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TMI Blog1987 (11) TMI 372X X X X Extracts X X X X X X X X Extracts X X X X ..... tion dealt with the property. On a consideration of all the facts and circumstances of the case, we are satisfied that the action of the Corporation in offering the property to P.M.Jacob and selling the same at his request to M/s. Gumraj Plantations was perfectly justified and cannot be found fault with In the result the appeal fails and is dismissed. - C.A. 914 OF 1987 - - - Dated:- 17-11-1987 - K.J. SHETTY AND B.C.RAY, JJ. JUDGMENT A tea estate of 100 acres with some buildings, machinery and equipments was given as security to the Kerala Financial Corporation ("The Corporation") against the loan taken by the appellant. A part of the loan remained outstanding and the appellant could not clear it. The Corporation thereupon filed O.A. No. 8/64 before the District Court of Kottayam for recovery of the arrears and obtained decree for an amount of Rs.1,20,000. In execution of the decree, the said tea estate was brought for sale by court auction. On November 5, 1969, the auction sale was held. There was no bidder. So the Corporation itself had to purchase the property for about Rs.1,65,000. There was long standing dispute between the workmen of the estate and the previou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... it and decided to sell the property to P.M. Jacob. The property however, was sold to M/s. Gumraj Plantations at the request of P.M. Jacob. M/s. Gumraj Plantations is a partnership firm in which P.M. Jacob is one of the partners. The appellant who could not purchase the said property by any means filed suit O.S. No. 229/84 before the Munsif Court Thidupuzha to restrain the Corporation from selling the property. He could not get relief in the suit since by then the sale deed was executed in favour of M/s. Gumraj Plantations. Subsequently, he moved the High Court of Kerala complaining that the Corporation while selling the property for Rs. four and a half lakhs to M/s. Gumraj Plantations, had deviated from the normal practice of inviting tenders from the public. He contended that the Corporation being a public authority was bound to act reasonably and fairly and it ought not to have arbitrarily selected the purchaser. The High Court found no substance in those submissions. The High Court observed: "The submission made by the petitioner s counsel is that the decision to sell the property by private negotiations is arbitrary and is therefore liable to be interfered with by this cour ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ice while disposing of public properties. They should not generally enter into private arrangements for the purpose. These principles may be taken as well established by the following decisions of this Court: (i) K.N. Guruswamy v. The State of Mysore and others, [1955] 1 SCR 305 at 312; (ii) Mohinder Singh Gill Anr. v. The Chief Election Commissioner, New Delhi and others, [1978] 2 SCR 272; (iii) R.D. Shetty v. The International Airport Authority of India and Ors., [1979] 3 SCR 1014; (iv) Kasturi Lal Lakshmi Reddy v. State of Jammu and Kashmir and Anr., [1980] 3 SCR 1338; (v) Fertilizer Corporation Kamagar Union v. Union of India, AIR 1981 SC 344; (vi) Ram and Shyam Company v. State of Haryana and Ors. [1985] Supp. SCR 541 and (vii) Shri Sachidanand Pandey v. State of W.B. AIR 1987 SC 1109. In R.D. Shetty v. The International Airport Authority of India and Ors. [1979] 3 SCR 1014 at 1041 Bhagwati, J. speaking for the Court observed: "Now, obviously where a corporation is an instrumentality or agency of Government, it would, in the exercise of its power or discretion, be subject to the same constitutional or public law limitations as Government. The rule inhibiting arbitrary ac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ntal action is reasonable and in public interest and it is for the party challenging its validity to show that it is wanting in reasonableness or is not informed with public interest. This burden is a heavy one and it has to be discharged to the satisfaction of the Court by proper and adequate material. The Court cannot lightly assume that the action taken by the Government is unreasonable or without public interest because as we said above, there are a large number of policy considerations which must necessarily weigh with the Government in taking action and therefore, the Court would not strike down governmental action as invalid on this ground, unless it is clearly satisfied that the action is unreasonable or not in public interest. But where it is so satisfied it would be the plainest duty of the Court under the Constitution to invalidate the governmental action. This is one of the most important functions of the Court and also one of the most essential for preservation of the rule of law." In Fertilizer Corporation case (AIR 1981 SC 344 at 350 this Court speaking through Chandrachud, C.J., observed: "We want to make it clear that we do not doubt the bona fides of the aut ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r hotel. The public property owned by the State or by any instrumentality of the State should be generally sold by public auction or by inviting tenders. This Court has been insisting upon that rule, not only to get the highest price for the property but also to ensure fairness in the activities of the State and public authorities. They should undoubtedly act fairly. Their actions should be legitimate. Their dealings should be above board. Their transactions should be without aversion or affection. Nothing should be suggestive of discrimination. Nothing should be done by them which gives an impression of bias, favouritism or nepotism. Ordinarily these factors would be absent if the matter is brought to public auction or sale by tenders. That is why the Court repeatedly stated and reiterated that the State owned properties are required to be disposed of publicly. But that is not the only rule. As O.Chinnappa Reddy, J. Observed "that though that is the ordinary rule, it is not an invariable rule." There may be situations necessitating departure from the rule, but then such instances must be justified by compulsions and not by compromise. It must be justified by compelling reasons a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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