Case Note & Summary
The dispute concerned industrial site No. 187-B, Industrial Area, Chandigarh allotted to M/s Johnson Paints & Varnish Co. through allottee Kulraj Singh Paul in 1965 at a concessional rate of Rs.10 per sq.yd. The Chandigarh Administration through the Estate Officer, Union Territory, challenged the High Court's direction to re-allot the site under Rule 11-D of the Chandigarh (Sale of Sites and Building) Rules, 1960. In 1965 the site was allotted to Kulraj Singh Paul for industrial use. Default in payment of instalments led to resumption on 26 April 1967. The property was handed over again with penal amounts, but since no construction was made, it was resumed again in 1981. The respondent filed a writ petition which was dismissed; the LPA was also dismissed and when the SLP was filed, the Supreme Court confirmed the dismissal. Thus the entitlement to allotment became final. Subsequently, the respondent filed an application under Rule 11-D for retransfer of the site. The Estate Officer rejected the application. The respondent then filed a writ petition in the High Court of Punjab and Haryana, which was allowed directing the appellant to allot the site to the respondent. Hence the present appeal by special leave. The core legal issue was whether the High Court was justified in directing re-allotment and whether the respondent was a genuine transferee or acting for third parties. The appellant contended through Arun Jaitley that Kulraj Singh Paul was only acting for the benefit of Tejpal Singh Brar, Narindra Brar and Gurinder Brar, and was not a transferee, as evidenced by the recitals in the general power of attorney, conditions of allotment, and a Will purported to have been executed by Kulraj Singh Paul in favour of those individuals. The respondent argued through M.L. Verma that the condition precedent for rejection was creation of third party rights, no such rights were established, the original rejection lacked reasons, and the High Court had validly directed re-allotment. The Court examined the material and observed that Kulraj Singh Paul was not acting for himself but appeared to act for and on behalf of Tej Pal Brar, Narinder Brar and Gurinder Brar. It noted that he was staying with Gursewak Singh Brar but in his rejoinder affidavit gave his factory number instead of residential number as residence. A power of attorney in favour of three persons to deal with a single industrial site was considered redundant unless a right had been created in him; if he were the owner, he could legitimately entrust management to agents, but that situation was not available on record. A Will purported to be created in favour of the same three persons. Reading the Will and the General Power of Attorney together, the Court concluded that he was purporting to act not for himself but on behalf of those three persons who did not appear to have confidence in each other and treated the property as joint family entitlement. The Court stated that once the original allotment stood cancelled and resumption became final, the allottee had no right in the allotted site. Rule 11-D deals only with discretionary power given to the Estate Officer. The only right the erstwhile outgoing transferee had was to make an application and satisfy the criteria laid down. The Court doubted the bona fides of introducing Rule 11-D to provide a back door entry from lost rights but did not need to decide its wisdom. It being a discretionary benefit, the outgoing transferee must in fact and in reality be the real, genuine and bona fide transferee and for him alone the benefit may be given. On the facts, he was not a transferee but acting for and on behalf of the aforesaid three persons. The High Court was therefore wholly wrong in directing the appellant to exercise power under Rule 11-D and re-allot the site. The appeal was allowed with costs quantified at Rs. 10,000/-.
Headnote
A) Property Law - Allotment of Industrial Site - Resumption and Re-allotment - Chandigarh (Sale of Sites and Building) Rules, 1960, Rule 11-D - The site originally allotted in 1965 was resumed twice for default in payment and non-construction, and the resumption became final after dismissal of writ petition, LPA, and SLP. The Court held that once original allotment stood cancelled and resumption became final, the allottee had no right in the allotted site and Rule 11-D only provides a discretionary benefit to the outgoing transferee, not a vested right. Held that Rule 11-D does not clothe the transferee with any right to allotment as of right. B) Administrative Law - Discretionary Power of Estate Officer - Conditions for Exercise of Discretion - Chandigarh (Sale of Sites and Building) Rules, 1960, Rule 11-D - The Court observed that Rule 11-D confers only discretionary power on Estate Officer to re-transfer site. The only right of erstwhile outgoing transferee is to make an application; he must satisfy criteria laid down in the rule. The High Court's mandatory direction to allot the site was found unjustified because the discretion could not be converted into a compellable duty on facts showing the applicant was not genuine transferee. C) Property Law - Genuine and Bona Fide Transferee - Acting for Third Parties - Chandigarh (Sale of Sites and Building) Rules, 1960, Rule 11-D - The Court found from the general power of attorney executed in favour of three individuals and the Will purporting to bequeath the property to the same three persons that the allottee Kulraj Singh Paul was acting not for himself but for and on behalf of Tej Pal Brar, Narinder Brar and Gurinder Brar. Since the rule requires the outgoing transferee to be real, genuine and bona fide transferee, the applicant failed to qualify. Held that High Court was wholly wrong in directing re-allotment.
Issue of Consideration
Whether the High Court was justified in directing re-allotment of the resumed industrial site to the respondent under Rule 11-D of the Chandigarh (Sale of Sites and Building) Rules, 1960, and whether the respondent was a genuine transferee or acting for third parties.
Final Decision
The appeal was allowed with costs quantified at Rs.10,000/-. The High Court's direction to the appellant to exercise power under Rule 11-D and re-allot the site was set aside.
Law Points
- Rule 11-D of Chandigarh (Sale of Sites and Building) Rules
- 1960 confers only discretionary power on Estate Officer
- no vested right to re-allotment
- outgoing transferee must be real
- genuine and bona fide transferee acting for himself
- once resumption becomes final
- allottee has no right in the site
- evidence of power of attorney and will indicating acting for third parties disqualifies applicant
