2020 (2) TMI 1739 - HC - Indian Laws

Enforceable contract between the government and the appellant or not - the letter of allotment was not properly stamped or registered to assume the character of an agreement for sale - whether this court in the exercise of its writ jurisdiction should entertain this matter or it should be relegated to a civil court or civil forum? - HELD THAT - The fundamental principle is that if the writ court is to relegate a litigant to an alternative remedy it has to do so at the earliest preferably at the motion stage before filing of affidavits. Once the writ application is entertained and admitted normally it is not desirable to send the writ petitioner to an alternative forum. Here the writ application was entertained. Directions for affidavits were made. Affidavits were filed. Thereafter the writ was decided - The various grounds urged in this appeal point towards arbitrariness unreasonableness and mala fide conduct on the part of the respondents. Now it is well settled that if a public law element is involved in a commercial transaction between the parties and the dispute can be resolved by affidavit evidence the court may exercise its discretionary jurisdiction under Article 226 of the Constitution to remedy the wrong if proved. The appellant has certainly framed a substantial cause of action on the above grounds. Therefore the writ was rightly entertained. Once a decision is taken by the government which has attained finality without any change of circumstances it cannot be changed. This is because the government is required under Article 14 of the Constitution to act predictably consistently fairly reasonably uniformly and without caprice. Apart from anything else the letter of allotment was a firm decision of the government which ordinarily in the absence of breach of contract on the part of the appellant the government could not revoke. However the government could do so by a valid exercise of administrative or legislative powers. There was a change of mind or an alteration in the attitude of the government. It was of the opinion that it should not divest itself of the legal ownership of the land. The entire swath of land in New Town should continue to belong to it. So the conveyance of land in favour of the appellant was to be abandoned. Instead they would get only a leasehold subject to stringent conditions like restriction on subletting partition etc. as the government did not like fragmented holdings in that area - In the contractual field it could be changed only by mutual agreement. The unilateral decision to change the terms of allotment by converting it into an allotment of leasehold interest with the above restrictions without a valid piece of legislation or a lawful administrative act or policy was arbitrary unreasonable wrongful and illegal. Conclusion - i) The unilateral decision to alter the contract terms from freehold to leasehold was arbitrary unreasonable and illegal. ii) A legitimate expectation had been created by the letter of allotment and the acceptance of consideration which could not be unilaterally altered without legislative or valid administrative action. The impugned Judgment and order dated 7th March 2019 is set aside - Appeal allowed.

Summary

ISSUES PRESENTED and CONSIDERED

The core legal issues considered in the judgment include:

1. Whether there was an enforceable contract between the appellant and HIDCO for the transfer of land on a freehold basis, given the subsequent policy change by the government.

2. Whether the unilateral decision by HIDCO to convert the freehold allotment into a leasehold was legally permissible.

3. Whether the appellant should be relegated to an alternative remedy of a civil suit or if the writ jurisdiction of the court was appropriate.

4. The validity of the government's policy decision to convert freehold land allotments into leasehold transactions and its retrospective application.

ISSUE-WISE DETAILED ANALYSIS

1. Enforceability of the Contract:

- Relevant legal framework and precedents: The court examined the nature of the contract formed by the letter of allotment, referencing constitutional provisions regarding property rights and executive powers. Key precedents included Bishambhar Dayal Chandra Mohan & Ors. Vs. State of Uttar Pradesh & Ors. and State of Madhya Pradesh & Anr Vs. Thakur Bharat Singh.

- Court's interpretation and reasoning: The court determined that although the letter of allotment was not registered or stamped, it created a legitimate expectation and some rights concerning property. The government's subsequent change of mind was deemed arbitrary and not supported by legislative or executive authority.

- Key evidence and findings: The appellant had paid the full consideration for the land, and HIDCO had accepted and appropriated this payment, creating a legitimate expectation of freehold transfer.

- Application of law to facts: The court applied principles of contract law and constitutional rights, concluding that the government's unilateral change to a leasehold was not legally justified.

- Treatment of competing arguments: The court rejected the argument that the contract was non-statutory and that the appellant should seek a civil remedy, emphasizing the public law element and the arbitrariness of the government's actions.

- Conclusions: The court concluded that the unilateral alteration of the contract terms by HIDCO was illegal and arbitrary.

2. Appropriateness of Writ Jurisdiction:

- Relevant legal framework and precedents: The court referred to principles of administrative law and the scope of writ jurisdiction under Article 226 of the Constitution.

- Court's interpretation and reasoning: The court held that since the writ application had been entertained and affidavits filed, it was not appropriate to redirect the appellant to a civil suit. The issues raised involved public law elements suitable for writ jurisdiction.

- Conclusions: The court affirmed the appropriateness of writ jurisdiction in this case.

3. Validity of Government's Policy Decision:

- Relevant legal framework and precedents: The court examined the policy decision under Article 162 and its compatibility with Article 300A regarding property rights.

- Court's interpretation and reasoning: The court found the policy decision to be prospective and not applicable to the appellant's case. The retrospective application was deemed invalid.

- Conclusions: The court held that the policy decision could not retrospectively alter the appellant's rights.

SIGNIFICANT HOLDINGS

- The court held that the unilateral decision to alter the contract terms from freehold to leasehold was arbitrary, unreasonable, and illegal.

- The court emphasized that a legitimate expectation had been created by the letter of allotment and the acceptance of consideration, which could not be unilaterally altered without legislative or valid administrative action.

- The court rejected the argument for relegating the appellant to a civil remedy, affirming the appropriateness of writ jurisdiction due to the public law elements involved.

- The court set aside the decisions and letters issued by HIDCO that sought to convert the allotment into a leasehold.

- The court refused the stay of operation of its order, affirming its decision to grant relief to the appellant.