Supreme Court of India
DIPAK BABARIA & ANR.versusSTATE OF GUJARAT & ORS.
- Citation
- 2014 INSC 48
- Decided
- 23 January 2014
- Disposal
- Case Partly allowed
- Bench
- H L GOKHALE
Holding
The Collector is the sole statutory authority to enforce s.89A(5); the Minister’s direction to bypass this procedure was arbitrary, rendering the second sale void and the land to vest in the State with compensation determined accordingly.
Summary
The petitioners challenged the Gujarat Government's permission to allow Indigold Refinery Ltd. to sell agricultural land, previously purchased for industrial use, to Alumina Refinery Ltd. despite the original purchaser's failure to commence any industrial activity. The High Court dismissed the writ on grounds of delay and alleged suppression of facts, prompting a Special Leave Appeal. The Supreme Court examined the scheme of the Gujarat Tenancy and Agricultural Lands (Vidarbha Region and Kutch Areas) Act, 1958, particularly sections 89 and 89A, and held that the Collector alone is empowered to conduct an enquiry and vest the land in the State when the purchaser defaults. The Court found that the Revenue Minister’s direction to the Collector bypassed statutory procedure, constituting arbitrary and illegal dictation. Consequently, the sale between the two private parties was declared void, the land vested in the State, and compensation to be adjusted based on the amount already paid. The Court allowed the appeal in part, set aside the High Court judgment, and ordered the State to recover a balance from the second purchaser if it wishes to proceed with the project.
Issues considered
- The legality of the State Government’s permission for the second sale of agricultural land under sections 89 and 89A of the Tenancy Act.
- Whether the Collector failed to perform his statutory duty under s.89A(5) by not conducting an enquiry and vesting the land in the State.
- Whether the Revenue Minister’s direction amounted to unlawful dictation and breach of the statutory scheme.
- Whether the direct sale between the two private parties is valid under the Tenancy Act.
- Appropriate quantum of compensation payable to the original purchaser upon vesting of the land.
Legislation cited
Subjects
agricultural landindustrial purposeSection 89Section 89Acollector's dutyministerial dictationpublic interest litigationland vestingcompensationarbitrarinessstatutory interpretationadministrative law
Judgment
[2014] 2 S.C.R. 71
DIPAK BABARIA & ANR. A
v.
STATE OF GUJARAT & ORS.
(Civil Appeal No. 836 of 2014)
JANUARY 23, 2014
8
[H.l. GOKHALE AND J. CHELAMESWAR, JJ.)
GUJARAT TENANCY AND AGRICULTURAL LANDS
(VIDARBHA REGION AND KUTCH AREAS) ACT, 1958:
c
s. 89-A - Sale of agricultural land for industrial purpose -
No industry set up - Minister permitting further sale of land
for industrial purpose - Held: Where purchaser fails to start
industrial activity, s. 89A (5) requires the Collector to hold an
enquiry, he is expected to pass an order that the land shall 0
vest in Government Then the land shall be disposed of by
Government having regard to the use of the land --In the
instant case, Collector did not take any steps - Instead
Minister granted permission for sale of land in favour of further
purchaser - This is clearly a case of dereliction of duties by
Collector and dictation by the Minister - Direction of State E
Government dated 18.12.2009 and consequent order issued
by Collector on 15.1.2010 are arbitrary, and bad in law for
being in violation of the scheme and the provisions of ss. 89
and 89A -- Direct sale of land by first purchaser to subsequent
purchaser is also bad in law, and inoperative - Consequently, F
there will be an order ·that the land shall vest in State
Government free from all encumbrances - The vesting order,
however, has to be on payment of appropriate compensation
to the purchaser as the Collector may determine - If the
second purchaser is interested in its proposed project, it shall G
pay the stated amount to Government - Direction given for
adjustment of the amount paid - Constitution of India, 1950 -
Art.142.
71 H
72 SUPREME COURT REPORTS [2014] 2 S.C.R.
A ADMINISTRATIVE LAW:
Departmental notings - Held: A higher civil servant
normally has a varied experience and 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
8
same must be reflected on the record - In the instant case,
the Secretaries had given advice in accordance with the
statute and yet the Minister has given a direction to act
contrary thereto and permitted the sale which is clearly in
breach of the statute.
c
Land policy - Held: Considering the scheme of the Act,
the process of industrialization must take place in accordance
therewith - If the law requires a particular thing should be done
in a particular manner it must be done in that way and none
D other -State Government cannot ignore the policy intent and
the procedure contemplated by the statute - In the instant case,
State Government could have acquired the land, and then
either by auction or by considering the merit of proposal,
allotted it.
E
Power of statutory authority - Exercise of by Government
- Minister permitting further sale - Held: Under s. 89A(3),
Government is appellate authority where Collector does not
grant a certificate for purchase of bonafide industrial purpose
- Thus, powers of statutory authority have been exercised by
F Government which is an appellate authority - Minister's
direction clearly indicates an arbitrary exercise of power -
Orders passed by Government cannot, therefore, be
sustained - Dictating the Collector to act in a particular
manner on the assumption by Minister that it is in the interest
G of industrial development would lead to a breach of the
mandate of statute framed by legislature - Gujarat Tenancy
and Agricultural Lands (Vidarbha Region and Kutch Areas)
Act, 1958 -- s. 89-A.
H The appellant filed a writ petition in public interest
DIPAK BABARIA & ANR. v. STATE OF GUJARAT & 73
ORS.
before the High Court challenging primarily the A
permission granted by the Collector to respondent No.4
i.e., lndigold Refinery Limited, to sell certain parcels of
agricultural land situated in District Kutch, which were
said to have been purchased earlier by respondent No.4,
for industrial purpose, in favour of respondent No.5 i.e. B
Alumina Refinery Limited, as being impermissible under
the provisions ss. 89 and 89A of the Gujarat Tenancy and
Agricultural Lands (Vidarbha Region and Kutch Areas)
Act, 1958 (Tenancy Act, 1958). It was the case of the
appellant that there was no provision for any further c
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 0
public interest, and a mala-fide one resulting into a
serious loss to the public exchequer. The writ petition
also sought an inquiry into the role of the Collector and
the Revenue Minister of the State Government as well as
a direction to the State authorities to resume the land in E
question. The High Court dismissed the writ petition
holding that there was delay in initiating the said public
interest litigation (PIL), and that the writ petitioner had
suppressed the material facts before the High Court
concerning the investment claimed to have been .made
by respondent No.5. F
In the instant appeal filed by the writ petitioner, the
questions for consideration before the Court were: (i)
whether the decision taken by the Government to permit
the transfer of the agricultural land from respondent No. G
4 to respondent No. 5, was legal and justified, and (ii)
whether there had been any breach of ss.89 and 89-A,
and if it was so what should be the order in the case?
Allowing the appeal in part, the Court
H
74 SUPREME COURT REPORTS [2014] 2 S.C.R.
A HELD: 1.1 Section 89 of the Gujarat Tenancy and
Agricultural Lands (Vidarbha Region and Kutch Areas)
Act, 1958 essentially bars the transfers of agricultural
lands to non-agriculturists. Section 89A creates an
exception to s. 89 for sale of land for bona-fide industrial
s purposes in certain cases. 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 purpose, in
conformity with the provisions of sub-s. (1) of s.89-A, and
c 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
respondent no. 4 nor was any affidavit in reply filed by
0
them, either before the High Court or before this Court.
[para 45, 46 and 48] [118-G; 119-E; 121-H; 122-A-B]
1.2 It is significant to note that whereas the land is
supposed to have been purchased in 2003 at a price of
E 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
F up the industrial project, and, therefore, they wanted to
dispose of 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-s. (5) of
s.89A to issue notice, conduct the necessary enquiry,
G determine the compensation and pass the order vesting
the land in the State Government. Then the land was to
be disposed of by the Government having regard to the
use of the land. In any case, the Collector should have
taken the necessary steps in accordance with law at least
H after receiving the letter dated 16.6.2009. He did not take
DIPAK BABARIN & ANR. v: STATE OF GUJARAT & 75
ORS.
any su·ch steps;· Thus, the only authority contemplated.· A
under· the Section is the Collector;«ind the decision is to
be taken at his level. It is only In the event of his refusing
to·give the certificate ofpurcffase for bonafide industrial
purpose that an appeal lies to the State Government.
[para '47 and 49] [122-E-H; 120-H; 121~A] · B
. , ' ''.
1.3 Respondent No.5 by letter dated 12.6.2009
addressed to. the Deputy Collector" Bhuj, sought
permission to purchase the land belonging to respondent
no. 4: It then sought the permission from the competent
authority, u/s 89 of the Tenancy Act, 1958 to register the C
sale in their favour. After writing to the Collector on
16.6.2009, without waiting 'for 'any communication' from'
him, re'spondent no: 5 wrote to the Chief Minister on:
a
18.6.2009. Directors' of respondent no.· 5. had meeting -
with ttie Minister of Revenue on 29.6.2009.'The Minister D
passed an order that permission be given and, therefore,
the Collector· ultimately 'granted ·the permission as·
directed by the Government. trlstead of the' statuto..Y
authority.viz: the· Coliector acting in accordance with the;
-statutory' manifate, orily because a direction was give'n ~
by ttie Minister that.the statutory·authorify was bypassed,
and even the enquiry as contemplated under sub-s: (5)
of s.·asA was given· a· go~by.iThus;:what emerges from
the record is that whereas ss.~B9 and BSA ·contemplate a·
certain. procedure and certain requirements, what has F
been'done in.the instant matter is quite different. · It i.s.
well settled that where the 'statute provides for a thing to
be done ina particular manner,, then it has to be done in
that manner. and in no other manner.[para 50,52 and 53]
[123-C-D and E-F; 124-B-E; ,125-8] . ·i · G
·Taylor Vs. Taylor (1875) 1 Ch D 426,431; Na~ir Ahmed·
Vs. King Emperor AIR 1936 PC 253 ; Rao Shiv Bahadur
Singh Vs. State.of Vindhya PradeshJ954 SCR 1038 =AIR
1954 SC 322; State of U.P. Vs." Singhara Singh, AIR 1964
SC 3SB;' Chandra Kishore Jha Vs. Mahavir Prasad 1999 (2) H
76 SUPREME COURT REPORTS [2014] 2 S.C.R.
A Suppl. SCR 754 = 1999 (8) SCC 266, Dhananjaya Reddy
Vs. State of Karnataka 2001 (2) SCR 399 = 2001 (4) SCC 9
and Gujarat Urja Vikas Nigam Limited vs. Essar Power
Limited 2008 (4) SCR 822 = 2008 (4) SCC 755 - referred to
R v. Tower Hamlets London Borough Council [1988] AC
8
856 - referred to.
1.4 The notings of the Secretaries were significant.
A higher civil servant normally has a varied experience
and the ministers ought not to treat his opinion with scant
C 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 instant case, the
Secretaries had given advice in accordance with the
statute and yet the Minister has given a direction to act
D contrary thereto and permitted the sale which is clearly
in breach of the statute. Under s. 89A(3), the Government
is the appellate authority where the Collector does not
grant a certificate for purchase of bonafide industrial
purpose. The State Government could not have given a
E direction to the Collector who was supposed to take the
decision under his own authority. Thus, thereby the -
powers of the statutory authority have been exercised by
the Government which is an appellate authority. [para 55
and 62] [126-H; 127-A-B; 132-B-D]
F Trilochan Dev Sharma vs. State of Punjab 2001 (3) SCR
1146 =AIR 2001 SC 2524 - referred to.
1.5 The Government must defend its action on the
basis of the order that it has passed, and it cannot
G improve its stand by filing subsequent affidavits. [para
57] [127-G]
Commissioner of Police, Bombay vs. Gordhandas
Bhanji 1952 SCR 135 =AIR 1952 SC 16; Mohinder Singh
H Gill vs. Chief Election Commissioner 1978 (2) SCR 272 =
DIPAK BABARIA & ANR. v. STATE OF GUJARAT & 77
ORS.
1978 (1) SCC 405 - referred to. A
State of Punjay vs. Hari Kishan 1966 SCR 982 = AIR
1966 SC 1081 - referred to.
1.6 The reliance on ss. 7 and 10 of the Transfer of
Property Act is misconceived, since the Tenancy Act is a 8
welfare enactment, enacted for the protection of the
agriculturists. It is a special statute and the sale of
agricultural land permitted under this statute will have to
be held as governed by the conditions prescribed under
the statute itself. The special provisions made in the C
Tenancy Act will, therefore, prevail over those in the
Transfer of Property Act to that extent. Besides, it is
clearly a case of dictation by the State Government to the
Collector. [para 60-61] [130-G-H; 131-A]
D
Anirudhsinhji Karansinhji Jadega and anr. vs. State of
Gujarat 1995 (2) Suppl. SCR 637 =1995 (5) sec 302 - relied
on.
1.7 From the facts it is obvious that the land which
was purchased by respondent No.4 for Rs.70 lakhs is E
permitted by the State Government 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 F
few crores to the public exchequer by not going for
public auction of the property. [para 63] [132-D-F]
1.8 It is true that in a given case State Government
may invite an entrepreneur and give an offer. However, G
in the instant case, the sale of the land for industrial
purpose is controlled by the statutory provisions, and the
State Government was bound to act as per the
requirements of the statute. The Minister's direction
clearly indicates an arbitrary exercise of power. The H
78 SUPREME COURT REPORTS [2014] 2 S.C.R.
A orders passed by the Government cannot therefore be
sustained. There is neither a power nor a justification to
make any special case, in favour of respondent No 5.
[para 63] [132-E-G]
2.1 Considering the scheme of the Act, the process
8
of industrialization must take place in accordance
therewith. If the law requires a particular thing should be
done in a particular manner it must be do.ne in that way
and none other. The State cannot ignore the policy intent
and the procedure contemplated by the statute. In the
C instant case, the State Government could have acquired
the land, and then either by auction or by considering the
merit of the propos(ll allotted it to respondent No.5.
Assuming that the application of respondent No 5 was
for a bona-fide purpose, the same had to be examined by
D 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
E respondent No. 5, and nothing would have prevented him
from following the course which is permissible under the
law. It is not merely the end but the means which are of
equal importance, particularly, if they are enshrined in the
legislative scheme. The minimum that was required was
F an enquiry at the level of the Collector who is the
statutory authority. [para 64] [133-A-E]
2.2 Dictating the Collector to act in a particular
manner on the assumption by the Minister that it is in the
G 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. This is clearly a case of dereliction of duties
H
DIPAK BABARIA & ANR. v. STATE OF GUJARAT & 79
ORS.
by the Collector and dictation by the Minister, showing A
nothing but arrogance of power. [para 64] [133-E-F]
2.3 The High Court has erred in overlooking the legal
position. It was expected to look into all the relevant
aspects. The impugned judgment does not reflect on the 8
issues raised in the petition. It could not be said that the
petition was delayed and merely because i!lvestment had
been made by respondent No.5, the court would decline
to look into the important issues raised in the PIL. [para
65] [133-G-H]
c
2.4 This Court holds 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 are
arbitrary, and bad in law for being in violation of the
scheme and the provisions of ss. 89 and 89A of the D
Tenancy Act. The direct sale of land by respondent no. 4
to respondent no. 5 is also bad in law, and inoperative.
[para 68] [135-C-D]
3.1 (i) In the letter dated 6.12.2008 of respondent no. E
4 itself, they clearly stated that they were no more
interested in putting up any industrial project in the said
land. Therefore, there is no need of any direction to hold
an enquiry u/s 89-A(5).
(ii) Consequently, there will be an order that the land F
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. Since respondent no. 4
has received from respondent no. 5 Rs. 1.20 crores as G
against the amount of Rs.70 lakhs, which it had paid to
the agriculturists when it bought those lands in 2003. That
being so, this amount of Rs. 1.20 crores would be set-off
towards the compensation which would be payable by
the State Government to the purchaser respondent no. H
80 SUPREME COURT REPORTS [2014] 2 S.C.R.
A 4, since the land was originally purchased by respondent
no. 4 and is now to vest in the State Government.
(iii) The third step in this regard is that the land is to
be disposed of by the State Government, having regard
B 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
C Government rate. In the facts and circumstances of the
case, having noted that respondent No.5 claims to have
made some good investment, and that it 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
D Government, the land will be· permitted to be allotted to
respondent no. 5 provided it pays Rs. 3.15 crores to the
State Government. This particular order is being made
further noting that respondent no. 5 has acted on the .
basis of the commitment made to it by the State
E Government in the Vibrant Gujarat Summit, and in
furtherance of the industrial development policy of the
State. It is also relevant to note that 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
F to set up its industry for the last four years. In the
circumstances, although the action of the State
Government is held to be clearly arbitrary and untenable,
the order of this Court will be appropriate to do complete
justice in the matter. [para 69] (135-E-H; 136-A-H; 137-A]
G
3.2 (a) The order dated 18.12.2009 passed by the
Government of Gujarat and by the Collector of Kutch on
15.1.2010, are held to be arbitrary and bad in law.
(b) The impugned judgment and order passed by the
H High Court is set-aside.
DIPAK BABARIA & ANR. v. STATE OF GUJARAT & 81
ORS.
(c) In the facts and circumstances of the case, the A
sale of the land by respondent no. 4 to respondent no. 5
is held to be bad in law. The land involved in the case is
held to have vested in the State Government free from all
encumbrances, and the amount of Rs. 1.20 crores paid
by respondent no. 5 to respondent no. 4 is treated as full B
payment towards the compensation payable by the State
to respondent no. 4
(d) If respondent no. 5 is interested in its proposed
project, it shall pay an amount of Rs. 3.15 crores to the C
State Government within three months. On such a
payment being made, an order of allotment of the land to
respondent no. 5 will be issued by the State Government.
The further activities of respondent no. 5 on the
concerned parcel of land will start only after this payment
is made, and in the event the amount is not so paid, the D
Government will proceed to take further steps to dispose
of the land having regard to the use of the land. [para 70)
[137-B-F]
Indian Council for Enviro-Legal Action Vs. Union of India E ..
& Ors. 1996 (1) Suppl. SCR 507 = 1996 (5) SCC 281, Centre
for Public Interest Litigation and Ors. Vs. Union of India and
Ors. 2012 (3) SCR 147 = 2012 (3) SCC 1; Noida
Entrepreneurs Association Vs. Noida and Ors. 2011 (8) SCR
=
25 2011 (6) SCC 508; Chandra Bansi Singh Vs. State of F
=
Bihar 1985 (1) SCR 579 19~4 (4) SCC 316; Manohar Joshi
=
Vs. State of Maharashtra and Ors. 2011 (12) SCR 781 2012
(3) SCC 619; Bhaurao Dagdu Para/kar Vs. State of
=
Maharashtra 2005 (2) Suppl. SCR 774 2005 (7) SCC 605;
Shrisht Dhawan Vs. Shaw Bros 1991 (3) Suppl. SCR 446 =G
1992 (1) SCC 534; Khawaja Vs. Secy. of State for Home
Deptt. 1983 (1) All ER 765; Deewan Singh & Ors. Vs.
=
Rajendra Pd. Ardevi & Ors. 2007 (1) SCR 30 2007(10) SCC
528; DLi= Qutab Enclave Complex Educational Charitable
=
Trust Vs. State of Haryana and Ors. 2003 (2) SCR 1 2003 H
82 SUPREME COURT REPORTS [2014] 2 S.C.R.
A (5) SCC 622; Ujjagar Singh Vs. Collector 1996 (4) Suppl.
SCR 239 = 1996 (5) SCC 14; Jasbir Singh Chhabra Vs. State
of Punjab 2010 (4) SCC 192; Natural Resources Allocation,
In Re: Special Reference (1) of 2012 2012 (9) SCR 311 =
2012(10) SCC 1; Kasturi Lal Lakshmi Reddy Vs. State of J&K
B 1980 (3)SCR 1338 =1980 (4) SCC 1; Prakash Amichand
Shah Vs. State of Gujarat 1985 (3) Suppl. SCR 1025 =1986
(1) sec 581 - cited.
Case Law Reference:
c 1996 (1) Suppl. SCR 507 cited para 32
. 2012 (3) SCR 147 cited para 33
2011 (8) SCR 25 cited para 33
1985 (1) SCR 579 cited para 34
D
2011 (12) SCR 781 cited para 34
2005 (2) Suppl. SCR 774 cited para 34
1991 (3) Suppl. SCR 446 cited para 34
E
1983 (1) All ER 765 cited para 34
2007 (1) SCR 30 cited para 35
2003 (2) SCR 1 cited para 41
F 1996 (4) Suppl. SCR 239 cited para 41
201 o (4) sec 192 cited para 42
2012 (9) SCR 311 cited para 42
G 1980 (3) SCR 1338 cited para 42
1985 (3) Suppl. SCR 1025 cited para 44
[1988] AC 858 referred to Para 52
(1875) 1 Ch D 426431 referred to para 53
H
DIPAK BABARIA & ANR. v. STATE OF GUJARAT & 83
ORS.
AIR 1936 PC 253 referred to para 53 A
1954 SCR 1038 referred to para 53
AIR 1964 SC 358 referred to para 53
1999 (2) Suppl. SCR 754 referred to para 53
B
2001 (2). SCR 399 referred to para 53
2008 (4) SCR 822 referred to para 53
1952 SCR 135 referred to Para 57
c
1978 (2) SCR 272 referred to Para 57
1966 SCR 982 relied on para 61
1995 (2) Suppl. SCR 637 relied on para 61
2001 (3) SCR 1146 referred to Para 62 D
CIVIL APPELLATE JURISDICTION : Civil Appeal No. 836
of 2014.
From the Judgment and Order dated 30.08.2012 of the
High Court of Gujarat at Ahmadabad in Writ Petition (PIL) No. E
44 of 2012.
Huzefa Ahmadi, Anirudh Sharma, Yashvardhan Roy,
Rohan Sharma for the Appellants.
Krishnan Venugopal, V. Giri, T.R. Andhyarujina, Udai V.S.
F
Rathore (for Vishal Gupta), Mayuri Raghuvanshi, Prakash Jani,
Preetesh Kapur, Hemantika Wahi, Jesal Wahi, Jatin Zaveri for
the Respondents.
The Judgment of the Court was delivered by G
H.L. GOKHALE J. 1. Leave Granted.
2. This appeal by Special Leave seeks to challenge the
judgment and order dated 30.8.2012 rendered by a Division
H
84 SUPREME COURT REPORTS [2014] 2 S.C.R.
A Bench of the Gujarat High Court dismissing Writ Petition (PIL)
No.44 of 2012 filed by the appellants herein. The Writ Petition
had various prayers, but essentially it sought to challenge the
permission granted by the Collector, Bhuj, to sell certain parcels
of agricultural land situated in district Kutch, which were said
B to have been purchased earlier by the respondent No.4 herein,
one lndigold 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
c 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
0
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
E shall vest in the State Government on payment of an
appropriate compensation to the purchaser which the Collector
may determine. It was contended that there was no provision
for any further transfer of agricultural land from one industrial
purchaser to any third party, once again, for industrial purpose
F 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
G 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
H petition on two grounds, firstly that there was delay in initiating
DIPAK BABARIA & ANR. v. STATE OF GUJARAT & 85
ORS. [H.L. GOKHALE, J.]
the said Public Interest Litigation (PIL), and that the writ A
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
B
with respect to the underlying policy and purpose behind the
relevant provisions of the Tenancy Act, 1958. In that connection,
it also raises the issue with respect to the duties of the revenue
officers on the spot, such as the Collector, the importance of
the role of senior administrative officers of the State
Government, and whether a Minister of the Government can C
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. D
The facts leading to this appeal are as follows:-
5. It is pointed out by the appellants that the respondent
No.4 lndigold Refinery Ltd. (lndigold for short) which is a
company having its office in Mumbai, purchased eight parcels E
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 F
respondent No.4 lndigold by one Hanumantrao Vishnu Kharat,
its Chairman-cum-Managing Director, The lands are situated
in villages Kukma and Moti Reldi in the district of Kutch. The
sale deeds indicated that the purchaser had purchased these
lands for industrial purpose, and that the purchaser will obtain G
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 H
86 SUPREME COURT REPORTS [2014] 2 S.C.R.
A 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
8 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
C respondent No. 5 treating it as a special case, and not to be
treated as a precedent. Thereafter, the respondent No.4
conveyed the concerned lands to respondent No.5 by sale
deed dated 19.1.2010. Respondent No.5 also obtained
permission from the Industries Commissioner on 8.3.2010 for
D 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
E 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 Mis Earth
Refinery Pvt. Ltd. which is the holding company of respondent
F 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 company
G 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
H
DIPAK BABARIA & ANR. v. STATE OF GUJARAT & 87
ORS. [H.L. GOKHALE, J.]
be sold to Alumina Refinery Limited (Alumina for short). One A
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 B
.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 c
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. Shah, a former Judge of Supreme Court of India
to enquire into a number of other controversial projects, this D
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 E
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 F
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 G
above referred news reports, as also the information obtained
through enquiry under the Right to Information Act, 2005 by one
Shri Shashikant Mohanlal Thakker of Madhapur Village of
Taluka Bhuj. This information contained the documents
H
88 SUPREME COURT REPORTS [2014] 2 S.C.R.
A 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-
B 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
c 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:-
D
10. In as much as we are concerned with the provisions
contained in Section 89 and Section 89A of the Tenancy Act,
1958, it is necessary to reproduce the two sections in their
entirety. These two sections appear in Chapter VIII of the
E Tenancy Act, 1958. The sections read as follows:-
"CHAPTER VIII
RESTRICTIONS ON TRANSFERS OF AGRICULTURAL
LANDS
F
AND ACQUISITION OF HOLDINGS AND LANDS
89 Transfers to non-agriculturists barred.-
Transfers to (1) Save as provided in this Act,
G 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
H revenue or for sums recoverable as arrears of land
DIPAK BABARIA & ANR. v. STATE OF GUJARAT & 89
ORS. [H.L. GOKHALE, J.]
revenue), gift exchange or lease of any land or A
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, B
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: c
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: D
[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.] E'
(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. F
(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 G
under sub-section (I).
89A. Sale of land for bonafide industrial
purpose permitted in certain cases:-
H
90 SUPREME COURT REPORTS [2014] 2 S.C.R.
A (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 (Born. V of 1879) in
favour of any person for use of such land by such person
B for a bonafides industrial purpose:
Provided that-
(a) the land is not situated within the urban
agglomeration as defined in clause (n) of section
c 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
D is proposed to 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.
E (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:
F 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
G 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 (Born.
H
DIPAK BABARIA & ANR. v. STATE OF GUJARAT & 91
ORS. [H.L. GOKHALE, J.]
V of 1879). A
(2) Nothing in the Section 90 shall apply to any sale
made in pursuance of subsection (1).
(3) a.
(a) Where the land is sold to person in pursuance
of sub-section (1) (hereinafter referred to as "the B
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 c
thereof to the Mamlatdar.
(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 D
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 E
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-
F
(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 G
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
H
92 SUPREME COURT REPORTS [2014] 2 S.C.R.
A 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
B
State Government or such officer, as it may, by an
order in writing, authorise in this behalf.
(ii) The State Government or the authorised officer
shall, after giving the appellant an opportunity of
c 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
D 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
E 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
F 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
G 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
H
DIPAK BABARIA & ANR. v. STATE OF GUJARAT & 93
ORS. [H.L. GOKHALE, J.]
encumbrances on payment to the purchaser of such A
compensation as the Collector may determine,
having regard to the price paid by the purchaser and
such land shall be disposed of by the State
Government, having regard to the use of land."
B
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 lndigold to sell the land
was contrary to the provisions and restrictions imposed under
the law, and contrary to the original permission granted to them C
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 D
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
Minister. It was also submitted that, there were possibilities that
the directors I promoters and the management of lndigold and F
Alumina a_re 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 G
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
H
94 SUPREME COURT REPORTS [2014] 2 S.C.R.
A 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
B public in whom the sovereignty vests. 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
C 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
D mandatory provisions of law. The affidavit further narrated the
various events in the matter leading to the sale deed dated
19.1.2010 by lndigold 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,
E 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.
F 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
G 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
H Ltd. (shortly known as NALCO), a Government of India
DIPAK BABARIA & ANR. v. STATE OF GUJARAT & 95
ORS. [H.L. GOKHALE, J.]
Enterprise. A share holding agreement dated 30.11.2011 had A
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. B
14. It was further submitted in para 15 (g) of the reply that,
the opinions of all the subordinate officers are "inconsequential
and not binding on the Revenue Minister". The decision of the
Minister cannot be faulted on the basis of certain notings of a C
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 D
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
b~- E
(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 lndigold under Section 89A(5) which is
otherwise a long-drawn process involving Chief Town Planner F
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.
(ii) In the sale to Alumina, the State Government's own G
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 H
96 SUPREME COURT REPORTS [2014] 2 S.C.R.
A crores as per the Jantri (i.e. official list of land price) at the
relevant time, and it had come dowr. 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
B paragraph 4 of the reply as follows:-
"1 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
c industrialization in the Kutch District; (iii) MoU arrived at
during the Vibrant ~ummit, 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.
D M/s Alumina Refinery Pvt. Ltd."
It is relevant to note that no reply was filed on behalf of
lndigold.
E 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
F 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
G 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
H Court was moved as a PIL, the petitioner No.1 was in fact a
DIPAK BABARIA & ANR. v. STATE OF GUJARAT & 97
ORS. [H.L. GOKHALE, J.]
leader of the opposition party in the State. In order to mislea~ A
the Court it was stated in the petition that the land was worth
Rs.250 crores. It was further submitted that to 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 B
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 thatthe decision of the
State Government was in tune with Mineral Development Policy,
2008 of the Government of India and Gujarat Mineral Policy, c
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
0
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 Mis Earth Refining Company Ltd. It was submitted that the E
Respondent No. 5 is a bona-fide purchaser of the land, and in
any case it should 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
s~. F
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 G
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
H
98 SUPREME COURT REPORTS [2014) 2 S.C.R.
A 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.
B
Points for consideration before this Court:
20. It, therefore, becomes necessary for this Court to
examine whether the decision taken by the Government to
permit the transfer of the agricultural land from respondent No.
C 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,
D 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?
E Material on record and the material disclosed from the
files of the Government and the Collector:-
21. The respondents h!lve contended that the sale
transaction between respondent Nos.4 and 5 took place
because of the financial constraints faced by respondent No.4
F lndigold 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
G 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
H to financial constraints on our part we are unable
DIPAK BABARIA & ANR. v. STATE OF GUJARAT & 99
ORS. [H.L. GOKHALE, J.]
to execute our proposed refinery project on the A
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 B
question. "
• Mis Alumina Refinery (P) Ltd. having their
registered office in Mumbai has shown keen
interest to set their Alumina Refinery Project on C
our above mentioned ownership land.
• A copy of consent letter dated 12. 06. 2009 has
already been sent to your office by Mis Alumina
Refinery (P) Ltd., whereby they have applied to
avail the permission to purchase our above D
ownership land uls 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 E
refinery project on the above mentioned
agricultural land.
• We would like to confirm that we had a c[ear
intention to set up industry on the above
mentioned land, it is only because of non F
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 G
ownership land to Mis Alumina Refinery (P) Ltd.
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 H~
100 SUPREME COURT REPORTS [2014] 2 S.C.R.
A authority ..... "
(emphasis supplied)
22. The earlier letter dated 6.12.2008 mentioned in this
letter of 16.6.2009, however, nowhere· mentions that respondent
B 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:-
c "IND/GOLD REFINERIES LIMITED
6th December 2008
To,
Collector of Kutch,
D Bhuj, State of Gujarat
Sub:- Permission for the sale of agricultural land
admeasuring 39 acres 25 gunthas at Moti Refadi
Kukama, Taluka Bhuj, District Kutch, State of Gujarat.
E Dear Sir,
Reference·to above, we have to respectfully inform your
good self that we had purchased land as per detaiis here
below for setting up of Industrial project:-
F
Sr.no. Name of Village Survey No. Measurement
Acres and gunthas
1. Kukama 9411 4114
2. Kukama 9412 2116
G
3. Moti Refadi 10111 9130
II
4. 106 6110
II
5. 10011 2120
II
H 6. 107 4115
DIPAK BABARIA & ANR. v. STATE OF GUJARAT & 101
ORS. [H.L. GOKHALE, J.]
,, A
7. 10514 5121
,,
8. 1101213 4116
Total 39 acres 25 gunthas
The above piece of land was purchased with the 8
permission granted by Deputy Collector, Bhuj, Kutch,
wide letter no. LNDNC/1169103 dated 2nd May 2003. We
further respectfuny 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 C
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 D
assistances in this regard and oblige.
Thanking you
Yours faithfully
Sdl- E
lndigold Refineries Ltd.
Hanumantrao V. Kharat"
(emphasis suppHed}
23. As stated earlier, the File notings of the Revenue
Department, were obtained through an RTI inquiry, and were F
placed on record alongwith the Writ Petition. The learned
counsel for the State of Gujarat was good enough to produce
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 G
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 H
102 SUPREME COURT REPORTS [2014) 2 S.C.R.
A 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
B 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
c note indicating the possible course of action may please
be sent to this office."
24. In view of this note from the Secretary to the Chief
Minister, the Revenue Department sought the factual report from
D 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,
E 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
F 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.
G 'Taking into consideration the reasons shown in thf!
submission of Alumina Refinery Company addressed to
the Hon 'ble C. M., dated 18. 6. 2009, it is submitted to grant
permission for purchasing land".
H 25. The departmental note thereafter states in sub-
DIPAK BABARIA & ANR. v. STATE OF GUJARAT & 103
ORS. [H.L. GOKHALE, J.]
paragraph A, B, C of paragraph 4, that under the relevant law A
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 B
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 c
payment of compensation, and pass an order that the land shall
vestin 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 D
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 report. Instead of the same, proposal is
submitted by him. Vide order dated 1.!i.2003 Deputy
Collector has granted permission to Ind/gold Refinery E
Company under Section-89 of the T.A. with r.egard 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 F
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?
G
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.
H
104 SUPREME COURT REPORTS [2014] 2 S.C.R.
A 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
B Deputy Secretary, Land Revenue made a note on 25.8.2009,
and at the end thereof, he stated as follows:-
II
Under these circumstances, looking to legal
c 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.
D 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
E 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
F 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".
G 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".
H The Chief Secretary wrote thereon on 1.9.2009 -
DIPAK BABARIA & ANR. v. STATE OF GUJARAT & 105
ORS. [H.L. GOKHALE, J.]
"We should take back the land. Allotment may be A
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 aspecial case, B
permission be granted for sale".
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 c
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 o
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 E
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:-
"lt would be proper to give lane to the new party
provided industry department recommends as per the laid F
down rules. As indicated in page 9/0 note (marginal). Let
us take back land under 63AA and then re-allot to the new
party".
15.10 G
The Minister still made a note thereon on 4.11.2009:-
"As a special case as suggested earlier,
permission for sale be given".
H
106 SUPREME COURT REPORTS [2014] 2 S.C.R.
A 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
B 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
c 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
D
Sr. No.: GNT/280912126/Z State of Gujarat
Revenue Department
1113 Sardar Bhavan
Sachivalay
Gandhinagar
E
Date: 1811212009
To,
The Collector
Kutch-Bhuj
F
Subject: Shri Nitin Patel c/o Mis lndigold Refinery/
Alumina Representation qua the land of
Kukma and Moti Re/di
Reference: Your letter dated 3119109 bearing no. PKA-
G 3- Land- Vs. 208312009
Sir,
In connection with your above referred and subject
H letter, the land of Kukma and Moti Re/di admeasuring
DIPAK BABARIA & ANR. v. STATE OF GUJARAT & 107
ORS. [H.l. GOKHALE, J.]
Acre 39 Guntha 25 was purchased by lndigold Refinery A
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 Mis Alumina Refinery Pvt. Ltd. being 8
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 confaining pages 1 to 89 are returned herewith. C
Encl:
As above
Yours sincerely
Section· Officer D
Revenue Department
State of Gujarat
Copy to:
Select File/Z Branch E
Select File/Z Branch/N. S.A"
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 F
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:- G
No. Jaman Vashi/218109
Office of Deputy Collector
Bhuj, Date-1510112010
H
108 SUPREME COURT REPORTS [2014] 2 S.C.R.
A To
Shri Hanumantrav V. Kharat
lndi Gold Refineries Limited
201~212, EMCS House
289 SBSL, Fort
B Mumbai-400 001
Subject:- Regarding getting the approval for sale of the
agricultural land of village Kukma and Moti Re/di, Ta/uka
Bhuj purchased for industrial purpose, under Section-89-
A of the Tenancy Act.
c
Read:- Letter No. Ganat/280912126/Z dated 1811212009
of the Revenue Department of the Government,
Gandhinagar.
Sir,
D
With reference to the above subject it is to be informed
that vide this office certificate No. LandNasi/1169103
dated 0110512003 you have been granted permission
under Section-89-A of the Tenancy Act for purchasing
E agricultural land for industrial purpose as under:-
Sr.No. Name of Village Survey No. Acre/Guntha
1 Kukma 9411 4.14
F 2 Ku km a 9412 2.16
3 Moti Re/di 10111 9.30
4 Moti Re/di 106 6.10
5 Moti Re/di 10011 2.20
G
6 Moti Re/di 107 4.15
7 Moti Re/di 10514 5.21
8 Moti Re/di 1101213 4.19
H Total 39.25
DIPAK BABARIA & ANR. v. STATE OF GUJARAT & 109
ORS. [H.L. GOKHALE; J.]
In the above lands as the company due to financial A
circumstances is not in a position to establish any
industry, with reference to your application dated 061121
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 B
the above referred Jetter of the R. D. of the Government
as a "special case and with a condition not to treat as the
precedent" the permission is granted, which may be
noted.
As the above land is admeasuring more than 25 C
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 D
issuing the certificate under Section-89 of the Tenancy
Act, which may be noted.
Sd!-
Deputy Collector, Bhuj E
Copy to
Alumina Refinery (Pvt.) Ltd.
1501-1502 Shiv Shankar Plaza-
Near HDFC Bank, Sector-8
Airoli, New Mumbai-400 708" F
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 lndigold by
Nitin Patel on the basis of the power of attorney from them, and
for Alumina by his brother Nilesh Patel. Subsequently the G
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.
H
110 SUPREME COURT REPORTS [2014) 2 S.C.R.
A The submissions on behalf of the appellants:-
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
B 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
c 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
o 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.
E A judgment of this Court in Indian 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
F 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
G 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.
H
DIPAK BABARIA & ANR. v. STATE OF GUJARAT & 111
ORS. [H.L. GOKHALE, J.]
33. It was then submitted that the Collector was expected A
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) sec 1 was relied
upon in support, wherein it has been held that natural resources
are national assets and the state acts as trustee on behalf of B
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 c
and Ors. reported in 2011 (6) sec 508 to submit that whatever
is provided by law to be done cannot be defeated by an indirect
and circuitous contrivance.
~- In the instant case, the transfer of the land has been
permitted because respondent No. 5 directly approached the D
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 E-
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 be a clear act of favouritism. Another judgment of
this Court in Manohar Joshi Vs. State of Maharashtra and Ors. F
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) sec 605 which has explained the concept of 'fraud' G
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 H
112 SUPREME COURT REPORTS [2014) 2 S.C.R.
A 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
B
object and beyond its scope.' Present day concept of
fraud on statute has veered round abuse of power or ma/a
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
c for extraneous or 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.
o 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
E 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
F 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 arbitr~ry. The power in
G the Collector implied a 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)
sec 528 in this behalf.
H
DIPAK BABARIA & ANR. v. STATE OF GUJARAT & 113
ORS. [H.L. GOKHALE, J.]
Submissions on behalf of the State Government:- A
36. The defence of the Government has principally been
that because lndigold 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. B
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 C
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 lndigold to sell the land can be
0
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 lndigold to purchase the concerned lands. This condition No.
(4) reads as follows:-
E
114. These lands cannot be sold, mortgaged, gifted
or transfe"ed in any manner etc. without obtaining prior
permission of the competent officer. 11
Last but not the least, Section 126 of the Tenancy Act was relied F
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:-
11126. Control- In all matters connected with this Act,
the State Government shall have the same authority and G
control over the [Mamlatdar] and the Collectors acting
under this Act as [it has and exercises] over them in the
general and revenue administration. 11
37. The learned senior counsel Mr. Andhyarujina appearing H
114 SUPREME COURT REPORTS [2014) 2 S.C.R.
A 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.Circumstances in which permission for sale, etc. of
B
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
c 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:-
D (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"
E
Submissions on behalf of the other respondents:-
F 38. Since it was the respondent No.4 lndigold, which had
initially purchased the land for industrial purpose, the stand of
lndigold was of significance. It is, however, very relevant to note
that lndigold 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.
G 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 Court. This is probably because it had already
received its price after selling the land. The respondent No. 4
H
DIPAK BABARIA & ANR. v. STATE OF GUJARAT & 115
ORS. [H.L. GOKHALE, J.]
appeared to be very much disinterested in as much as even A
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.
B
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 C
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 D
project was being set up in furtherance of the Industrial Policy
of the State of Gujarat and with the technical know-how from
NALCO. He drew our attention to the project report and the
photographs showing the work done so far.
E
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 F
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 G
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 H
116 SUPREME COURT REPORTS [2014] 2 S.C.R.
A accepted that this document cannot be construed as a contract,
and that it can at best be utilised as 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
B 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.
c 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
D 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
E the right of ownership, and relied 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 U!lless
the possession of the unutilized area is taken over by the State, .1
F 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) sec 14 in this behalf.
42. It was then submitted that notings cannot be made a
G 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.
H
DIPAK BABARIA & ANR. v. STATE OF GUJARAT & 117
ORS. [H.L. GOKHALE, J.]
India and Ors.· (supra) had been clarified by a Constitution A
_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 Katuri Lal Lakshmi Reddy Vs. State of J&K
reported in 1980 (4) sec 1 as follows:- B
" 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)
c
"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 D
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 E
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 lip F .
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 G
J), therein, where the learned Judge has observed that the court
cannot mandate one method to be followed in all 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 H
118 SUPREME COURT REPORTS [2014] 2 S.C.R.
A 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
8
that the State was also to pay Rs. 1.20 crores as compensation
to lndigold, 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 lndigold, could be asked to compensate the state for
C 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
D to be sold and compensation was to be given, it may not 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
E 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.
F 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
G 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,
H exchange or lease of any land, or no agreement in that behalf
DIPAK BABARIA & ANR. v. STATE OF GUJARAT & 119
ORS. [H.L. GOKHALE, J.]
shall be valid in favour of a non-agriculturist. The first proviso A
to Section 89 (1) makes an exception viz. 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 for that purpose, in such circumstances as may be
prescribed. The second proviso of course provides that no B
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 C
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
(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. E
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 658 of the Bombay
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 F
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 G
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 H
120 SUPREME COURT REPORTS [2014] 2 S.C.R.
A 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,
B (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
c certain additional restrictions,
(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
D whether the land is purchased for a bonafide industrial purpose
and issue a certificate to that effect. In case he is not satisfied
cif 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.
E
(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. ,
F 47. Where the purchaser fails to start the indllstrial 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
G in the Government which will, however, be done after
determining appropriate compensation payable to 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, th«;l only .
H authority contemplated under the section is the Collector, and
DIPAK BABARIA & ANR. v. STATE OF GUJARAT & 121
ORS. [H.L. GOKHALE, J.]
the decision is to be taken at his level. It is only in the event of A
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 B
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 (l)e1>roduction of goods and services also starts c
within five y'afS 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
appropriate order of resumption of the land on determining the 0
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:-
E
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 F
the entire piece of land since they were no more inte_rested 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 G
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
H
122 SUPREME COURT REPORTS [2014) 2 S.C.R.
A industrial 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
B certificate. Admittedly no such steps were taken by lndigold, nor
was any affidavit in reply filed by them, either before the High
Court or before this Court. Mr. Trivedi, learned counsel,
appeared for lndigold, and he was specifically asked as to what
were the attempts that had been made by respondent No.4 to
c 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 lndigold'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
0 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.
49. What is, however, material to note in this behalf is that
whereas the land is supposed to have been purchased in 2003
E 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 f'.:!o.5, in
December 2008 itself respondent No.4 had written 'to the
Collector that they were no more interested in putting up the
F 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
G 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.
H
DIPAK BABARIA & ANR. v. STATE OF GUJARAT & 123
ORS. [H.l. GOKHALE, J.]
50. It has been pointed out by the respondents that the A
representative of respondent No.5 participated in the Vibrant
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. B
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 c
belonging to lndigold. 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· 1and admeasuring 39 acres and 25 gunthas, situated in D
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 the E.
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 F
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 G
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 H
124 SUPREME COURT REPORTS [2014) 2 S.C.R.
A 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 matter
was again discussed thereafter, and then a suggestion was
8
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
C 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
D 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
E 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 Bingham's work titled 'Rule of Law' where in the Chapter
on exercise of power, he observes that:
F
'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' .
G
He quotes from R v. Tower Hamlets London Borough Council
[1988] AC 858, which states:
'Statutory power conferred for public purposes is
H conferred as it were upon trust, not absolutely, that is to
DIPAK BABARIA & ANR. v. STATE OF GUJARAT & 125
ORS. [H.L. GOKHALE, J.]
say, it can validly be used only in the right and proper A
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 8
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 C
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 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 D
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 E
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
F
266, Dhananjaya Reddy Vs. State of Kamataka 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 lndigold informed the Collector on
6.12.2008 that they were 'no more interested' to put up any G
industrial project, and were disposing of the entire piece of land
to their prospective client, the Collector was expected to hold
the necessary enquiry. This was the minimum that he was
expected to do. After holding the enquiry, if he was convinced
that the industrial activity had not been started, he was expected H
126 SUPREME COURT REPORTS [2014] 2 S.C.R.
A 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
B 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 ~1hich is the normal method for disposal of natural
resources which are national assets. Out of that amount, the
c 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
0
thereafter sell it for profiteering. The Jantri price is an. official
price. In actual auction the State could have realised a greater
amount. In permitting the sale inter-se parties, the State
exchequer has positively suffered.
E (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
F 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.
G
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
H accordingly. Under Section 89A(3), the Government is the
DIPAK BABARIA & ANR. v. STATE OF GUJARAT & 127
ORS. [H.L. GOKHALE, J.]
appellate authority where the Collector does not grant a A
certificate for purchase of bonafide industrial purpose. Thus
what has happened, thereby is that the powers of the statutory
authority have been exercised by the Government which is an
appellate authority.
B
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
lndigold, and it would have been a long-drawn process for C
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 D
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 E
the land was worth Rs.4.35 crores as per the Jantri in 2008,
and as per 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. F
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 G
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 H
128 SUPREME COURT REPORTS [2014] 2 S.C.R.
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
B 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 "
C This proposition has been quoted with approval in paragraph
8 by a Constitution Bench in Mohinder Singh Gill vs. Chief
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
D 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
E 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
F incapability of lnidgold. 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.
G
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
H 89(1) read with condition no. (4) of the permission dated
DIPAK BABARIA & ANR. v. STATE OF GUJARAT & 129
ORS. [H.L. GOKHALE, J.]
1.5.2003 granted to lndigold to purchase the concerned A
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
B
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 C
refer to a judgment of a Constitutional Bench in State of Punjay
vs. Harl 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 o
State Government. Therefore, though his application was
·initially accepted, the SDO informed him that the application
was rejected. He appealed to the State Government and the
appeal was rejected which has led to the petition in the High
Court. The Punjab High Court framed the question as to
whether the State of Punjab was justified in assuming the .E
_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 F
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 G
guidelines, but not for interference or giving directions in
individual cases.
59. The submission that condition No.4 of the permission
·to Pl.\rchase, obtained by respondent No.4 in 2003 permits the
H
130 SUPREME COURT REPORTS [2014] 2 S.~.R.
A Collector to pass such an order is equally untenable. There is
nothing in the statutory scheme to suggest that a second sale,
inter se parties, after the failure of a purchaser to set up an
industry is permissible. In such an event, the statute requires
an enquiry to be conducted by the collector. If he is satisfied
B 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
C 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
D 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
E is in possession of a land, either as an owner or as a tenant
protected by the statute, transfer of his land for industrial
purposes is subject to the conditions regulated by the Act. It is
for the protection and preservation of the agricultural land that
the bar against conversion is created under Section 89.
F 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
G 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
H statute itself. The special provisions made in the Tenancy Act
DIPAK BABARIA & ANR. v. STATE OF GUJARAT & 131
ORS. [H.L. GOKHALE, J.]
will therefore prevail over those in the Transfer of Property Act A
to that extent.
61. Besides, the present case is clearly a case of dictation
by the State Government to the Collector. As observed by
Wade and Forsyth in Tenth Edition of Administrative Law:-
B
"if the minister's inteNention 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". c
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, D
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 E
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 this to be a clear case of'dictation',
and has referred to Wade and Forsyth on 'Surrender
Abdications and Dictation'. F
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 G
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 H
132 SUPREME COURT REPORTS [2014] 2 S.C.R.
A 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
B 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
C record. In the present case, the Secretaries had given advice
in accordance with the statute and yet the Minister has 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
0
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
E 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, ·
F 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
G sustained. As seen earlier, there is neither a power nor a
justification to make any special case, in favour of the
Respondent No 5. Such exceptions may open floodgates for
similar applications and orders, even though the Gujarat
Government is contending that this order is purportedly not to
H ,be treated as a precedent.
DIPAK BABARIA & ANR. v. STATE OF GUJARAT & 133
ORS. [H.L. GOKHALE, J.]
64. In our view, considering the scheme of the act, the A
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 B
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 C
commissioner, to begin with, and thereafter it should have gone
to the collector. After the property vests in the Government,
even if there were other bidders to the property, the collector
could have considered the merits and the bona~fides of the
application of Respondent No. 5, and nothing would have
prevented him from following the course which is permissible D
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 E
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, F
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 G
aspects. The impugned judgment does not reflect on the issues
raised in the petition. It could not be said that the petition was
delayed and merely because investment had been made by the
respondent No.5, the court would decline to look into the
important issues raised in the PIL. H
134 SUPREME COURT REPORTS [2014) 2 S.C.R.
A 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
8 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
C 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
D 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 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
E 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
F 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
G 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.
H
DIPAK BABARIA & ANR. v. STATE OF GUJARAT & 135
ORS. [H.L. GOKHALE, J.]
67. Development should not be measured merely in terms A
of growth of gross domestic product, but it should be in 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. s
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 c
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 0
direct sale of land by lndigold 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 E
purchaser viz. lndigold had failed to commence the industrial
activity and the production of goods and services within the
period specified. In the instant case, there is no need of any
such direction to hold an enquiry, in view of the letter of lndigold
itself, dated 6.12.2008, wherein, it clearly stated that they were F
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 G
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 lndigold 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 H
136 SUPREME COURT REPORTS [2014] 2 S.C.R.
A in 2003. Neither lndigold 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 lndigold 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
B set-off towards the compensation which would be payable by
the State Government to the purchaser lndigold, since the land
was originally purchased by lndigold, and is now to vest in the
State Government.
(iii) The third step in this regard is that the land is to be
C 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
D 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
E Rs.4.35 crores and Rs.1.20 crores i.e. Rs.3.15 cores to the
State, the land will be permitted to be disposed of by the State
Government to Alumina provided Alumina pays this amount of
Rs. 3.15 crores to the State Government. This particular order
is being made having further noted that, Alumina has acted on
the basis of the commitment made to it by the Government of
F 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
G 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.
H State Government, and hold it to be clearly arbitrary and
DIPAK BABARIA & ANR. v. STATE OF GUJARAT & 137
ORS. [H.L. GOKHALE, J.]
untenable, we are of the view that the aforesaid order will be A
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
(b) The impugned judgment and order passed by the High
Court is set-aside;
(c) The PIL No.44 of 2012 filed by·ihe appellants is allowed
by holding that the order dated 18.12.2009 passed by the
Government of Gujarat and by the Collector of Kutch on C
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 lndigold to Alumina is held to be bad in
law. The land involved in the present case is held to have vested 0
in the State of Gujarat free from all encumbrances, and the
amount of Rs. 1.20 crores paid oy Alumina to lndigold is treated
as full payment towards the ~mpensation ·payable by the State
to lndigold.
(e) If Alumina is interested in their proposed project, it shall E
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 F
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.
(f) In the facts of the present case, there shall be no order
as to costs. G
R.P. Appeal partly allowed.
I
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