Case Note & Summary
The dispute pertains to a Nazul plot in Lucknow originally leased to Gursharan Lal Srivastava in 1961. The leasehold interest was sold to M.M. Batra (the alleged lessee) in 1962. In 1994, the alleged lessee filed a civil suit to protect possession. In 1995, an auction notice was issued for Nazul lands including the plot. City Montessori School and the sons of the alleged lessee submitted bids; the school was the highest bidder. However, the school's bid was cancelled on the ground that the tender document was purchased after the outer limit. The State Government accepted the bid of the alleged lessee's sons. The school filed a writ petition challenging the cancellation. During the pendency of the writ petition, the alleged lessee applied for conversion of leasehold to freehold under Government Orders, and the authority converted the plot and executed a sale deed in his favour. The High Court held the conversion illegal and set aside the sale deed. Both parties appealed to the Supreme Court. The Supreme Court considered the principles of State largesse and held that the conversion during pendency of litigation without notice to the school was arbitrary and illegal. The court set aside the conversion order and sale deed, and directed the State to consider the school's bid afresh in accordance with law, subject to the school complying with tender conditions. The appeals were disposed of accordingly.
Headnote
A) Constitutional Law - State Largesse - Article 14 - Distribution of State Property - The State and its instrumentalities must distribute largesse like land allotment in a fair, transparent, and non-arbitrary manner, following a well-defined policy made known to the public. Any allotment dehors an advertisement or invitation is arbitrary and discriminatory. (Paras 8-9) B) Property Law - Nazul Land - Conversion of Leasehold to Freehold - Government Orders - Conversion of leasehold Nazul property into freehold during the pendency of a writ petition challenging the cancellation of a bid, without notice to the competing claimant (the school), is illegal and violative of Article 14. The order of conversion and the consequent sale deed are nullities. (Paras 5, 10-11) C) Contract Law - Tender - Auction - Cancellation of Bid - Tender Conditions - The cancellation of the school's highest bid on the ground of late purchase of tender document was not justified as the school purchased the document on the last date and the authorities subsequently called upon the school to deposit the bid amount. However, the court did not finally decide this issue. (Paras 3, 6) D) Civil Procedure - Collusive Order - Appeal - The order dated 6th December 2000 passed by the High Court in the appeal filed by the alleged lessee was based on statements of counsel and did not adjudicate merits; it was a collusive order that cannot be relied upon. (Paras 4, 6)
Issue of Consideration
Whether the conversion of leasehold rights into freehold in favour of the alleged lessee during the pendency of the writ petition was legal and whether the cancellation of the school's highest bid was justified.
Final Decision
The Supreme Court allowed the appeals filed by the school and dismissed the appeals filed by the alleged lessee. The Court set aside the order of conversion dated 26th November 2001 and the deed of freehold dated 29th January 2002. The Court directed the State Government to consider the school's bid afresh in accordance with law, subject to the school complying with the tender conditions within a specified period. The Court also directed that the alleged lessee shall not be dispossessed until the State takes a final decision on the school's bid.
Law Points
- State largesse must be distributed in a fair
- transparent
- and non-arbitrary manner
- Article 14 of the Constitution
- conversion of leasehold to freehold during pendency of litigation without notice to competing claimant is illegal
- auction of Nazul property must follow tender conditions strictly
- collusive orders cannot bind the court
