Rules of Maharashtra and have to
be read in context with the provisions of Rule 3 of
the Business Rules of Government of Goa which
states that the business of the Government shall be
transacted in accordance with the Business Rules.
Under Rule 7(2) thereof, the concurrence of the
Finance Department is a condition precedent.
69. Likewise Rule 6 of the Business Rules states,
that, the Council of Minister shall be collectively
responsible for all executive orders passed by any
Department in the name of the Governor or
contract made in exercise of the power conferred
on the Governor or any other officer subordinate
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to him in accordance with the Rules, whether such
orders or contracts are authorized by an individual
minister on a matter pertaining to the Department
under his charge or as the result of discussion at a
meeting of the Council of Minister or otherwise.
This Rule requires that an executive order issued
from any department in the name of the Governor
of the State should be known to the Council of
Ministers so as to fulfil the collective responsibility
of the Council of Ministers.
70. Further Rule 7 of the Business Rules requires
that no Department shall without the concurrence
of the Finance Department issue any order which
may involve any abandonment of revenue or
involve expenditure for which no provisions have
been made in the Appropriation Act or involve any
grant of land or assignment of revenue or
concession, grant, lease or licence in respect of
minerals or forest rights or rights to water, power
or any easement or privilege or otherwise have a
financial implications whether involving
expenditure or not.
71. From a combined reading of the provisions of
Rules 7, 3 and 6 of the Business Rules of the
Government of Goa the conclusion would be
irresistible that any proposal which is likely to be
converted into a decision of the State Government
involving expenditure or abandonment of revenue
for which there is no provision made in the
Appropriation Act or an issue which involves
concession or otherwise has a financial
implication on the State is required to be
processed only after the concurrence of the
Finance Department and cannot be finalized
merely at the level of the Minister in charge…”
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83.Learned Senior Counsel, Mr. Nadkarni, has emphasized
on Schedule I of the Rules of Business, under which the matters
related to RIICO would be addressed by the Industries
Department. By extension, the Minister for Industries would be
the nodal authority responsible for finalizing decisions that
impact RIICO’s functioning. Since the Minister for Industries
was not included in the Cabinet Committee and was not
involved while taking the final decision, his absence vitiates the
decision taken on 03.08.2019.
84.The relevant portions of the Rules of Business relief upon
by Respondent No.1 are as follows:
“PART-II ALLOCATION AND DISPOSAL OF
BUSINESS
…
4. The Business of the Government shall be
transacted in the Secretariat Departments specified
in the First Schedule and shall be classified and
distributed between those departments as laid down
therein.
…
7. The Council shall be collectively responsible for
all advice tendered to the Governor and also for all
executive orders issued in the name of the
Governor in accordance with these Rules, whether
such advice is tendered or such orders are
authorised by an individual minister on a matter
appertaining to his portfolio or as a result of
discussion at a meeting of the Council or a sub-
committee thereof or howsoever otherwise.
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9. Without prejudice to the provisions of Rule 7,
the minister-in-charge or the minister of State-in-
charge of a department, shall be primarily
responsible for the disposal of the business
pertaining to that Department.”
85.We are, however, unable to agree with the contentions
placed by Respondent No. 1. It appears to us that the Rules of
Business have been substantially complied with. The entire
Cabinet was called on 29.12.2018 to consider various decisions
taken by RIICO during the previous regime. Among these were
the supplementary leases and connected permissions to
Respondent No. 1 by RIICO. The Cabinet, which included the
Minister for Industries, then proceeded to constitute three sub-
committees to investigate these alleged irregularities, along with
an inter-departmental committee. The Minister for Industries is
not expected to look into each individual matter pertaining to
RIICO as this would render the entire working of government
unviable. The intention behind Article 166(3) under which the
Rules of Business are framed, have been succinctly set out by
this Court in Gulabrao Keshavrao Patil & Ors. v. State of
Gujarat
24
:
“7…Article 166(1) and (2) expressly envisage
authentication of all the executive action and
shall be expressed to be taken in the name of the
Governor and shall be authenticated in such
manner specified in the rules made by the
24 (1996) 2 SCC 26.
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Governor. Under Article 166(3), the Governor is
authorised to make the rules for the more
convenient transaction of the business of the
Government of the State, and for the allocation
among Ministers of the said business insofar as it
is not a business with respect to which the
Governor is by or under the Constitution required
to act in his discretion...”
86.Another decision in Lalaram and Ors. vs. Jaipur
Development Authority and Ors.
25
also laid down the
following:
“104… Thus, Article 166(3) mandates the making
of the Rules of Business for more convenient
transactions of the affairs of the Government.
Clause (1) stipulates the mode of expression of an
executive action taken in conformity therewith
and Clause (2) ordains the manner of
authentication of the consequential orders and
instruments. Having regard to the role assigned
to the Council of Ministers with the Chief
Minister at the summit, the Rules of Business
framed Under Article 166(3) meant for
convenient transaction of the affairs of the
Government, by allocation thereof among the
Ministers, secures their collective participation in
the administration of the governance of the State.
This scheme of executive functioning, assuredly
thus, is in assonance with the constitutional edict
with regard thereto, modelling the steel frame of
the State machinery.”
87.The purpose behind Article 166(3) is to form regulations
for the convenient administration of government. The Minister
25 (2016) 11 SCC 31.
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of Industries was not, at any point, missing from the overall
decision to review the actions taken by RIICO and to take
necessary steps thereafter. The cabinet sub-committee was
merely acting on behalf of the entire Council of Ministers, when
carrying out the exhaustive fact-finding enquiries.
88.We must not overlook the overall objective of ensuring
that governance is carried out in a convenient and efficient
manner. Rule 7 of the Rules of Business embodies this spirit as
well, in that it advocates for collective governance by the
Council of Ministers in terms of recommendations made to the
Governor. The Council was collectively involved in the decision
to have sub-committees set up to revisit different decisions
taken by the prior government, including with respect to actions
by RIICO.
89.The judgment in MRF (Supra) formulated its final
conclusion on the basis of a construction of the Rules of
Business of Goa and only after interpreting the Rules, was the
mandatory nature of the sign off from the Finance Department
distilled. In our case, the sign off from the Minister for
Industries is clear from the authorization granted on 01.01.2019
to the sub-committee to look into the decisions of the prior
government and RIICO. Therefore, the spirit behind the Rules
of Business stand complied with in the present case.
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90.We hasten to emphasize once more that it was a
collective decision of the Council of Ministers to constitute the
Committees to look into irregularities of various kinds. The
specific committee that was authorized to investigate RIICO
and its alleged misuse of non-existent powers in favour of
Respondent No. 1, was a creation of the entire Council,
including the Minister for Industries. The sub-committee’s
actions in this context were completely validated and backed by
the Minister and the rest of the Council. It is, thus, difficult to
hold that Rules of Business have not been followed by the State
Government in the course of its decision making process.
C.6Does the Doctrine of Legitimate Expectations and
Promissory Estoppel apply in favour of Respondent
No. 1?
91.An additional point in this regard is the inapplicability of
principles of estoppel and legitimate expectations. In line with
our analysis on why the principles of natural justice will not be
of relevance, these defences, similarly, cannot be raised by
Respondent No. 1 on the strength of illegal actions or orders
passed by RIICO. Moreover, there is no governmental action or
order in favour of Respondent No.1 which can give rise to any
legitimate expectations. The execution of the supplementary
lease deed by RIICO in favour of Respondent No. 1, along with
the attendant permissions in its favour for converting the usage
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of the land and sub-division, are actions taken between them.
This Court has clearly laid out the contours of legitimate
expectations on numerous occasions, along with commenting
on the scenarios where they are inapplicable. In Bannari
Amman Sugars Ltd. vs. Commercial Tax Officer and Ors.
26
it
was opined that:
“8…It is generally agreed that 'legitimate
expectation' gives the applicant sufficient locus
standi for judicial review and that the doctrine of
legitimate expectation to be confined mostly to
right of a fair hearing before a decision which
results in negativing a promise or withdrawing an
undertaking is taken. The doctrine does not give
scope to claim relief straightway from the
administrative authorities as no crystallized right
as such is involved. The protection of such
legitimate expectation does not require the
fulfilment of the expectation where an overriding
public interest requires otherwise. In other words,
where a person's legitimate expectation is not
fulfilled by taking a particular decision then
decision maker should justify the denial of such
expectation by showing some overriding public
interest.”
92.In Food Corporation of India v. Kamdhenu Cattle Feed
Industries
27
, this Court also noted that legitimate expectations
may not themselves give rise to defensible rights, but merely act
as a bulwark against arbitrator decision making that does not
take into account these interests. The Court outlined:
26 (2005) 1 SCC 625.
27 (1993) 1 SCC 71.
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“8. The mere reasonable or legitimate expectation
of a citizen, in such a situation, may not by itself
he distinct enforceable right, but failure to
consider and give due weight to it may render the
decision arbitrary, and this is how the
requirement of due consideration of a legitimate
expectation forms part of the principle of non-
arbitrariness, a necessary concomitant of the rule
of law. Every legitimate expectation is a relevant
factor requiring due consideration in a fair
decision making process. Whether the expectation
of the claimant is reasonable or legitimate in the
context is a question of fact in each case.
Whenever the question arises, it is to be
determined not according to the claimant's
perception but in larger public interest wherein
other more important considerations may
outweigh what would otherwise have been the
legitimate expectation of the claimant. A bona
fide decision of the public authority reached in
this manner would satisfy the requirement of
non-arbitrariness and withstand judicial scrutiny.
The doctrine of legitimate expectation gets
assimilated in the rule of law and operates in our
legal system in this manner and to this extent.”
93.From this encapsulation of the law, it is clear to us that no
legitimate expectation could have arisen in favour of
Respondent No. 1. There was no implicit or explicit
representation made by the State Government in favour of its
request for conversion of the land, nor for sub-division of plots.
RIICO, in completely untenable fashion, took over the role of
the lessor without there being any right to do so, and issued the
requisite permissions. Evidently, such approvals had no legs to
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stand on as they were devoid of any force of law. The lessor of
LIA, Kota, was the State Government. When the entity
purporting to exercise the powers of a lessor, RIICO in this
case, does so without having the requisite legal status to act in
this manner, Respondent No. 1 as the beneficiary of these
wrongful actions, cannot seek any legitimate expectation or
promissory estoppel in its favour.
94.Furthermore, this Court in Food Corporation of India
(Supra) had noted that other overriding public interests could
outweigh the consideration of legitimate expectations in favour
of a private party. Thus, even if we were to consider Respondent
No. 1’s arguments at their highest, the objectives of a private
entity such as Respondent No. 1 could not outweigh the larger
public interest behind the industrial development of the land.
Respondent No. 1 cannot be permitted to act in defiance of the
1959 Rules, which are applicable to the land and which mandate
the utilization of the land for industrial purposes, subject to the
variations as may be permitted by the State Government.
95.On the very same logic, there can be no promissory
estoppel working against the Appellants. In this regard, the view
taken by this Court in Motilal Padampat (Supra) is worthy of
reproduction:
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“24… But it is necessary to point out that since
the doctrine of promissory estoppel is an equitable
doctrine, it must yield when the equity so requires.
If it can be shown by the Government that having
regard to the facts as they have transpired, it
would be inequitable to hold the Government to
the promise made by it, the Court would not raise
an equity in favour of the promise and enforce
the promise against the Government. The
doctrine of promissory estoppel would be
displaced in such a case because, on the facts,
equity would not require that the Government
should be held bound by the promise made by it.
When the Government is able to show that in view
of the facts as have transpired, public interest
would be prejudiced if the Government were
required to carry out the promise, the Court
would have to balance the public interest in the
Government carrying out a promise made to a
citizen which has induced the citizen to act upon
it and after this position and the public interest
likely to suffer if the promise were required to be
carried out by the Government and determine
which way the equity lies. It would not be enough
for the Government just to say that public interest
requires that the Government should not be
compelled to carry out the promise or that the
public interest would suffer if the Government were
required to honour it…”
96.Hence, supervening public interest, as we have already
elaborated upon above, acts as a veto against the invocation of
promissory estoppel. On these grounds as well, Respondent
No. 1 cannot claim any right to the continuation of the
supplementary lease deeds.
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97.Our conclusion, incontrovertibly, is that Respondent
No. 1 cannot lay claim to any legitimate expectation or
promissory estoppel. The supplementary lease deeds and
corresponding permissions were executed with/by RIICO which
had no authority and power to do so. This, combined with the
overriding public interest in having the land in LIA, Kota
utilized for industrial purposes for the economic progression of
the state or any revised purpose, as may be permitted by the
State Government in public interest, leaves us in no doubt that
Respondent No. 1 has no further valid defences against the
cancellation of the supplementary lease deeds.
C.7Whether the Appellant Unions are entitled to relief?
98.The one issue that remains for our consideration is with
regard to the Appellant Unions. We are receptive and sensitive
to the interests of the workers in this regard, especially given
that a significant part of the AAIFR scheme remains
unimplemented. We have been informed by learned counsels
appearing for the Appellant Unions that an earlier petition
challenging the transfer lease deeds of 2007, whereby the land
was handed over to Respondent No. 1, is still pending before
the Rajasthan High Court. This proceeding would, naturally,
have a knock-on effect with regard to everything that happens
subsequently, if the High Court were to ascertain that the
transfer leases were invalid.
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99.Regardless, we do not have the requisite material before
us to comment on this point, and it would be inappropriate for
us to do so in any case, especially when the matter is sub-judice
before the High Court. Thus, the High Court will consider the
workers’ petition on its own merits, uninfluenced by anything
that we have held in this judgment in the context of the dispute
between the State Government, RIICO and Respondent No. 1.
In the same breath, we also abstain from commenting on the
other petitions filed by individual workers before various
forums. These proceedings may continue and be decided
eventually in accordance with law.
100.We note that despite the passage of 21 years since the
tripartite agreements were signed between JKSL, Respondent
No. 1 and the workers unions in 2002, and 16 years since the
transfer lease deeds were signed in 2007, the LIA, Kota has
remained dormant. The objective of restarting industrial
production in the area, as envisaged by the AAIFR
rehabilitation plan and required by virtue of the settlements of
2002, remains out of reach. The damage this causes to the
former employees of JKSL, as well as the industrial and
economic growth of the State, cannot be underestimated. While
we are not in a position to direct or order the implementation of
the AAIFR plan, we recall the earlier orders of this Court which
had dismissed the workers unions’ SLP, and the subsequent
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Review Petitions on 17.08.2017 and 06.03.2018, but with a note
that the rehabilitation plan should be implemented.
101.Given that the earlier orders of the Supreme Court have
already held that Respondent No. 1 is not a sick industrial
company and that judgment has become final with the dismissal
of the Review Petitions, there is no point reverting to SICA any
longer. However, we re-emphasize the importance of finding a
viable solution to this complex issue.
102.We reiterate the earlier observations made by this Court
regarding implementation of the AAIFR scheme. The objective
of the original transfer lease deeds of 2007 that were signed for
the purpose of using the land for industrial development should
be carried out, subject to altering the usage of the land under the
1959 Rules.
103.However, at the same time, our sympathy for the
Appellant Unions cannot translate into any concrete relief in the
context of the dues they seek. We are not appropriately
positioned to consider their prayers in this context. Instead, we
grant liberty to the Appellant Unions to approach the
appropriate government and other forums as permitted by law,
to seek their respective dues. We clarify once again that we have
expressed no opinion on the merits of this segment of the
controversy.
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D. CONCLUSION
104.Our final analysis is that the supplementary leases signed
between Respondent No. 1 and RIICO are unsustainable.
RIICO did not possess the authority to enter into these
agreements, as the land in LIA, Kota remained under the
ownership and control of the State Government uninterruptedly
from the first lease signed with JKSL, till the present date.
Respondent No. 1 was also cognizant of this fact as evinced by
it entering into the 7 transfer lease deeds with the Collector,
Kota, in 2007, after it stepped into the shoes of JKSL.
105.The leases with JKSL were executed under the 1959
Rules which remained applicable and there was no authority
ever vested in RIICO to have issued the permissions for
conversion and sub-division of plots in the LIA, Kota, and for
signing the supplementary lease deeds with Respondent No. 1.
There is no legal infirmity in the action of the Appellants in
setting aside the decisions taken by RIICO or in directing to
cancel the supplementary leases of 2018. Hence, we uphold the
cancellation of the supplementary deeds and quashing of the
approvals for conversion of land and sub-division of plots.
106.This shall, however, not preclude Respondent No. 1 from
reapproaching the State Government and seeking conversion of
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the usage of land and attendant approvals under the 1959 Rules.
The State Government shall be at liberty to consider such a
proposal in public interest and in accordance with the 1959
Rules.
107.With regard to the Appellant Unions, we do not consider
it expedient for us to enter into the demands made by the labour
unions for the dues of JKSL’s employees. We express no views
on the content of the prayers by the Appellant Unions, and leave
it open for them to seek their remedies under law from the
Appropriate Government, and judicial forums.
108.We may summarize our overall conclusions in the
following points:-
A.There has been an uninterrupted and subsisting
relationship of lessor and lessee between the State
Government and either JKSL or Respondent No. 1,
in the context of LIA, Kota. From the first lease
deed executed in 1967, till date, the State
Government has maintained the position of lessor;
B.The lease with JKSL, and all leases thereafter with
JKSL and/or Respondent No. 1, have been signed
under the 1959 Rules. The terms of the lease are
clearly in compliance with the 1959 Rules;
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C.The land in LIA, Kota was never transferred to
RIICO under the Government Order dated
18.09.1979. The State Government has always
maintained title and ownership of the area;
D.The land was also never allotted to RIICO on a
leasehold basis under Rule 11A of the 1959 Rules.
Thus, RIICO was never expressly given any
leasehold rights, and had no authority to further
sub-lease the land, along with other corresponding
powers, under Rule 12 of the 1959 Rules;
E.In any case, Rule 11A of the 1959 Rules is of no
importance, as there had to be an express allotment
of the land to RIICO on a leasehold basis after the
coming into force of Rules 11A and 12. No such
express allocation was ever made in favour of
RIICO;
F.The 1979 Rules are not statutory in nature. The
reference to the 1979 Rules in Rule 12 of the 1959
Rules, does not accord any statutory recognition to
the former;
G.There was no violation of the Principles of Natural
Justice in this case. The entire basis for granting
permission for conversion of the land, and
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subdivision of the plots, was on an incorrect
assumption of power by RIICO under the 1979
Rules, to act as the lessor of LIA, Kota. RIICO was
never given any leasehold rights over the land.
When the basis for a benefit received by a party is
itself invalid, there is no question of giving the
party a chance to be heard;
H.The State Government was competent to issue
directions under Article 138 of the AoA of RIICO,
to cancel the supplementary lease deeds and
attendant permissions. This fell squarely within the
ambit of Article 138 of the Articles of Association;
I.There was no violation of the Rajasthan Rules of
Business as the sub-committee which
recommended the cancellation of the
permissions/approvals to Respondent No. 1, was
acting for and on behalf of the entire Council of
Ministers. Hence, the Rules of Business were
complied with;
J.There was no legitimate expectation nor
promissory estoppel that could operate to the
benefit of Respondent No. 1, as, once again, no
such defences could be raised on the back of
RIICO’s own erroneous utilization of powers that
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vest only with the rightful lessor of LIA, Kota,
which is the State Government. Further, public
interest overrides both these doctrines, and cannot
come to the aid of a private party, when the larger
interests of society are involved;
K.The Appellant Unions and workers are at liberty to
approach the Appropriate Government and various
judicial forums to pursue their remedies in
accordance with law.
109.The Appeals by the State of Rajasthan and RIICO are
accordingly allowed; the impugned judgment dated 20.07.2021
passed by the High Court of Judicature for Rajasthan at Jaipur,
is set aside. Consequently, the Writ Petition filed by Respondent
No.1 before the High Court is dismissed save and except the
liberty granted in Para 106 of this judgment.
110.Pending interlocutory applications, if any, also stand
disposed of.
…..…………………..J.
(SURYA KANT)
…..…………………..J.
(VIKRAM NATH)
New Delhi;
April 20, 2023.
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