Page 1 REPORTABLE

IN THE SUPREME COURT OF INDIA

CIVIL APPELLATE JURISDICTION

CIVIL APPEAL N. 836 OF 2014

(@ out of SPECIAL LEAVE PETITION (CIVIL) NO.36738/2012)

Dipak Babaria & Anr. …

Appellants

Versus

State of Gujarat & Ors. …

Respondents

J U D G E M E N T

H.L. Gokhale J.

Leave Granted.

2. This appeal by Special Leave seeks to challenge

the judgment and order dated 30.8.2012 rendered by a

Division Bench of the Gujarat High Court dismissing Writ

Petition (PIL) No.44 of 2012 filed by the appellants herein.

The Writ Petition had various prayers, but essentially it

sought to challenge the permission granted by the Collector,

Bhuj, to sell certain parcels of agricultural land situated in

Page 2 district Kutch, which were said to have been purchased

earlier by the respondent No.4 herein, one Indigold Refinery

Limited of Mumbai, for industrial purpose in favour of

respondent No.5 i.e. one Alumina Refinery Limited, Navi

Mumbai, as being impermissible under the provisions of the

Gujarat (earlier ‘Bombay’ prior to the amendment in its

application in the State of Gujarat) Tenancy and Agricultural

Lands (Vidarbha Region and Kutch Areas) Act, 1958 (Tenancy

Act, 1958 for short). It was submitted that under Section 89A

of this Act, agricultural land can be permitted to be sold by

an agriculturist to another person for industrial purpose

provided the proposed user is bona-fide. In the event, the

land is not so utilised by such a person for such purpose,

within the period as stipulated under the act, the Collector of

the concerned district has to make an enquiry under sub-

Section 5 thereof, give an opportunity to the purchaser with a

view to ascertain the factual situation, and thereafter pass an

order that the land shall vest in the State Government on

payment of an appropriate compensation to the purchaser

which the Collector may determine. It was contended that

2

Page 3 there was no provision for any further transfer of agricultural

land from one industrial purchaser to any third party, once

again, for industrial purpose when the first purchaser of

agricultural land had defaulted in setting up the industry.

Apart from being in breach of the law, the transaction was

stated to be against public interest, and a mala-fide one

resulting into a serious loss to the public exchequer. The Writ

Petition criticised the role of the Collector and the Revenue

Minister of the State Government, and sought an inquiry

against them in the present case, and also a direction to the

state authorities to resume the concerned land.

3. The impugned judgment and order rejected the

said writ petition on two grounds, firstly that there was delay

in initiating the said Public Interest Litigation (PIL), and that

the writ petitioner had suppressed the material facts before

the Court concerning the investment claimed to have been

made by the respondent No.5.

4. The writ petition, and now this appeal raise the

issues with respect to the underlying policy and purpose

behind the relevant provisions of the Tenancy Act, 1958. In

3

Page 4 that connection, it also raises the issue with respect to the

duties of the revenue officers on the spot, such as the

Collector, the importance of the role of senior administrative

officers of the State Government, and whether a Minister of

the Government can direct the administrative officers and

the Collector to act contrary to the provisions and policy of

the statute. The Secretary of the Department of Revenue of

the Government of Gujarat, and the Collector of District Kutch

at Bhuj are joined as respondent Nos. 2 and 3 to this appeal.

The facts leading to this appeal are as follows:-

5. It is pointed out by the appellants that the

respondent No.4 Indigold Refinery Ltd. (Indigold for short)

which is a company having its office in Mumbai, purchased

eight parcels of land owned by one Virji Jivraj Patel and

Jayaben Virji Patel residing at Bankers Colony, Bhuj,

admeasuring in all 39 acres and 25 gunthas (i.e. roughly 40

acres) by eight sale deeds all dated 30.1.2003, for a

consideration of about Rs.70 lakhs. These eight sale deeds

are supposed to have been signed for respondent No.4

Indigold by one Hanumantrao Vishnu Kharat, its Chairman-

4

Page 5 cum-Managing Director. The lands are situated in villages

Kukma and Moti Reldi in the district of Kutch. The sale deeds

indicated that the purchaser had purchased these lands for

industrial purpose, and that the purchaser will obtain the

permission from the Deputy Collector, Bhuj for purchasing

the said land within one month from the date of those sale

deeds. The respondent No.4 is said to have applied for the

necessary permission under Section 89A of the Tenancy Act,

1958 on 31.1.2003, and the Collector of Bhuj is stated to

have given the requisite certificate of purchase of the lands

under sub-section (3) (c) (i) of the said section. It appears

that thereafter no steps were taken by respondent No.4 to

put up any industry on the said land.

6. Five years later, the respondent No.4 is stated to

have applied on 6.12.2008 to the Deputy Collector at Bhuj for

permission to sell these lands. The Collector of Bhuj sought

the guidance from the Revenue Department, and in view of

the direction of the Revenue Department, the Deputy

Collector granted the permission on 15.1.2010, to sell the

lands to respondent No. 5 treating it as a special case, and

5

Page 6 not to be treated as a precedent. Thereafter, the respondent

No.4 conveyed the concerned lands to respondent No.5 by

sale deed dated 19.1.2010. Respondent No.5 also obtained

permission from the Industries Commissioner on 8.3.2010 for

putting up the industry. Subsequently, the Collector issued

the certificate as required under Section 89A (3) (c) (i) of the

Tenancy Act, 1958, on 21.5.2010, that respondent No.5 had

purchased the land for a bona-fide purpose. The permission

for a non-agricultural user was given to the respondent No.5

on 5.1.2011. The Gujarat Mineral Development Corporation

(GMDC) – which got itself impleaded in this appeal as

respondent No.6 has entered into a Memorandum of

Understanding (MOU for short) on 30.11.2011 with M/s Earth

Refinery Pvt. Ltd. which is the holding company of

respondent No.5 to purchase 26% of equity in a joint venture

company to be set up by them, and which will own the

industry.

7. It appears that a Gujarati Daily “Sandesh” in an

article dated 20.8.2011 reported that there was a huge loss

to the State exchequer in the sale of these lands to a private

6

Page 7 company almost to the tune of Rs.250 crores. The

newspaper reported that although the respondent No.4 had

purchased the concerned lands at village Kukma and Moti

Reildi on 30.1.2003, no industrial activity was started till

2008 as required by the law, and after a long period of five

years the land was to be sold to Alumina Refinery Limited

(Alumina for short). One Mr. Nitin Patel is the Managing

Director of this Alumina, and Mr. Nilesh Patel who is his

brother is its Director (Legal and Human Resources). The

newspaper stated that Alumina had written a letter to the

Chief Minister Mr. Narendra Modi, on 18.6.2009 that the

Government should grant the necessary permission. It is

further stated that on the said proposal being placed before

them, the officers of the Revenue Department had placed

negative remarks, and yet a permission was granted to sell 2

lakh sq. yds. of land at a throw away price when the rate of

land was Rs.3500 – 4000 per sq. yd.. It was alleged that

there was a direct involvement of the Chief Minister in this

scam, and with a view to avoid Lokayukata enquiry, although

a commission was appointed under Hon’ble Mr. Justice M.B.

7

Page 8 Shah, a former Judge of Supreme Court of India to enquire

into a number of other controversial projects, this scam was

excluded therefrom.

8. There was also a news item in another Daily

“Kachchh Mitra” on 1.2.2011 that the Alumina Refinery

Limited was given permission by breaching rules and

regulations. The farmers of the nearby villages were worried,

and some 200 farmers had protested against the proposal as

it would affect their agricultural activities due to pollution. It

was stated that they had sowed plants of tissue-culture

Israeli dry-dates. They had planted lacs of Kesar Mango

trees. They were also cultivating crops of Papaiya, Aranda,

Wheat, Cotton, groundnuts etc. If the refinery work starts in

this area, it will affect the agricultural work badly. There was

also a fear that the blackish and toxic air of the factory will

spoil the plants.

9. All this led the appellants to file the earlier

mentioned writ petition, for the reliefs as prayed. The

petition enclosed the above referred news reports, as also

the information obtained through enquiry under the Right to

8

Page 9 Information Act, 2005 by one Shri Shashikant Mohanlal

Thakker of Madhapur Village of Taluka Bhuj. This information

contained the documents incorporating the file notings of the

revenue department and the orders granting permission.

The aforesaid writ petition was filed on 28.2.2012. An

affidavit in reply to the writ petition was filed by above

referred Nitin Patel on behalf of respondent No.5, and the

appellants filed a rejoinder. Respondent No.5 filed a sur-

rejoinder thereto. The respondent No.1 State of Gujarat filed

an affidavit in reply on 16.8.2012, and the petitioner filed a

rejoinder to the Government’s affidavit on 10.11.2012. After

the writ petition was filed on 28.2.2012 an order of status-

quo was granted on 1.3.2012, and it continued till the

dismissal of the petition on 30.8.2012 when the order of stay

was vacated. However, when the present SLP was filed, an

order of status-quo was granted by this Court on 4.1.2013,

and it has continued till date.

Relevant provisions of the Statute:-

10. In as much as we are concerned with the provisions

contained in Section 89 and Section 89A of the Tenancy Act,

9

Page 10 1958, it is necessary to reproduce the two sections in their

entirety. These two sections appear in Chapter VIII of the

Tenancy Act, 1958. The sections read as follows:-

“CHAPTER VIII

RESTRICTIONS ON TRANSFERS OF AGRICULTURAL LANDS

AND ACQUISITION OF HOLDINGS AND LANDS

89 Transfers to non-agriculturists

barred.-

Transfers to (1) Save as provided in this Act,

non-agricul-

turists barred

(a)no sale (including sales in

execution of a decree of a Civil

Court or for recovery of arrears of

land revenue or for sums

recoverable as arrears of land

revenue), gift exchange or lease of

any land or interest therein, or

(b)no mortgage of any land or

interest therein, in which the

possession of the mortgaged

property is delivered to the

mortgagee,

shall be valid in favour of a person who is not

an agriculturist or who being an agriculturist

cultivates personally land not less than three

family holdings whether as owner or partly

as tenant or who is not an agricultural

labourer:

Provided that the Collector or an officer

authorised by the State Government in this

behalf may grant permission for such sale,

gift, exchange, lease or mortgage, in such

circumstances as may be prescribed:

10

Page 11 [Provided further that no such permission

shall be granted, where land is being sold to

a person who is not an agriculturists for

agricultural purpose, if the annual income of

such person from other source exceeds five

thousand rupees.]

(2) Nothing in this section shall be deemed

to prohibit the sale, gift, exchange or lease

of a dwelling house or the site thereof or any

land appurtenant to it in favour of an

agricultural labourer or an artisan.

(3) Nothing in this section shall apply to a

mortgage of any land or interest therein

effected in favour of a co-operative society

as security for the land advanced by such

society.

(4) Nothing in section 90 shall apply to any

sale made under sub-section (I).

89A. Sale of land for bonafide

industrial purpose permitted in certain

cases:-

(1) Nothing in section 89 shall prohibit

the sale or the agreement for the sale of

land for which no permission is required

under sub-section (1) of section 65B of the

Bombay Land Revenue Code, 1879 (Bom. V

of 1879) in favour of any person for use of

such land by such person for a bonafides

industrial purpose:

Provided that—

(a)the land is not situated within the urban

agglomeration as defined in clause (n)

of section 2 of the Urban Land (Ceiling

and Regulation) Act, 1976 (33 of 1976),

(b)where the area of the land proposed to

be sold exceeds ten hectares, the

person to whom the land is proposed to

11

Page 12 be sold in pursuance of this sub-section

shall obtain previous permission of the

Industries Commissioner, Gujarat State,

or such other officer, as the State

Government may, by an order in

writing, authorise in this behalf.

(c)the area of the land proposed to be sold

shall not exceed four times the area on

which construction for a bonafide

industrial purpose is proposed to be

made by the purchaser:

Provided that any additional land which

may be required for pollution control

measures or required under any

relevant law for the time being in force

and certified as such by the relevant

authority under that law shall not be

taken into account for the purpose of

computing four times the area.

(d)where the land proposed to be sold is

owned by a person belonging to the

Scheduled Tribe, the sale shall be

subject to the provisions of section

73AA of the Bombay Land Revenue

Code, 1879 (Bom. V of 1879).

(2)Nothing in the Section 90 shall apply to

any sale made in pursuance of

subsection (1).

(3)(a) Where the land is sold to a person in

pursuance of sub-section (1)

(hereinafter referred to as “the

purchaser”), he shall within thirty days

from the date of purchase of the land

for bonafides industrial purpose, send a

notice of such purchase in such form

alongwith such other particulars as may

be prescribed, to the Collector and

endorse a copy thereof to the

Mamlatdar.

12

Page 13 (b)Where the purchaser fails to send

the notice and other particulars to the

Collector under clause (a) within the

period specified therein, he shall be

liable to pay, in addition to the non-

agricultural assessment leviable under

this Act, such fine not exceeding two

thousand rupees as the Collector may

subject to rules made under this Act,

direct.

(c)Where, on receipt of the notice of

the date or purchase for the use of land

for a bonafides industrial purpose and

other particulars sent by the purchaser

under clause (a), the Collector, after

making such inquiry as he deems fit—

(i)is satisfied that the purchaser of

such land has validly purchased the

land for a bonafide industrial purpose in

conformity with the provisions of sub-

section (1), he shall issue a certificate

to that effect to the purchaser in such

form and with in such time as may be

prescribed.

(ii)is not so satisfied, he shall, after

giving the purchaser an opportunity of

being heard, refuse to issue such

certificate and on such refusal, the sale

of land to the purchaser shall be

deemed to be in contravention of

section 89.

(d) (i) The purchaser aggrieved by the

refusal to issue a certificate by the

Collector under sub-clause (ii) of clause

(c) may file an appeal to the State

Government or such officer, as it may,

by an order in writing, authorise in this

behalf.

13

Page 14 (ii)The State Government or the

authorised officer shall, after giving the

appellant an opportunity of being

heard, pass such order on the appeal as

it or he deems fit.

(4)The purchaser to whom a certificate is

issued under sub-clause (i) of clause (c)

of sub-section (3), shall commence

industrial activity on such land within

three years from the date of such

certificate and commence production of

goods or providing of services within

five years from such date:

Provided that the period of three years or, as

the case may be, five years may, on an

application made by the purchaser in that

behalf, be extended from time to time, by

the State Government or such officer, as it

may, by an order in writing authorise in this

behalf, in such circumstances as may be

prescribed.

(5)Where the Collector, after making such

inquiry as he deems fit and giving the

purchaser an opportunity of being

heard, comes to a conclusion that the

purchaser has failed to commence

industrial activity or production of

goods or providing of services within

the period specified is clause (b) of sub-

section (4), or the period extended

under the proviso to that clause, the

land shall vest in the State Government

free from all encumbrances on payment

to the purchaser of such compensation

as the Collector may determine, having

regard to the price paid by the

purchaser and such land shall be

14

Page 15 disposed of by the State Government,

having regard to the use of land.”

The pleadings of the parties before the High Court:-

11. The appellants had contended in paragraph 6 of

their Writ Petition that the permission given to Indigold to sell

the land was contrary to the provisions and restrictions

imposed under the law, and contrary to the original

permission granted to them by the Deputy Collector, Bhuj, on

1.5.2003. The market value of the land in question goes into

crores of rupees, and such an act will result in huge loss to

the public exchequer. They had contended that the decision

was malafide. The decision was alleged to have been taken

for a collateral purpose, which was apparently neither legal

nor in the interest of the administration and public interest.

Inasmuch as it was concerning disposal of public property,

the only mode to be adopted was a fair and transparent

procedure which would include holding a public auction

inviting bids, and thereby providing equal opportunity to all

interested or capable industries, in order to promote healthy

competition and to fetch the right market price. The decision

has been taken at the instance of the Hon’ble Revenue

15

Page 16 Minister. It was also submitted that, there were possibilities

that the directors / promoters and the management of

Indigold and Alumina are the same, and if that is so, it would

be a design to defraud the Government. Alumina had

contended that it had signed an MOU with the State

Government during the Vibrant Gujarat Investors’ Summit,

2009. The appellants had submitted that the same cannot be

a ground to grant the permission to sell, contrary to the

mandatory provisions of law. Section 89A makes a contingent

provision in case the land is not used for industrial activity

within the time provided, and such mandatory provisions of

the Act cannot be bypassed merely upon the endorsement

made by the Hon’ble Revenue Minister. The action on the

part of the State is absolutely arbitrary. The State or a public

authority which holds the property for the public, and which

has the authority to grant the largesse, has to act as a

trustee of the people, and therefore to act fairly and

reasonably. The holders of pubic office are ultimately

accountable to the public in whom the sovereignty vests.

16

Page 17 The action of the Government is arbitrary, and therefore

violative of Article 14 of the Constitution of India.

12. Respondent No.5 was the first to file a reply to this

petition in the High Court which was affirmed by Mr. Nitin

Patel on 11.7.2009. In this reply he principally submitted that

it was not correct to say that the land was being given away

at a throwaway price, causing great loss to the public

exchequer to the tune of Rs.250 crores, as alleged. The

State Authorities and the Revenue Minister have not acted in

violation of any mandatory provisions of law. The affidavit

further narrated the various events in the matter leading to

the sale deed dated 19.1.2010 by Indigold in favour of

Alumina, and the permission of the Industries Commissioner

dated 8.3.2010. It was also pointed out that permission had

been granted by the Collector, Bhuj on 5.1.2011. Thereafter,

it was contended that the land has been purchased by the

respondent No.5 way back in January 2010, and the petition,

making frivolous and baseless allegations, has been filed two

years after the said transaction.

17

Page 18 13. Then, it was pointed out that the respondent No.5

was incorporated under the Companies Act in the year 2008,

and that the company is promoted by Earth Refining

Company Pvt. Limited. Respondent No.5 wanted to

manufacture high value added products from bauxite ore

available in Kutch district which ore was currently sold or

exported as it is without any value addition. The intention of

respondent No.5 was in line with and supported by

Government of Gujarat Industries and Mines Policies, 2009.

The project was to be first of its kind in Gujarat, with

technology supplied to it by National Aluminum Company Ltd.

(shortly known as NALCO), a Government of India Enterprise.

A share holding agreement dated 30.11.2011 had been

entered into between GMDC and Earth Refining Company Ltd.

whereby GMDC had agreed to be joint venture partner, and

to subscribe to 26% of the equity share capital of the new

company. NALCO has provided advanced technology for the

project.

14. It was further submitted in para 15 (g) of the reply

that, the opinions of all the subordinate officers are

18

Page 19 “inconsequential and not binding on the Revenue Minister ”.

The decision of the Minister cannot be faulted on the basis of

certain notings of a lower authority.

15. One Mr. Hemendera Jayantilal Shah, Additional

Secretary, Revenue Department filed the reply on behalf of

the respondent-State. In paragraph 3.4 it was contended

that the notings from the Government files reflect only the

exchange of views amongst the officers of the departments.

The decision of the State Government to grant permission for

sale of the land could not be said to be arbitrary, malafide or

in the colourable exercise of power. Three reasons were

given in support thereof:-

(i)If the land had been directed to be vested in the State

Government, State would have been required to pay

compensation to M/s Indigold under Section 89A(5) which is

otherwise a long-drawn process involving Chief Town Planner

and State Level Valuation Committee, for the purpose of

determining the valuation of the land, and thereafter for

finding the suitable and interested party to set up an industry

on the land in question.

19

Page 20 (ii)In the sale to Alumina, the State Government’s own

interest through its public sector undertaking had been

involved, and therefore there has been a substantial

compliance of the spirit flowing from the provisions of Section

89A(5).

(iii)The price of the land in question was around Rs.4.35

crores as per the Jantri (i.e. official list of land price) at the

relevant time, and it had come down to Rs.2.08 crores, as per

the revised Jantri rated of 2011. Thus, apart from time being

consumed in the process, perhaps there would have been a

loss to the public exchequer. Thereafter, it was stated in

paragraph 4 of the reply as follows:-

“I further respectfully say that the

action of the State Government was bonafide

and taking into consideration all the aspects

of the matter, viz. (i) the land is being used

for the industrial purpose, (ii) a dire need for

industrialization in the Kutch District; (iii)

MoU arrived at during the Vibrant Summit,

2009, whereby, a ready and interested party

was available to start the industry

immediately on the land in question; and (iv)

GMDC possessing 26% of the share in such

interested party, i.e. M/s Alumina Refinery

Pvt. Ltd.”

20

Page 21 It is relevant to note that no reply was filed on behalf of

Indigold.

Additional pleadings of the parties in this Court:-

16. As far as this Court is concerned, a counter

affidavit was filed on behalf of the State Government by one

Mr. Ajay Bhatt, Under Secretary, Land Reforms. In his reply,

he stated that in any event in the present process the State

is the beneficiary in permitting this transaction with GMDC

which is a Government Undertaking. It will have 26% stock in

respondent No.5. In paragraph 4(E)(e)(ii) he stated that since

the Government’s own interest was involved, there has been

a substantial compliance of the spirit flowing from the

provisions of Section 89A(5) of the Act.

17. A counter was also filed in this Court by one Mr.

Deepak Hansmukhlal Gor, Vice President of respondent No.5-

Alumina. He pointed out that although the petition in the

High Court was moved as a PIL, the petitioner No.1 was in

fact a leader of the opposition party in the State. In order to

mislead the Court it was stated in the petition that the land

was worth Rs.250 crores. It was further submitted that to

21

Page 22 seek an interim relief a false statement had been made in the

writ petition that no activity had been initiated by respondent

No.5 on the concerned land by the time writ petition was

filed. The respondent No.5 had made substantial investment

and construction on the land, and photographs in that behalf

were placed on record. It was also submitted that the

decision of the State Government was in tune with Mineral

Development Policy, 2008 of the Government of India and

Gujarat Mineral Policy, 2003. It was then pointed out that

apart from other controversies, the present controversy has

also been included for the consideration of Hon’ble Mr. Justice

M.B. Shah, Former Judge of this Court. The sale of land in the

present case was rightly considered as a special one, and the

challenge thereto was highly unjustified and impermissible.

The respondent No.5 filed various documents thereafter,

including the various permissions obtained by respondent

No.5 for the project and the technology supply agreement

entered into between NALCO and M/s Earth Refining

Company Ltd. It was submitted that the Respondent No. 5 is

a bona-fide purchaser of the land, and in any case it should

22

Page 23 not be made to suffer for having invested for industrial

development. It is claimed that Respondent No. 5 has made

an investment to the tune of Rs 6.85 crores as on 31.3.2012

on the project, and moved in some machinery on the site.

18. The appellant No.1 has filed his rejoinder to both

these counters. He has stated that he has not suppressed

that he is a political activist, which is what he has already

stated in the petition. He has maintained his earlier

submissions in the writ petition, and denied the allegations

made in the two counter affidavits.

19. As stated earlier, GMDC has applied for joining as

respondent No.6. In its application it has stated that Alumina

was selected through transparent evaluation. Then, it was

short-listed for setting up the project in Kutch at the Vibrant

Gujarat Summit in 2009. It also defended the Government’s

decision on the ground that it is going to have 26% equity in

respondent No.5.

Points for consideration before this Court:

20. It, therefore, becomes necessary for this Court to

examine whether the decision taken by the Government to

23

Page 24 permit the transfer of the agricultural land from respondent

No. 4 to respondent No. 5, was legal and justified. For that

purpose one may have to consider the developments in this

matter chronologically as disclosed from the above pleadings

of the parties, as well as from the material available from the

Government files placed for the perusal of the Court.

Thereafter, one will have to see the scheme underlying

Sections 89 and 89A, and then examine whether there has

been any breach thereof, and if it is so what should be the

order in the present case?

Material on record and the material disclosed from the

files of the Government and the Collector:-

21. The respondents have contended that the sale

transaction between respondent Nos.4 and 5 took place

because of the financial constraints faced by respondent No.4

Indigold Refinery Limited, and that is reflected in their letter

dated 16.6.2009 addressed to the Collector, Bhuj. The letter-

head of the respondent No.4 shows that it claims to have a

gold refinery at Chitradurg in State of Karnataka. This letter

refers to their earlier letter dated 6.12.2008, and letter dated

24

Page 25 12.6.2009 from respondent No.5 Alumina. The relevant

paragraph of letter dated 16.6.2009 reads as follows:-

“……..

·With regret we have hereby to inform you

that due to financial constraints on our part

we are unable to execute our proposed

refinery project on the said land. We are

well aware of the fact that sufficient amount

of time has passed from the date of

permission granted by the office of Deputy

Collector-Bhuj to set up the project. We

have tried our level best to set up the

industry on the land in question.”

·M/s Alumina Refinery (P) Ltd. having their

registered office in Mumbai has shown keen

interest to set their Alumina Refinery Project

on our above mentioned ownership land.

·A copy of consent letter dated 12.06.2009

has already been sent to your office by M/s

Alumina Refinery (P) Ltd., whereby they have

applied to avail the permission to purchase

our above ownership land u/s 89.

·We appreciate and are thankful to your office

and Government of Gujarat for giving us an

opportunity to purchase and set up of our

then proposed refinery project on the above

mentioned agricultural land.

·We would like to confirm that we had a clear

intention to set up industry on the above

mentioned land, it is only because of non

availability of monetary fund we are not

in a position to set up our industry on

the above mentioned agricultural land.

Further, we are also not having any intention

to take any undue advantage in form of

booking any profit by sale of ownership land

to M/s Alumina Refinery (P) Ltd.

25

Page 26 We, hereby request your office to kindly grant

the permission to sale all the above land and

allow us to execute the Sale Deed for

registration with the competent authority…..”

(emphasis supplied)

22. The earlier letter dated 6.12.2008 mentioned in

this letter of 16.6.2009, however, nowhere mentions that

respondent No.4 had any financial constraints because of

which it could not set up the industry and thefore it wanted to

sell the particular land. This letter is seen in the file of the

Collector. This letter reads as follows:-

“INDIGOLD REFINERIES LIMITED

6

th

December 2008

To,

Collector of Kutch,

Bhuj, State of Gujarat

Sub:- Permission for the sale of agricultural land

admeasuring 39 acres 25 gunthas at Moti Reladi

Kukama, Taluka Bhuj, District Kutch, State of

Gujarat.

Dear Sir,

Reference to above, we have to respectfully inform

your good self that we had purchased land as per

details here below for setting up of Industrial

project:-

Sr.no. Name of Village Survey No.

Measurement

Acres and

gunthas

26

Page 27 1.Kukama 94/1 4/14

2.Kukama 94/2 2/16

3.Moti Reladi 101/1

9/30

4. “ 106 6/10

5. “ 100/1 2/20

6. “ 107 4/15

7. “ 105/4 5/21

8. “ 110/2/3 4/16

Total 39 acres 25 gunthas

The above piece of land was purchased with the

permission granted by Deputy Collector, Bhuj,

Kutch, wide letter no. LND/VC/1169/03 dated 2

nd

May 2003. We further respectfully inform

yourself that we are no more interested to

put any industrial project in the said land and

therefore we are disposing off entire piece of

land as per aforesaid details to our

prospective client. We, therefore, request your

good self to kindly give us your permission for sale,

so as to enable us to register the sale deed with

the concern competent authority.

We hope you will extend your maximum

corporation and assistances in this regard and

oblige.

Thanking you

Yours faithfully

Sd/-

Indigold Refineries Ltd.

Hanumantrao V. Kharat”

(emphasis supplied)

23. As stated earlier, the File notings of the Revenue

Department, were obtained through an RTI inquiry, and were

placed on record alongwith the Writ Petition. The learned

counsel for the State of Gujarat was good enough to produce

27

Page 28 the original files for our perusal. In the file of the Revenue

Department, there is an Email dated 1.7.2009 from Shri Nitin

Patel, Chairman & MD of respondent No.5 forwarding his

letter dated 30.6.2009 addressed to Smt. Anandiben M. Patel,

Hon’ble Minister of Revenue recording the minutes of the

meeting held in her office on 29.6.2009. Immediately

thereafter, the respondent No.5 has written a letter to the

Chief Minister of Gujarat seeking permission to purchase

these lands. The Secretary to the Chief Minister, Shri A.K.

Sharma has then sent a letter on 2.7.2009 to the Principal

Secretary, Revenue Department informing him that Shri Nitin

Patel, of respondent No.5, had approached them with their

representation dated 18.6.2009. It had inked an MOU during

the Vibrant Gujarat Global Summit for establishing an

Alumina Refinery, and they had identified a land suitable for

that purpose. This letter further stated:

“On verification of the issue, necessary

action may kindly be taken at the earliest. In

the meantime, a brief note indicating the

possible course of action may please be sent

to this office.”

28

Page 29 24. In view of this note from the Secretary to the Chief

Minister, the Revenue Department sought the factual report

from the Collector by their letter dated 6.7.2009. What we

find however, is that instead of sending a factual report, the

Collector fowarded the original proposal of respondent No.5

itself to the Department, and sought their decision thereon in

favour of Alumina through his letter dated 31.7.2009.

Thereafter, we have the note dated 7.8.2009 in the

Government file which is signed by then Section Officer and

Under Secretary, Land Revenue. This note refers to the fact

that a letter dated 2.7.2009 had been received from the

Secretary to the Chief Minister. Thereafter, a letter dated

31.7.2009 had been received from the Collector, Kutch

stating that respondent No.4 had purchased the concerned

land admeasuring 39 acres and 25 guntas, but no industrial

use had been made, and that the respondent No.5 had shown

his willingness to purchase the land. Thereafter, the note

records what the Collector had stated viz.

“Taking into consideration the reasons

shown in the submission of Alumina Refinery

Company addressed to the Hon’ble C.M.,

29

Page 30 dated 18.6.2009, it is submitted to grant

permission for purchasing land”.

25. The departmental note thereafter states in sub-

paragraph A, B, C of paragraph 4, that under the relevant law

the purchaser of the land should commence the industrial

activity within a period of 3 years from date of the certificate

of purchase, and within 5 years start the manufacture of

goods and provide the services. Where the purchaser fails to

commence the industrial activity, the Collector has to initiate

an enquiry as to whether the purchaser has failed to

commence industrial activity or production, as mentioned in

clause (b) of sub-section 4. Thereafter, if on giving the

purchaser an opportunity to be heard, the Collector comes to

a conclusion that the purchaser has failed to do so, he has to

determine the payment of compensation, and pass an order

that the land shall vest in the State Government. Thereafter

the note records:-

“ …..Taking into consideration the

above provisions, whatever action required

to be taken, is to be taken by Collector,

Kutch, means there is no question at all of

the authority for a period of more than five

years. Further vide letter dated 6.7.2009,

Collector was informed to submit factual

30

Page 31 report. Instead of the same, proposal is

submitted by him. Vide order dated

1.5.2003 Deputy Collector has granted

permission to Indigold Refinery Company

under Section-89 of the T.A. with regard to

the lands in question. The time limit of this

permission has come to an end. Now

another company, Alumina Refinery Co.

wants to purchase land of this company and

establish a project. Looking to the same,

taking into consideration the above

provisions, whatever action is required to

be taken, the same is to be taken at his

(Collector) level only. This is submitted

for consideration whether to inform Collector

accordingly or not?

As Collector is required to take

action as per the legal provisions, any

action on proposal of Collector is not

required to be taken by this office.

Therefore, proposal of the Collector be

sent back.

Submitted respectfully…”

(emphasis supplied)

26. Since, the Secretary of the Hon’ble Chief Minister

had sought a note indicating the possible course of action,

the Deputy Secretary, Land Revenue made a note on

25.8.2009, and at the end thereof, he stated as follows:-

“..……

Under these circumstances, looking to

legal provisions, there is a provision that

either the company carries out the industrial

activity or the State Government resumes

the land. There is no provision for mutual

transfer by the parties.

31

Page 32 As suggested by the Secretary to the

Hon’ble C.M., note indicating the above

position be sent separately.”

27. A note was, thereafter, made by the Principal

Secretary, Land Revenue, which recorded that as per existing

policy such sale was not permissible. In para 2 of his note he

stated:

“as per rules, the land is to be resumed

by Collector in case of failure to utilize for

industrial use”. In para 5 thereof he however

suggested “that in such case, as in cases

under the Land Acquisition Act, 50% of the

unearned income being required to be

charged by the State Government can be

introduced as a policy measure”.

The Principal Secretary, Revenue Department marked para 2

above as “A” and then remarked on 29.8.2009 as follows:-

“We may resume as “A” of pre-page

and allot as per the existing policy on land

price”.

The Chief Secretary wrote thereon on 1.9.2009 –

“We should take back the land.

Allotment may be separately examined”.

What is relevant to note is that the Minister of Revenue Smt.

Anandiben Patel thereafter put a remark on 10.9.2009:-

“Land is of private ownership. As a

special case, permission be granted for

sale”.

32

Page 33 28. Thereafter, it is seen from this file that in view of

this direction by the Minister, the matter was further

discussed. A note was then made by the Principal Secretary,

Revenue Department on 21.9.2009 - “Discussed. We may

resubmit to adopt a procedure for such cases”. The Principal

Secretary, Land Revenue made a detailed note thereafter on

14.10.2009 referring to the amendment brought in by Gujarat

Act No.7 of 1997 incorporating Section 63AA in the Bombay

Tenancy and Agricultural Lands Act, 1948, and the

developments in the present matter up to the noting made

by the Minister, that the land may be permitted to be sold as

a special case. Thereafter, he sought an opinion as to

whether or not an action similar to a provision under the Land

Acquisition Act on the occasion of sale of land providing for

taking of 50% amount of unearned income by the State

Government, be taken in the present case. The Chief

Secretary made a note thereon as follows:-

“It would be proper to give land to the

new party provided industry department

recommends as per the laid down rules. As

indicated in page 9/D note (marginal). Let us

33

Page 34 take back land under 63AA and then re-allot

to the new party”.

15.10

The Minister still made a note thereon on 4.11.2009:-

“As a special case as suggested

earlier, permission for sale be given”.

In view of this direction by the minister, the department has,

thereafter, taken the decision that the permission be given as

a special case but not to be treated as precedent. Thus, the

opinion of the Principal Secretary, Land Revenue that 50% of

the unearned income be taken by the Government was not

accepted. Similarly, the opinion of the Chief Secretary that

the land be resumed, and then be re-allotted to the new

party was also not accepted.

29. This has led to the communication from the State

Government to the Collector dated 18.12.2009 that the

Government had granted the necessary permission to

respondent No.5 to purchase the land, treating it as a special

case. The said letter reads as follows:-

“ Urgent/RPAD

Sr. No.: GNT/2809/2126/Z State of Gujarat

Revenue Department

11/3 Sardar Bhavan

Sachivalay

34

Page 35 Gandhinagar

Date: 18/12/2009

To,

The Collector

Kutch-Bhuj

Subject:Shri Nitin Patel c/o M/s Indigold

Refinery/Alumina Representation qua the

land of Kukma and Moti Reldi

Reference: Your letter dated 31/9/09 bearing no.

PKA-3- Land- Vs. 2083/2009

Sir,

In connection with your above referred and

subject letter, the land of Kukma and Moti Reldi

admeasuring Acre 39 Guntha 25 was purchased by

Indigold Refinery as per the provisions of Bombay

Tenancy and Agricultural Lands (Vidharbha Region

and Kutch Area) Act, 1958; Section 89. However

due to financial incapability, the Company is

unable to establish industry and other company

M/s Alumina Refinery Pvt. Ltd. being ready to

purchase the said land, upon careful consideration

the Government on the basis of treating the case

as “A special case and not to be treated as

precedent” has granted the permission.

2.Papers containing pages 1 to 89 are returned

herewith.

Encl:

As above

Yours sincerely

Section Officer

Revenue

Department

State of Gujarat

Copy to:

Select File/Z Branch

Select File/Z Branch/N.S.A”

35

Page 36 30. Thereafter, the Deputy Collector has issued an

order dated 15.1.2010 granting permission to sell the land for

industrial purpose under Section 89A of the Act. He, however,

added that the action of issuing the certificate can be taken

only after the submission of a project report and technical

recommendation letter of Industries Commissioner by

respondent No.5. The above referred order dated 15.1.2010

of the Deputy Collector granting permission to sale the land

reads as follows:-

No. Jaman Vashi/218/09

Office of Deputy Collector

Bhuj, Date-15/01/2010

To

Shri Hanumantrav V. Kharat

Indi Gold Refineries Limited

201-212, EMCS House

289 SBSL, Fort

Mumbai-400 001

Subject:- Regarding getting the approval for sale of

the agricultural land of village Kukma and Moti

Reldi, Taluka Bhuj purchased for industrial

purpose, under Section-89-A of the Tenancy Act.

Read:- Letter No. Ganat/2809/2126/Z dated

18/12/2009 of the Revenue Department of the

Government, Gandhinagar.

Sir,

36

Page 37 With reference to the above subject it is to be

informed that vide this office certificate No.

Land/Vasi/1169/03 dated 01/05/2003 you have

been granted permission under Section-89-A of the

Tenancy Act for purchasing agricultural land for

industrial purpose as under:-

In the above lands as the company due to

financial circumstances is not in a position to

establish any industry, with reference to your

application dated 06/12/2008 seeking the

permission for sale of the above land for industrial

purpose to Shri Alumina Refinery (Pvt.) Limited,

Mumbai for the Alumina Refinery project, vide the

above referred letter of the R.D. of the

Government as a “special case and with a

37

Sr.No

.

Name of VillageSurvey No.Acre/Guntha

1 Kukma 94/1 4.14

2 Kukma 94/2 2.16

3 Moti Reldi 101/1 9.30

4 Moti Reldi 106 6.10

5 Moti Reldi 100/1 2.20

6 Moti Reldi 107 4.15

7 Moti Reldi 105/4 5.21

8 Moti Reldi 110/2/3 4.19

Total 39.25

Page 38 condition not to treat as the precedent” the

permission is granted, which may be noted.

As the above land is admeasuring more than

25 Acres, in this case on submission of the Project

Report and the Technical recommendation letter of

Industries Commissioner, G.S., Gandhinagar by the

party desirous to purchase the land Alumina

Refinery (Pvt.) Ltd., Mumbai, further action can be

taken by this office for issuing the certificate under

Section-89 of the Tenancy Act, which may be

noted.

Sd/-

Deputy Collector, Bhuj

Copy to

Alumina Refinery (Pvt.) Ltd.

1501-1502 Shiv Shankar Plaza-

Near HDFC Bank, Sector-8

Airoli, New Mumbai-400 708”

31. This led to the sale deed between respondent No.4

and 5 for sale of the lands at Rs.1.20 crores. It is, however,

interesting to note that the sale deed is signed for Indigold by

Nitin Patel on the basis of the power of attorney from them,

and for Alumina by his brother Nilesh Patel. Subsequently

the permission from the Industries Commissioner was

obtained on 8.3.2010, and the certificate under Section 89A

(3) (c) (i) of purchase for bona-fide industrial purpose on

21.5.2010.

The submissions on behalf of the appellants:-

38

Page 39 32. The decision of the State Government to permit the

transfer of the concerned agricultural lands was challenged

by the appellants on various grounds. Firstly, it was

submitted that Section 89 basically bars transfer of

agricultural land to the non-agriculturists. Section 89A makes

an exception only in favour of a bonafide industrial user. The

industry is required to be set-up within three years from the

issuance of necessary certificate issued by the Collector for

that purpose, and the production of the goods and services

has to start within five years. If that is not done, the

Collector has to take over the land after holding an

appropriate enquiry under sub-section (5) of 89A, and the

land has to vest in the Government after paying the

compensation to the purchaser which has to be determined

having regard to the price paid by the purchaser. In the

instant case, it is very clear that the respondent No. 4 had

expressed their inability to develop the industry way back on

6.12.2008. The Collector was, therefore, expected to hold an

enquiry and pass appropriate order. This was a power

coupled with a duty. A judgment of this Court in Indian

39

Page 40 Council for Enviro-Legal Action Vs. Union of India &

Ors. reported in 1996 (5) SCC 281 , was relied upon to

submit that a law is usually enacted because the legislature

feels that it is so necessary. When a law is enacted

containing some provisions which prohibit certain types of

activities, it is of utmost importance that such legal provision

are effectively enforced. In Section 89A there is no provision

for a further transfer by such a party which has not

developed the industry, and therefore, the Collector ought to

have acted as required by Section 89A (5). In that judgment

it was observed “enacting of a law, but tolerating its

infringement, is worse than not enacting a law at all.” It was

submitted that in the instant case the state itself has issued

an order in violation of the law.

33. It was then submitted that the Collector was

expected to dispose of the land by holding an auction. The

judgment of this court in Centre for Public Interest

Litigation and Ors. Vs. Union of India and Ors. reported

in 2012 (3) SCC 1 was relied upon in support, wherein it has

been held that natural resources are national assets and the

40

Page 41 state acts as trustee on behalf of its people. Public Interest

requires that the disposal of the natural resources must be by

a fair, transparent and equitable process such as an auction.

The same having not been done, the State exchequer has

suffered. Reliance was also placed on the judgment in Noida

Entrepreneurs Association Vs. Noida and ors. reported

in 2011 (6) SCC 508 to submit that whatever is provided by

law to be done cannot be defeated by an indirect and

circuitous contrivance.

34. In the instant case, the transfer of the land has

been permitted because respondent No. 5 directly

approached the Chief Minister and thereafter the Revenue

Minister. It was submitted that such an act of making of a

special case smacks of arbitrariness. The judgment of this

Court in Chandra Bansi Singh Vs. State of Bihar reported

in 1984 (4) SCC 316 was relied upon in this behalf. In that

matter the state of Bihar had released a parcel of land

acquired by it for the benefit of one particular family which

had alleged to have exercised great influence on the

Government of the time. The action of the State was held to

41

Page 42 be a clear act of favouritism. Another judgment of this Court

in Manohar Joshi Vs. State of Maharashtra and Ors.

reported in 2012 (3) SCC 619 was also relied upon to

criticise a direct approach to the ministers rather than going

through the statutory authorities. Reliance was also placed

on the judgment in Bhaurao Dagdu Paralkar Vs. State of

Maharashtra reported in 2005 (7) SCC 605 which has

explained the concept of ‘fraud’ from paragraph 9 to 12

thereof. In paragraph 12 amongst others it has referred to an

earlier judgment in Shrisht Dhawan Vs. Shaw Bros

reported in 1992 (1) SCC 534 which relies upon the English

judgment in Khawaja Vs. Secy. of State for Home Deptt.

reported in 1983 (1) All ER 765. In para 20 of Shrisht

Dhawan (supra) this Court has observed:-

“ If a statute has been passed for some

one particular purpose, a court of law will not

countenance any attempt which may be

made to extend the operation of the Act to

something else which is quite foreign to its

object and beyond its scope.’ Present day

concept of fraud on statute has veered round

abuse of power or mala fide exercise of

power. It may arise due to overstepping the

limits of power or defeating the provision of

statute by adopting subterfuge or the power

may be exercised for extraneous or

42

Page 43 irrelevant considerations. The colour of fraud

in public law or administrative law, as it is

developing, is assuming different

shades……”

35. The learned senior counsel for the appellants Mr.

Huzefa Ahmadi submitted that the appellants’ writ petition

should not have been dismissed only on the ground of delay,

in as much as the environmental clearance to the project was

granted on 19.2.2012 and the writ petition was filed in March

2012. He submitted that similarly the appellant cannot be

criticised for suppression of any information about the

investment made by respondent No. 5, since the appellant

cannot be aware of the same. In any case he submitted that

in as much as there has been an immediate interim order,

the plea of large investment having been made is untenable.

As far as the objection to the appellant No 1 being a person

belonging to a rival political party is concerned, he submitted

that he has specifically accepted that he is a political activist.

In any case, he submitted that the Collector did not act in

accordance with law at any point of time. Similarly, the order

passed by the Government is not a reasoned order and is

undoubtedly arbitrary. The power in the Collector implied a

43

Page 44 duty in him to act in accordance with law. He relied upon a

judgment of this Court in Deewan Singh & Ors. Vs.

Rajendra Pd. Ardevi & Ors. reported in 2007 (10) SCC 528

in this behalf.

Submissions on behalf of the State Government:-

36 . The defence of the Government has principally

been that because Indigold was not in a position to set up the

industry, and Alumina had given a proposal in the Vibrant

Gujarat summit to set up its project on the very land, the

proposal was accepted. It had entered into an MOU with

GMDC which was to have 26% equity therein. While looking

into the proposal, initially there was some hesitation on the

part of the Government as can be seen from the notings of

the officers in the Government files. However, ultimately

looking into the totality of the factors, the Government took

the decision to permit the transfer of the land. It is not

mandatory that the land must be resumed under Section 89A

(5) of the Tenancy Act, if the initial purchaser does not set up

the industry. Section 89A (5) does not operate automatically.

Besides, the permission to Indigold to sell the land can be

44

Page 45 explained with reference to the authority of the Collector

available to him under the first proviso to Section 89(1) read

with condition No. (4) of the permission dated 1.5.2003

granted to Indigold to purchase the concerned lands. This

condition No. (4) reads as follows:-

“4.These lands cannot be sold,

mortgaged, gifted or transferred in any

manner etc. without obtaining prior

permission of the competent officer.”

Last but not the least, Section 126 of the Tenancy Act was

relied upon to submit that the State Government has an

overall control which permits it to issue the necessary

directions. This Section 126 reads as follows:-

“126. Control- In all matters connected

with this Act, the State Government shall

have the same authority and control over the

[Mamlatdar] and the Collectors acting under

this Act as [it has and exercises] over them in

the general and revenue administration.”

37. The learned senior counsel Mr. Andhyarujina

appearing for the State, submitted that the Collector had the

authority to grant such a permission to sell under Rule 45 (b)

of the Bombay Tenancy and Agricultural Lands Rules, 1959.

This rule reads as follows:-

45

Page 46 “45.Circumstances in which permission

for sale, etc. of land under section 89 may be

granted - The Collector or any other officer

authorised under the proviso to sub-section

(1) of section 89 may grant permission for

sale, gift exchange, lease or mortgage of any

land in favour of a person who is not an

agriculturists or who being an agriculturists,

cultivates personally land not less than three

family holdings whether as tenure holder or

tenant or partly as tenure holder and partly

as tenant in any of the following

circumstances:-

(a)such a person bona fide requires the

land for a non-agricultural purpose; or

(b)the land is required for the benefit of an

industrial or commercial undertaking or

an educational or charitable institution”

…..

Submissions on behalf of the other respondents:-

38. Since it was the respondent No.4 Indigold, which

had initially purchased the land for industrial purpose, the

stand of Indigold was of significance. It is, however, very

relevant to note that Indigold had neither filed any affidavit in

the High Court, nor in this Court, and their counsel Mr. Trivedi

stated that he has no submissions to make. It is the failure of

the respondent No. 4 to set up the industry, and the

subsequent justification on the basis of financial difficulties

for the same which has led to the sale of the land. It is

strange that such a party had nothing to state before the

46

Page 47 Court. This is probably because it had already received its

price after selling the land. The respondent No. 4 appeared

to be very much disinterested in as much as even the sale

documents were signed on their behalf by Mr. Nitin Patel, the

Managing Director of Alumina. Mr. Ahmadi, learned counsel

for the appellant therefore alleged collusion amongst all

concerned.

39. The respondent No. 5, however, contested the

matter vigorously. Mr. Krishnan Venugopal, learned senior

counsel appearing for respondent No. 5 pointed out that the

respondent No. 5 had entered into a correspondence with

GMDC earlier, and thereafter participated in the Vibrant

Gujarat Summit. He pointed out that the respondent No. 5

had previous experience in dealing in Alumina products, and

therefore was interested in setting up the plant in Kutch. It

intended to use the bauxite available in that district, and

finally it was going to have a production of 25,000 metric

tonnes of Alumina per-annum. It was being set up with an

investment of Rs. 30 crores. The project was being set up in

furtherance of the Industrial Policy of the State of Gujarat and

47

Page 48 with the technical know-how from NALCO. He drew our

attention to the project report and the photographs showing

the work done so far.

40. It was submitted that the respondent No.5 had also

entered into an MOU with GMDC whereunder GMDC was to

supply bauxite for 25 years, and it was to have 26% equity

participation. It is however, material to note that there are 3

MOUs placed on record. The first MOU is dated 13.1.2009

between Alumina Refinery Pvt. Ltd. and GMDC which is

basically like a declaration of intent to set up the plant, and it

contains the assurance of support from the Government of

Gujarat. The second MOU between them is dated 9.9.2009,

and it records that Government of Gujarat has agreed to

support this refinery, and that the GMDC had agreed to

supply, on priority basis, the plant-grade bauxite to this plant.

It is this document which states that GMDC will invest in the

equity of Alumina Refinery to an extent not exceeding 26%.

It contains the promise to supply bauxite. Mr. Krishnan

Venugopal, fairly accepted that this document cannot be

construed as a contract, and that it can at best be utilised as

48

Page 49 a defence to insist on a promissory estoppel. The third MOU

is dated 30.11.2011 which is an agreement between Earth

Refinery Pvt. Ltd. which the holding company of Respondent

No. 5 and GMDC. In clause 2.1 of this agreement they have

agreed to set up a joint venture Company by name Alumina

Refinery Ltd. Clause 6.2 of this agreement states that equity

participation of GMDC in this company shall be 26%. The

obligation of GMDC has been spelt out under clause 4.2 to

supply bauxite.

41. The principal submission of respondent No. 5 is

that it is a bonafide purchaser of land of respondent No. 4, it

has a serious commitment for industrial development, and it

is acting in accordance with the industrial policy of the State.

There is nothing wrong if the Minister directs the transfer of

the unutilized land of respondent No. 4 to respondent No. 5

for industrial purpose, and this should be accepted as

permissible. The minister’s action cannot be called malafide

since it is in the interest of the industrial development of the

State. Mr. Krishnan Venugopal submitted that the right to

transfer is incidental to the right of ownership, and relied

49

Page 50 upon paragraph 36 of the judgment of this Court in DLF

Qutab Enclave Complex Educational Charitable Trust

Vs. State of Haryana and Ors. reported in 2003 (5) SCC

622. He further submitted that unless the possession of the

unutilized area is taken over by the State, the landlord’s title

to it is not extinguished. There is no automatic vesting of

land in the instant case. He relied upon the judgment of this

Court in Ujjagar Singh Vs. Collector reported in 1996 (5)

SCC 14 in this behalf.

42. It was then submitted that notings cannot be made

a basis for an inference of extraneous consideration, and

reliance was placed upon the observations of this Court in

paragraph 35 in Jasbir Singh Chhabra Vs. State of

Punjab reported in 2010 (4) SCC 192. He pointed out that

the law laid down in Centre for Public Interest Litigation

and Ors. Vs. Union of India and Ors. (supra) had been

clarified by a Constitution Bench in the matter of Natural

Resources Allocation , In Re: Special Reference (1) of

2012 reported in 2012(10) SCC 1. He referred to paragraph

122 of the judgment which quotes the observations from

50

Page 51 Katuri Lal Lakshmi Reddy Vs. State of J&K reported in

1980 (4) SCC 1 as follows:-

” 122. In Kasturi Lal Lakshmi Reddy v.

State of J&K, while comparing the efficacy of

auction in promoting a domestic industry,

P.N. Bhagwati, J. observed: (SCC p. 20, para

22)

“22. … If the State were giving a

tapping contract simpliciter there can be no

doubt that the State would have to auction or

invite tenders for securing the highest price,

subject, of course, to any other relevant

overriding considerations of public wealth or

interest, but in a case like this where the

State is allocating resources such as water,

power, raw materials, etc. for the purpose of

encouraging setting up of industries within

the State, we do not think the State is bound

to advertise and tell the people that it wants

a particular industry to be set up within the

State and invite those interested to come up

with proposals for the purpose. The State

may choose to do so, if it thinks fit and in a

given situation, it may even turn out to be

advantageous for the State to do so, but if

any private party comes before the State and

offers to set up an industry, the State would

not be committing breach of any

constitutional or legal obligation if it

negotiates with such party and agrees to

provide resources and other facilities for the

purpose of setting up the industry…..”

He also referred to paragraph 146 of the judgment (Per

Khehar J), therein, where the learned Judge has observed that

the court cannot mandate one method to be followed in all

51

Page 52 facts and circumstances, and auction and economic choice of

disposal of natural resources is not a constitutional mandate.

It was therefore submitted that, it was not necessary that the

Collector ought to have opted for auction of the concerned

parcel of land.

43. The learned senior counsel Mr. Krishnan

Venugopal, lastly drew our attention to the Jantri prices of the

land in 2008. He pointed out that at the highest, the State

would have sold this land, as per the Jantri price, for Rs. 4.35

crores. Assuming that the State was also to pay Rs. 1.20

crores as compensation to Indigold, the loss to the State

would come to Rs 3.15 crores. He submitted that if it comes

to that, the respondent No. 5, alongwith Indigold, could be

asked to compensate the state for this difference of 3.15

crores or such other amount as may be directed, but its

project must not be made to suffer.

44. GMDC was represented by learned senior counsel

Mr. Giri. He defended the action of the State as something in

furtherance of the industrial policy of the State. If the land

was to be sold and compensation was to be given, it may not

52

Page 53 have resulted into much benefit to the state. He relied upon

Section 7 of the Transfer of Property Act, to submit that every

person competent to contract, and entitled to transferable

property can transfer such property, and under S 10 of the

said Act any condition restraining alienation was void. He

relied on paragraph 20 of the judgment in Prakash

Amichand Shah Vs. State of Gujarat reported in 1986 (1)

SCC 581, to submit that divesting of title takes place only

statutorily, and which had not happened in the instant case.

Examination of the Scheme underlying Sections 89

and 89A above:-

45. Before we examine the submissions on behalf of all

the parties, it becomes necessary to examine the scheme

underlying the relevant sections 89 and 89A. As can be seen,

Section 89 essentially bars the transfers of agricultural lands

to non-agriculturists. The said section is split into four parts.

(a) Sub-section (1) provides that no sale or mortgage, gift,

exchange or lease of any land, or no agreement in that behalf

shall be valid in favour of a non-agriculturist. The first proviso

to Section 89 (1) makes an exception viz. that the Collector

or an officer authorised by the State Government in this

53

Page 54 behalf may grant permission for such sale, gift, exchange,

lease or mortgage for that purpose, in such circumstances as

may be prescribed. The second proviso of course provides

that no permission is required where the land is being sold to

a person who is not an agriculturist, but it is sold for

agricultural purpose.

(b) Sub section (2) provides that the above restriction will not

apply to a sale etc. in favour of an agricultural labourer or an

artisan

(c) Sub-section (3) similarly provides that the above

restriction will not apply to a mortgage in favour of a

cooperative society, to secure a loan therefrom.

(d) Sub-section (4) lays down that the restriction under

Section 90 with respect to the reasonable price for the land

to be sold will not apply to the sale under Section 89(1).

46. Section 89A creates an exception to Section 89 for

sale of land for bona-fide industrial purposes in certain cases.

This section is split into five sub-sections. Sub-section (1) of

Section 89A deals with those lands for which no permission is

required under sub-section (1) of Section 65B of the Bombay

54

Page 55 Land Revenue Code, 1879, i.e. lands such as those in

industrial zone etc. It lays down that nothing in Section 89

will prohibit the sale or the agreement of sale of such zonal

land in favour of any person for use of such land by such

person for a bona-fide industrial purpose. Section 89A,

creates an exception to Section 89 by allowing a sale of land

for bonafide industrial purpose in certain cases as

contemplated under the said section. These requirements

are laid down in the provisos (a) to (d) of sub-section (1) and

in sub-section (2) to (4) of Section 89A. They are as follows:-

(i)That the land is not situated within an urban

agglomeration,

(ii)A prior permission of the Industries Commissioner of the

State is to be obtained where the area of the land proposed

to be sold exceeds ten hectares,

(iii)The land proposed to be sold shall not exceed four times

the area on which the construction of the industry is to be put

up excluding the additional land for pollution measures,

(iv)If the land belongs to a tribal, it shall be subjected to

certain additional restrictions,

55

Page 56 (v)Within 30 days the purchaser has to inform the Collector

of such purchase failing which he is liable to a fine,

(vi)The Collector has thereafter to make an enquiry

whether the land is purchased for a bonafide industrial

purpose and issue a certificate to that effect. In case he is

not satisfied of the bonafide industrial purpose, he has to

hear the purchaser, and thereafter he may refuse issuance of

such certificate against which an appeal lies to the State

Government.

(vii)Lastly, the purchaser has to commence the industrial

activity within three years from the date of certificate, and

start the production of goods and services within five years

from the date of issuance of certificate.

47. Where the purchaser fails to start the industrial

activity as stipulated above, Section 89A (5) requires the

Collector to hold an enquiry, wherein he has to give the

purchaser an opportunity of being heard. Thereafter, if he

confirms such a view, he is expected to pass an order that

the land shall vest in the Government which will, however, be

done after determining appropriate compensation payable to

56

Page 57 the purchaser, which has to be done having regard to the

price paid by the purchaser. Then the land shall be disposed

of by the Government having regard to the use of the land.

Thus, the only authority contemplated under the section is

the Collector, and the decision is to be taken at his level. It is

only in the event of his refusing to give the certificate of

purchase for bonafide industrial purpose that an appeal lies

to the State Government. Thus, where one wants to

purchase agricultural land for industrial purposes, one has to

first obtain the permission of the Industries Commissioner.

The purchaser has also to inform the Collector about the

purchase within 30 days of such purchase, and obtain a

certificate that the land is purchased for a bonafide industrial

purpose. He has to see to it that the industrial activity starts

in three years from the date of such certificate, and the

production of goods and services also starts within five years

thereof, which period can be extended by the State

Government, in an appropriate case. In the event the

purchaser fails to commence such industrial activity, the

Collector has to make an enquiry, and thereafter pass an

57

Page 58 appropriate order of resumption of the land on determining

the compensation. Thus, the entire authority in this behalf is

with the Collector and none other.

Have the provisions of Sections 89 and 89A been

complied in the present case:-

48. Now, we may examine the developments in the

present matter on the backdrop of these statutory provisions.

It is relevant to note that in their first letter dated 6.12.2008,

the respondent No.4 has not referred to any financial

constraint. The letter merely states that respondent No.4

wanted to dispose off the entire piece of land since they were

no more interested in putting up any industrial project in the

said land. As can be seen from Section 89A, the object of the

section is to permit transfer of agricultural land, only for a

bonafide industrial purpose. Where the land exceeds ten

hectares, such a purchaser has to obtain, to begin with, a

previous permission of the Industries Commissioner before

any such sale can be given effect to. Thereafter, the

purchaser has to send a notice to the Collector within 30 days

of the purchase, and the Collector has to be satisfied that the

land has been validly purchased for a bonafide industrial

58

Page 59 purpose, in conformity with the provisions of sub-section (1),

and then issue a certificate to that effect. There is a further

requirement that the purchaser has to commence the

industrial activity within three years, and has to start the

production within five years from the date of issuance of the

certificate. Admittedly no such steps were taken by Indigold,

nor was any affidavit in reply filed by them, either before the

High Court or before this Court. Mr. Trivedi, learned counsel,

appeared for Indigold, and he was specifically asked as to

what were the attempts that had been made by respondent

No.4 to set up the industry, and what were the difficulties

faced by it. He was asked as to whether there was any

material in support of the following statement made in

Indigold’s letter dated 16.6.2009 i.e. ‘we have tried our level

best to set up the industry on the land in question.’ Mr.

Trivedi stated that he had nothing to say in this behalf. All

that he stated was that the respondent No.4 purchased the

land, it was unable to set up its unit, and it sold the land to

respondent No.5.

59

Page 60 49. What is, however, material to note in this behalf is

that whereas the land is supposed to have been purchased in

2003 at a price of Rs.70 lakhs, it is said to have been sold at

Rs.1.20 crores in 19.1.2010. It is very clear that even before

the letter of 16.6.2009 proposing to sell the land to

respondent No.5, in December 2008 itself respondent No.4

had written to the Collector that they were no more

interested in putting up the industrial project, and therefore

they wanted to dispose off the piece of land to their

prospective clients. That being the position, it was

mandatory for the Collector at that stage itself to act under

sub-Section 5 of Section 89A to issue notice, conduct the

necessary enquiry, determine the compensation and pass the

order vesting the land in the State Government. It is very

clear that Collector has done nothing of the kind. In any case

he should have taken the necessary steps in accordance with

law at least after receiving the letter dated 16.6.2009. Again

he did not take any such steps.

50. It has been pointed out by the respondents that the

representative of respondent No.5 participated in the Vibrant

60

Page 61 Gujarat Global Investors Summit on 31.1.2009, and signed an

MOU with respondent No.6 for setting up a specialty alumina

plant in Kutch. The MOU stated that the Government of

Gujarat was assuring all necessary permissions to respondent

No.5. The respondent No.5 will be investing an amount of

Rs.30 crores in the proposed plant, and it will provide

employment to 80 persons. Thereafter, the above referred

letter dated 12.6.2009 was addressed by the respondent

No.5 to the Deputy Collector Bhuj. The letter sought

permission to purchase land belonging to Indigold. It referred

to the letter of respondent No.4 dated 6.12.2008. It stated

that the respondent No.5 would like to purchase the land for

a bonafide industrial purpose, for setting up their upcoming

project, Alumina Refinery Limited, on the land admeasuring

39 acres and 25 gunthas, situated in villages Kukma and Moti

Reladi. It then sought the permission from the competent

authority, under Section 89 of the Tenancy Act, 1958 to

register the sale in their favour.

51. After writing to the Collector on 16.6.2009, without

waiting for any communication from him, Alumina wrote to

61

Page 62 the Chief Minister on 18.6.2009. Directors of Alumina had a

meeting with the Minister of Revenue Smt. Anandiben Patel

on 29.6.2009, which was recorded by Mr. Nitin Patel on

30.6.2009. The Chief Minister’s Secretary wrote to the

Principal Secretary, Revenue Department on 2.7.2009

seeking a note on the possible course of action. The

Revenue Department sought a factual report from the

Collector, who instead of furnishing the same, forwarded the

proposal of Alumina itself to the Department for granting the

permission for the sale. The Department looked into the

statutory provisions, and then recorded on 7.8.2009 that the

Collector is required to take an action at his level in the

matter, and the proposal be sent back to him. After looking

into the legal position, the Principal Secretary, Revenue

Department and the Chief Secretary of the State wrote that

the land be taken back, and thereafter the issue of allotment

be examined separately.

52. The matter could have rested at that, but the

Minister of Revenue put a remark that permission be granted

as a special case, since the land is of private ownership. The

62

Page 63 matter was again discussed thereafter, and then a

suggestion was made by the departmental officers that 50%

of the unearned income may be sought from the seller. The

Chief Secretary noted that land may be given to the new

party provided Industries Department recommends it as per

the laid down rules. He maintained that the land be taken

back, and then be re-allotted to the new party. The Minister,

however, again passed an order that as suggested earlier by

her, permission be given and, therefore, the Collector

ultimately granted the permission as directed by the

Government. Thus, as can be seen, that instead of the

statutory authority viz. the Collector acting in accordance

with the statutory mandate, only because a direction was

given by the Minister that the statutory authority was

bypassed, and even the enquiry as contemplated under sub-

section 5 of Section 89A was given a go-by. Thus, as can be

seen from the above narration what emerges from the record

is that whereas Sections 89 and 89A contemplate a certain

procedure and certain requirements, what has been done in

the present matter is quite different. We may refer to Lord

63

Page 64 Bingham’s work titled ‘Rule of Law’ where in the Chapter on

exercise of power, he observes that:

‘Ministers and public officers at all level must

exercise the powers conferred on them in good

faith, fairly, for the purpose for which the powers

were conferred, without exceeding the limits of

such powers and not unreasonably’ .

He quotes from R v. Tower Hamlets London Borough

Council [1988] AC 858, which states:

‘Statutory power conferred for public

purposes is conferred as it were upon trust, not

absolutely, that is to say, it can validly be used

only in the right and proper way which the

parliament, when conferring it, is presumed to

have intended.’

53. It is well settled that where the statute provides for

a thing to be done in a particular manner, then it has to be

done in that manner and in no other manner. This proposition

of law laid down in Taylor Vs. Taylor (1875) 1 Ch D

426,431 was first adopted by the Judicial Committee in Nazir

Ahmed Vs. King Emperor reported in AIR 1936 PC 253 and

then followed by a bench of three Judges of this Court in Rao

Shiv Bahadur Singh Vs. State of Vindhya Pradesh

reported in AIR 1954 SC 322 . This proposition was further

explained in paragraph 8 of State of U.P. Vs. Singhara

64

Page 65 Singh by a bench of three Judges reported in AIR 1964 SC

358 in the following words:-

“8. The rule adopted in Taylor v.

Taylor is well recognised and is founded on

sound principle. Its result is that if a statute

has conferred a power to do an act and has

laid down the method in which that power

has to be exercised, it necessarily prohibits

the doing of the act in any other manner than

that which has been prescribed. The principle

behind the rule is that if this were not so, the

statutory provision might as well not have

been enacted….”

This proposition has been later on reiterated in Chandra

Kishore Jha Vs. Mahavir Prasad reported in 1999 (8) SCC

266, Dhananjaya Reddy Vs. State of Karnataka reported

in 2001 (4) SCC 9 and Gujarat Urja Vikas Nigam Limited

vs. Essar Power Limited reported in 2008 (4) SCC 755.

54. (i)Therefore, when Indigold informed the Collector on

6.12.2008 that they were ‘no more interested’ to put up any

industrial project, and were disposing of the entire piece of

land to their prospective client, the Collector was expected to

hold the necessary enquiry. This was the minimum that he

was expected to do. After holding the enquiry, if he was

convinced that the industrial activity had not been started, he

65

Page 66 was expected to pass an order that the land will vest in the

State which will have to be done after determining the

compensation payable having regard to the price paid by the

purchaser. In the instant case, the respondent No.4 claims to

have purchased the land for Rs.70 lakhs. As pointed out by

Mr. Krishnan Venugopal himself, as per the jantri price of the

lands at that time, i.e. even at the Government rate in 2008,

the land was worth Rs.4.35 crores. The collector was

expected to dispose of the land by auction which is the

normal method for disposal of natural resources which are

national assets. Out of that amount, the compensation

payable to the respondent no.4 would have been around

Rs.70 lakhs having regard to the amount that the respondent

No.4 had paid. This is because respondent no. 4 had

purchased agricultural land to put up an industry, and they

had taken no steps whatsoever for over five years to set up

the industry. They were not expected to purchase the land,

and thereafter sell it for profiteering. The Jantri price is an

official price. In actual auction the State could have realised a

66

Page 67 greater amount. In permitting the sale inter-se parties, the

State exchequer has positively suffered.

(ii)On the other hand, in the event, the Collector was to

form an opinion after receiving the bids or otherwise that it

was not worth disposing of the land in that particular way, he

could have divested Respondent No. 4 of the land by paying

compensation, and re-allotted the same to the Respondent No

5 at an appropriate consideration. The statute required him

to act in a particular manner and the land had to be dealt in

that particular manner only, and in no other manner, as can

be seen from the legal position, accepted in various

judgments based on the proposition in Taylor vs. Taylor.

55. Thus inspite of the Secretaries repeating their

advice, the Minister of Revenue Smt. Anandiben Patel has

insisted on treating this case as a special case for which she

has recorded no justifiable reasons whatsoever, and orders

were issued accordingly. Under Section 89A(3), the

Government is the appellate authority where the Collector

does not grant a certificate for purchase of bonafide industrial

purpose. Thus what has happened, thereby is that the powers

67

Page 68 of the statutory authority have been exercised by the

Government which is an appellate authority.

56. The State Government gave three additional

reasons when it defended its decision. (i)The first reason was

that if the land had been directed to be vested in the State

Government, State would have been required to pay

compensation to Indigold, and it would have been a long-

drawn process for determining the valuation of the land, and

thereafter for finding the suitable and interested party to set

up an industry. As stated earlier, this plea is not tenable. If

the law requires something to be done in a particular manner,

it has got to be done in that way and by no other different

manner. (ii) The second reason given was that the action was

in State’s own interest because through its public sector

undertaking i.e. GMDC, it was involved in the transaction viz.

that is it is going to have 26% equity. As far as this part is

concerned again it is difficult to accept this reason also

because one does not know what will be the value of shares of

the new company. (iii) Third reason given was that the land

was worth Rs.4.35 crores as per the Jantri in 2008, and as per

68

Page 69 the revised Jantri in 2011 it had come down to Rs.2.08 crores.

This is a situation which was brought about by the State itself

and this cannot be a ground for the State to submit that it

would not have gained much in the process.

57. That apart it has to be examined whether the

Government had given sufficient reasons for the order it

passed, at the time of passing such order. The Government

must defend its action on the basis of the order that it has

passed, and it cannot improve its stand by filing subsequent

affidavits as laid down by this Court long back in

Commissioner of Police, Bombay vs. Gordhandas

Bhanji reported in AIR 1952 SC 16 in the following words:-

“Public orders, publicly made, in

exercise of a statutory authority cannot be

construed in the light of explanations

subsequently given by the officer making the

order of what he meant, or of what was in his

mind, or what he intended to do. Public

orders made by public authorities are meant

to have public effect and are intended to

affect the actings and conduct of those to

whom they are addressed and must be

construed objectively with reference to the

language used in the order itself.”

This proposition has been quoted with approval in paragraph

8 by a Constitution Bench in Mohinder Singh Gill vs. Chief

69

Page 70 Election Commissioner reported in 1978 (1) SCC 405

wherein Krishna Iyer, J. has stated as follows:-

“8. The second equally relevant matter

is that when a statutory functionary makes

an order based on certain grounds, its

validity must be judged by the reasons so

mentioned and cannot be supplemented by

fresh reasons in the shape of affidavit or

otherwise. Otherwise, an order bad in the

beginning may, by the time it comes to court

on account of a challenge, get validated by

additional grounds later brought out.”

In this context it must be noted that the Revenue Minister’s

direction merely states that it is a private land, and the

Governments letter dated 18.12.2009 speaks of the financial

incapability of Inidgold. Neither the letter dated 18.12.2009

from the Government to the Collector, nor the order passed

by the Deputy Collector on 15.1.2010 mention anything

about:

1.the mineral policy of the Government of Gujarat.

2.the time taking nature of the process of acquiring the

land and re-allotting it.

3.That the second sale was under the authority of the

Collector available to him under the first proviso to

Section 89(1) read with condition no. (4) of the

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Page 71 permission dated 1.5.2003 granted to Indigold to

purchase the concerned lands.

In the absence of any of these factors being mentioned in the

previous orders, it is clear that they are being pressed into

service as an after-thought. The Government can not be

allowed to improve its stand in such a manner with the aid of

affidavits.

58. As noted earlier, the State Government is an

Appellate Authority under sub-section 3 of Section 89A, and it

could not have given a direction to the Collector who was

supposed to take the decision under his own authority. We

may profitably refer to a judgment of a Constitutional Bench

in State of Punjay vs. Hari Kishan reported in AIR 1966

SC 1081. In that matter, the respondent desired to construct

a cinema at Jhajhar. He submitted an application and under

the orders of the State Government all applications were

directed to be referred to the State Government. Therefore,

though his application was initially accepted, the SDO

informed him that the application was rejected. He appealed

to the State Government and the appeal was rejected which

71

Page 72 has led to the petition in the High Court. The Punjab High

Court framed the question as to whether the State of Punjab

was justified in assuming the jurisdiction which was conferred

on the licensing authority by the act. The Supreme Court held

in paragraph 4 of the judgment, that the course adopted by

the State of Punjab had resulted in the conversion of the

appellate authority into the licensing authority. That was not

permissible, and so it is in the present case. The reliance by

the State Government on the overall control of the State

under Section 126 of the Tenancy Act cannot be used when in

the instant case the power is with the Collector and the

appellate power is with the State Government. The power

under Section 126 can be utilized for giving general

guidelines, but not for interference or giving directions in

individual cases.

59. The submission that condition No.4 of the

permission to purchase, obtained by respondent No.4 in 2003

permits the Collector to pass such an order is equally

untenable. There is nothing in the statutory scheme to

suggest that a second sale, inter se parties, after the failure of

72

Page 73 a purchaser to set up an industry is permissible. In such an

event, the statute requires an enquiry to be conducted by the

collector. If he is satisfied that there is a failure to set up the

industry, the compensation to be paid to the purchaser is

determined. After this stage the land vests in the

Government. It is thus clear that the condition No 4 in the

permission obtained by Respondent No. 4 is bad in law, not

having its basis in any statutory provision. Even assuming

that the Collector had that power to lay down such a

condition, the authority to permit the sale as per the said

condition had to be exercised by him in the manner

contemplated under Section 89 A (5) viz. after holding the

enquiry as prescribed. Here the enquiry itself was dispensed

with. Rule 45(b) of the Bombay Tenancy and Agricultural

Lands Rules, 1959 also cannot be pressed into service for the

reason that, neither under Section 89 nor under Section 89A,

a sale inter-se parties is contemplated or permitted.

60. Now, what is to be noted is that wherever an

agriculturist is in possession of a land, either as an owner or

as a tenant protected by the statute, transfer of his land for

73

Page 74 industrial purposes is subject to the conditions regulated by

the Act. It is for the protection and preservation of the

agricultural land that the bar against conversion is created

under Section 89. Thereafter, as an exception, only a bonafide

use for industrial purpose is permissible under section 89A.

Ownership of respondent No.4 was subject to the conditions

of utilization for bonafide industrial purpose, and it was clear

on record that respondent No.4 had failed to utilize the land

for bonafide industrial purpose. The reliance on Sections 7

and 10 of the Transfer of Property Act is also misconceived in

the present case, since the Tenancy Act is a welfare

enactment, enacted for the protection of the agriculturists. It

is a special statute and the sale of agricultural land permitted

under this statue will have to be held as governed by the

conditions prescribed under the statute itself. The special

provisions made in the Tenancy Act will therefore prevail over

those in the Transfer of Property Act to that extent.

61. Besides, the present case is clearly a case of

dictation by the State Government to the Collector. As

74

Page 75 observed by Wade and Forsyth in Tenth Edition of

Administrative Law:-

“if the minister’s intervention is in fact

the effective cause, and if the power to act

belongs to a body which ought to act

independently, the action taken is invalid on

the ground of external dictation as well as on

the obvious grounds of bad faith or abuse of

power”.

The observations by the learned authors to the same effect in

the Seventh Edition were relied upon by a bench of three

judges of this Court in Anirudhsinhji Karansinhji Jadega

and anr. vs. State of Gujarat reported in 1995 (5) SCC

302. In this matter the appellant was produced before the

Executive Magistrate, Gondal, on the allegation that certain

weapons were recovered from him. The provisions of TADA

had been invoked. The appellant’s application for bail was

rejected. A specific point was taken that the DSP had not

given prior approval and the invocation of TADA was non-est.

The DSP, instead of granting prior approval, made a report to

the Additional Chief Secretary, and asked for permission to

proceed under TADA. The Court in para 13, 14, 15 has held

75

Page 76 this to be a clear case of ‘dictation’, and has referred to Wade

and Forsyth on ‘Surrender Abdications and Dictation’.

62. The respondent No.5 had the courage to state that

the notings of the Secretaries were inconsequential. As a

beneficiary of the largesse of the Government, respondent

No.5 could say that, but it is not possible for us to accept the

same. In Trilochan Dev Sharma vs. State of Punjab

reported in AIR 2001 SC 2524 what is observed by this Court

is relevant for our purpose

“In the system of Indian Democratic

Governance, as contemplated by the

constitution, senior officials occupying key

positions such as Secretaries are not

supposed to mortgage their own discretion,

volition and decision making authority and be

prepared to give way or being pushed back

or pressed ahead at the behest of

politications, for carrying out commands

having no sanctity in law.”

A higher civil servant normally has had a varied experience

and the ministers ought not to treat his opinion with scant

respect. If Ministers want to take a different view, there must

be compelling reasons, and the same must be reflected on

the record. In the present case, the Secretaries had given

advice in accordance with the statute and yet the Minister has

76

Page 77 given a direction to act contrary thereto and permitted the

sale which is clearly in breach of the statute.

63. Now, the effect of all that is stated above is that the

land which was purchased by respondent No.4 for Rs.70 lakhs

is permitted by the Government of Gujarat to be sold directly

to respondent No.5 at Rs.1.20 crores to set up an industry

which could not have been done legally. It is undoubtedly not

a case of loss of hundreds of crores as claimed by the

appellants, but certainly a positive case of a loss of a few

crores by the public exchequer by not going for public auction

of the concerned property. It is true as pointed out by Mr.

Venugopal, learned senior counsel that in a given case the

state may invite an entrepreneur and give an offer. However,

in the instant case, the sale of the land for industrial purpose

is controlled by the statutory provisions, and the State was

bound to act as per the requirements of the statute. The

minister’s direction as seen from the record clearly indicates

an arbitrary exercise of power. The orders passed by the

Government cannot therefore be sustained. As seen earlier,

there is neither a power nor a justification to make any special

77

Page 78 case, in favour of the Respondent No 5. Such exceptions may

open floodgates for similar applications and orders, even

though the Gujarat Government is contending that this order

is purportedly not to be treated as a precedent.

64. In our view, considering the scheme of the act, the

process of industrialization must take place in accordance

therewith. As stated earlier if the law requires a particular

thing should be done in a particular manner it must be done

in that way and none other. The State cannot ignore the

policy intent and the procedure contemplated by the statute.

In the instant case, the State could have acquired the land,

and then either by auction or by considering the merit of the

proposal of respondent No.5 allotted it to respondent No.5.

Assuming that the application of the Respondent No 5 was for

a bona-fide purpose, the same had to be examined by the

industrial commissioner, to begin with, and thereafter it

should have gone to the collector. After the property vests in

the Government, even if there were other bidders to the

property, the collector could have considered the merits and

the bona-fides of the application of Respondent No. 5, and

78

Page 79 nothing would have prevented him from following the course

which is permissible under the law. It is not merely the end

but the means which are of equal importance, particularly if

they are enshrined in the legislative scheme. The minimum

that was required was an enquiry at the level of the Collector

who is the statutory authority. Dictating him to act in a

particular manner on the assumption by the Minister that it is

in the interest of the industrial development would lead to a

breach of the mandate of the statute framed by the

legislature. The Ministers are not expected to act in this

manner and therefore, this particular route through the

corridors of the Ministry, contrary to the statute, cannot be

approved. The present case is clearly one of dereliction of his

duties by the Collector and dictation by the Minister, showing

nothing but arrogance of power.

65. The High Court has erred in overlooking the legal

position. It was expected to look into all the earlier mentioned

aspects. The impugned judgment does not reflect on the

issues raised in the petition. It could not be said that the

petition was delayed and merely because investment had

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Page 80 been made by the respondent No.5, the court would decline

to look into the important issues raised in the PIL.

Epilogue:-

66. Before we conclude, we may observe that India is

essentially a land of villages. Although, urbanization and

industrialization is taking place, the industry has not

developed sufficiently, and large part of our population is still

required to depend on agriculture for sustenance. Lands are,

therefore, required to be retained for agricultural purposes.

They are also required to be protected from the damage of

industrial pollution. Bonafide industrial activity may mean

good income to the entrepreneurs, but it should also result

into good employment and revenue to the State, causing least

pollution and damage to the environment and adjoining

agriculturists. While granting the permission under Section

89A (5) the Collector has to examine all these aspects. This is

because the only other exception for conversion of

agricultural lands to non-agricultural purpose is for those

lands which are in an industrial zone. As far as the conversion

of lands otherwise than those in the industrial zone is

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Page 81 concerned, all the aforesaid precautions are required to be

taken when a decision is to be arrived at as to whether the

application is for a bonafide industrial purpose. In the instant

case, there were newspaper reports of apprehensions and

protest of the adjoining farmers. The Revenue Secretary and

the Chief Secretary had placed the statutory provisions on

record. It was expected of the Government and the Revenue

Minister to take cognizance of these apprehensions of the

farmers as well as the statutory provisions brought to her

notice by the secretaries. She has simply brushed aside the

objections of the secretaries merely because the Chief

Minister’s secretary had written a letter, and because she was

the minister concerned. While over-ruling the opinion of

secretaries to the concerned department, the Minister was

expected to give some reasons in support of the view she was

taking. No such reason has come on record in her file notings.

She has ignored that howsoever high you may be, the law is

above you.

67. Development should not be measured merely in

terms of growth of gross domestic product, but it should be in

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Page 82 terms of utility to the community and the society in general.

There is a certain inbuilt wisdom in the statute which is the

mandate of the legislature which represents the people. The

Minister has clearly failed to pay respect to the same.

Hence, the following decision:-

68. Having noted the legal position and the factual

scenario, the impugned judgment and order passed by the

High Court will have to be set aside. The prayers in the PIL

will have to be entertained to hold that the direction of the

State Government dated 18.12.2009 and the consequent

order issued by the Collector of Kutch on 15.1.2010 is

arbitrary, and bad in law for being in violation of the scheme

and the provisions of Sections 89 and 89A of the Tenancy Act.

The direct sale of land by Indigold to Alumina is also held to

be bad in law, and inoperative.

69. (i) In normal circumstances, the order hereafter would

have been to direct the Collector to proceed in accordance

with Section 89A(5) viz., to hold an enquiry to decide whether

the purchaser viz. Indigold had failed to commence the

industrial activity and the production of goods and services

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Page 83 within the period specified. In the instant case, there is no

need of any such direction to hold an enquiry, in view of the

letter of Indigold itself, dated 6.12.2008, wherein, it clearly

stated that they were no more interested in putting up any

industrial project in the said land.

(ii)Consequently, there will be an order that the land shall

vest in the State Government free from all encumbrances.

This vesting order, however, has to be on payment of

appropriate compensation to the purchaser as the Collector

may determine. In the instant case, there is no need of

having this determination, for the reason that Indigold has

received from Alumina Rs. 1.20 crores as against the amount

of 70 lakhs, which it had paid to the agriculturists when it

bought those lands in 2003. Neither Indigold nor Alumina is

making any grievance towards this figure or the payment

thereof. In fact, it is the case of both of them that the direct

sale by Indigold to Alumina for this amount as permitted by

the State Government be held valid. That being so, this

amount of Rs. 1.20 crores would be set-off towards the

compensation which would be payable by the State

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Page 84 Government to the purchaser Indigold, since the land was

originally purchased by Indigold, and is now to vest in the

State Government.

(iii)The third step in this regard is that the land is to be

disposed off by the State Government, having regard to the

use of the land. The land was supposed to be used for the

industrial activity on the basis of the utilization of bauxite

found in Kutch, and respondent No. 5 has proposed a plant

based on use of bauxite. The disposal of the land will,

however, have to be at least as per the minimum price that

would be receivable at the Government rate. In the facts and

circumstances of this case, having noted that the respondent

No.5 claims to have made some good investment, and that

the Respondent No.5 has also offered to pay, without

prejudice, the difference between Rs.4.35 crores and Rs.1.20

crores i.e. Rs.3.15 cores to the State, the land will be

permitted to be disposed of by the State Government to

Alumina provided Alumina pays this amount of Rs. 3.15 crores

to the State Government. This particular order is being made

having further noted that, Alumina has acted on the basis of

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Page 85 the commitment made to it by the Government of Gujarat in

the Vibrant Gujarat Summit, and in furtherance of the

industrial development policy of the State. It is also relevant

to note that the respondent No.5 had made an application to

the Collector in the year 2009 for permitting the purchase of

the land, and has been waiting to set up its industry for the

last four years. Mr. Ahmadi, learned senior counsel appearing

for the appellants has also submitted that, as such, appellants

are not against the development of Kutch area, but they do

want the state to follow the law and exchequer not to suffer.

In the circumstances, although we do not approve the action

of the State Government, and hold it to be clearly arbitrary

and untenable, we are of the view that the aforesaid order will

be appropriate to do complete justice in the matter.

70. In the circumstances, we pass the following orders:-

(a)The appeal is allowed in part;

(b)The impugned judgment and order passed by the High

Court is set-aside;

(c)The PIL No.44 of 2012 filed by the appellants is allowed

by holding that the order dated 18.12.2009 passed by the

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Page 86 Government of Gujarat and by the Collector of Kutch on

15.1.2010, are held to be arbitrary and bad in law;

(d)In the facts and circumstances of this case, the sale of

the concerned land by Indigold to Alumina is held to be bad in

law. The land involved in the present case is held to have

vested in the State of Gujarat free from all encumbrances,

and the amount of Rs. 1.20 crores paid by Alumina to Indigold

is treated as full payment towards the compensation payable

by the State to Indigold.

(e)If Alumina is interested in their proposed project, it shall

pay an amount of Rs. 3.15 crores to the Government of

Gujarat within three months hereafter. On such a payment

being made, an order of allotment of the land to Alumina will

be issued by the State Government. The further activities of

Alumina on the concerned parcel of land will start only after

this payment is made, and in the event the amount is not so

paid within three months hereafter, the Government will

proceed to take further steps to dispose of the land having

regard to the use of the land.

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Page 87 (f)In the facts of the present case, there shall be no order

as to costs.

…………………………………..J.

[ H.L. Gokhale ]

……………………………………J.

[ J. Chelameswar ]

New Delhi

Dated: January 23, 2014

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