Supreme Court Strikes Down Preferential Land Allotment Policy for Elites: State of Andhra Pradesh vs. Dr. Rao, V.B.J. Chelikani (25 November 2024)

Date of the Judgment: 25 November 2024
Citation: 2024 INSC 894
Judges: Sanjiv Khanna, CJI., Dipankar Datta, J.
Can a government allot public land at discounted rates to its own functionaries? The Supreme Court of India recently addressed this question, examining the legality of a policy that favored politicians, judges, and bureaucrats in land allocation. This case critically analyzes whether such preferential treatment violates the constitutional principle of equality.

Case Background

In 2005, the Government of Andhra Pradesh issued three Government Memoranda (GoMs): GoM No. 242, GoM No. 243, and GoM No. 244. GoM No. 242 established a land management policy for urban and semi-urban areas, addressing the need for affordable housing due to rising land prices. GoM No. 243 outlined categories of individuals eligible for land allotment, and GoM No. 244 provided guidelines for the allotment process. These GoMs aimed to create a land bank for housing and institutional purposes, prioritizing Cooperative Societies with members from various groups, including Members of Parliament (MPs), Members of the Legislative Assembly (MLAs), All India Services (AIS) officers, judges, government employees, defense personnel, and journalists.

GoM No. 243 specified that land would be allotted to Cooperative Societies, not individuals, with a minimum of 12 members. It also categorized beneficiaries for pricing, with MPs, MLAs, judges, and AIS officers receiving land at basic value. GoM No. 244 detailed the operational aspects of the scheme, including the role of the Collector as the Nodal Authority.

Subsequently, GoM No. 522, issued on 04.05.2006, relaxed some conditions of GoM No. 243, allotting land to the aforementioned categories at basic value, irrespective of prior land ownership, which was challenged in the High Court. The High Court quashed GoM No. 522 on 08.10.2007, stating it was against public interest. Following this, the government issued GoMs 419-425 on 25.03.2008, and GoM 551 on 27.03.2008, allotting land to various cooperative societies, which were again challenged.

Timeline

Course of Proceedings

The High Court initially quashed GoM No. 522 in Writ Petition No. 13730 of 2006, finding it contrary to public interest for relaxing the conditions set in GoM No. 243. The court directed the government to formulate a new policy adhering to the guidelines of GoM Nos. 242, 243 and 244, and also suggested to restrict allotment to those who already owned a house. However, the government issued new GoMs (419 to 425 and 551) which were challenged in the High Court. The High Court partly allowed the writ petitions, quashing the GoMs that laid down the allotment policy and facilitate the allotments to the Cooperative Societies, directing the land to be restored to the Government, and fresh allotments to be made only after issuing new GoMs consistent with the judgment. The High Court also directed the State to collect details of eligible members, require affidavits declaring eligibility, and publish this information online.

The Cooperative Societies, their members, and the State of Telangana appealed against this decision. Mr. Keshav Rao Jadhav, the petitioner in Writ Petition No. 23682/2008, filed a cross-appeal, arguing that preferential allotment of land at basic rates to certain categories was illegal and unconstitutional, violating Article 14 of the Constitution of India.

Legal Framework

The case revolves around the interpretation and application of Article 14 of the Constitution of India, which guarantees equality before the law and equal protection of the laws. The Supreme Court also considered the Andhra Pradesh (Telangana Area) Alienation of State Lands & Land Revenue Rules, 1975, particularly Rules 3 and 10, which govern the alienation of state lands.

The court noted that while the 1975 Rules allow for alienation of land to local authorities for unremunerative public purposes without charge, when land is allocated for remunerative public purposes or to private entities, it should be at market value. Rule 10 permits deviation from established procedures, but requires a reasonable process, including auction, where necessary.

The Court also examined the interplay between Article 14 and the State’s power to distribute resources, emphasizing that while the State has discretion, it is not absolute and must be exercised fairly, without discrimination.

Arguments

Arguments on behalf of the Cooperative Societies, their members, and the State of Telangana:

• ✓ The policy of allotting land at concessional rates to government officials has been in practice since 1989.
• ✓ The GoMs were issued as a one-time benefit after 18 years for housing sites.
• ✓ Allotment to members of AIS and government services does not violate Article 14, as they form a separate class due to their vital role in governance and sacrifices made.
• ✓ Government employees face financial constraints and job transfers, which justify the allotment of housing sites to provide stability.
• ✓ The Cooperative Societies have made substantial payments for land and stamp duty.
• ✓ Journalists form a separate class and have been allotted housing sites at concessional rates by previous governments.
• ✓ Allotment at basic rate is valid, as price determination is an executive function.
• ✓ The basic market value is determined by the Collector as per the Telangana Revision of Market Value Guideline Rules, 1998.
• ✓ There are enough safeguards to prevent profiteering, such as allotment through societies, one-time allotment, and restrictions on transfer for ten years.
• ✓ Allotments also include family members of AIS officers who died in service.

Arguments on behalf of the Writ Petitioners:

• ✓ A policy should be backed by a social and welfare purpose and not for the benefit of a particular class.
• ✓ Land is a natural resource and should be used for the common good, not at a lower price than its worth.
• ✓ Valuable government property is being transferred to a privileged class without a legitimate public purpose.
• ✓ The size of plots allotted shows arbitrariness, with larger plots for judges, MPs, MLAs, and AIS officers.
• ✓ Most of the beneficiaries already own property and should not profit from state largesse.
• ✓ The land was acquired from poor agriculturists at meager amounts and is now being transferred to the privileged without public auction.
• ✓ Past illegal allotments do not justify current illegal allotments.
• ✓ The policy is an attempt by the executive to favor privileged groups.
• ✓ Allotment of individual housing plots to weaker sections was prohibited due to land scarcity, yet the current allotment policy favors the privileged.
• ✓ The 1975 Rules do not apply, and the relevant rules are the Assignment of House Sites in Villages & Towns in Telangana Area Rules, 1975.

Submissions Table

Issues Framed by the Supreme Court

The Supreme Court framed the following issues:

1. Whether the principle of res judicata and constructive res judicata apply to the present case?
2. Whether the land allotment policy, as envisaged under GoM Nos. 243 and 244 dated 28.02.2005 and subsequent GoMs, is constitutionally valid?
3. Whether the allotment of land to members of the judiciary, legislature, executive, and media at basic rates is violative of Article 14 of the Constitution of India?

Treatment of the Issue by the Court

Authorities

Cases Relied Upon by the Court:

• ✓ Erusian Equipment and Chemicals Ltd. v. State of West Bengal [1975] 1 SCC 70: Established that the government cannot act arbitrarily when dealing with the public.
• ✓ Ramana Dayaram Shetty v. International Airport Authority of India [1979] 3 SCC 489: Reiterated that government actions must conform to non-arbitrary standards.
• ✓ Common Cause, A Registered Society v. Union of India [1996] 6 SCC 530: Highlighted that government benefits must be distributed fairly.
• ✓ Shrilekha Vidyarthi v. State of Uttar Pradesh [1991] 1 SCC 212: Stated that Article 14 applies to government policies and contracts.
• ✓ Subramanian Swamy v. Director, Central Bureau of Investigation [2014] 8 SCC 682: Emphasized the nexus between classification and the object of the policy.
• ✓ Ram Krishna Dalmia v. Justice S.R. Tendolkar AIR 1958 SC 538: Discussed the extent of legislative freedom in making classifications.
• ✓ Nagpur Improvement Trust v. Vithal Rao and Others [1973] 1 SCC 500: Stressed that the object of a classification must be lawful and non-discriminatory.
• ✓ In Re: The Special Courts Bill, 1978 [1979] 1 SCC 380: Discussed the State’s power to classify individuals for specific ends.
• ✓ State of West Bengal v. Anwar Ali Sarkar [1952] 1 SCC 1: Questioned the propriety of the classification test.
• ✓ Kathi Raning Rawat v. State of Saurashtra [1952] 1 SCC 215: Further questioned the propriety of the classification test.
• ✓ State of Jammu and Kashmir v. Triloki Nath Khosa [1974] 1 SCC 19: Cautions against overdoing classification.
• ✓ LIC v. Consumer Education Centre [1995] 5 SCC 482: Struck down a discriminatory insurance policy.
• ✓ Indian Council for Legal Aid and Advice v. Bar Council of India [1995] 1 SCC 732: Invalidated age restrictions for advocates.
• ✓ Ajay Hasia v. Khalid Mujib Sehravardi [1981] 1 SCC 722: Discussed the requirements for reasonable classification.
• ✓ A.L. Kalra v. Project and Equipment Corporation of India Ltd. [1984] 3 SCC 316: Held that policy can be arbitrary per se.
• ✓ Maneka Gandhi v. Union of India [1978] 1 SCC 248: Established reasonableness as an essential element of equality.
• ✓ National Legal Services Authority v. Union of India and Others [2014] 5 SCC 438: Referred to the relationship between equality and dignity.
• ✓ Navtej Johar v. Union of India [2018] 10 SCC 1: Articulated the principle of substantive equality.
• ✓ Lt. Col. Nitisha v. Union of India [2021] 15 SCC 125: Referred to jurisprudence relating to indirect discrimination.
• ✓ Ram & Shyam Co. v. State of Haryana [1985] 3 SCC 267: The State is obligated to sell public property only at the market price, with the sole exception of achieving a constitutionally recognised public purpose.
• ✓ NOIDA Entrepreneurs Association v. NOIDA and Others [2011] 6 SCC 508: The State, including the three organs – Legislature, Executive and the Judiciary, are de facto trustees and agents/repositories which function and govern for the benefit of the citizens who are the beneficiaries.

Legal Provisions Considered by the Court:

• ✓ Article 14 of the Constitution of India: Guarantees equality before the law and equal protection of the laws.
• ✓ Andhra Pradesh (Telangana Area) Alienation of State Lands & Land Revenue Rules, 1975: Governs the alienation of state lands.
• ✓ Section 25 of the Andhra Pradesh (Telangana Area) Land Revenue Act, 1317F: Allows the assignment of land for special purposes.
• ✓ Rules 3 and 10 of the Andhra Pradesh (Telangana Area) Alienation of State Lands & Land Revenue Rules, 1975: Pertain to the alienation of land to local authorities.

Authorities Table

Judgment

How each submission made by the Parties was treated by the Court?

How each authority was viewed by the Court?

The Supreme Court relied heavily on the cited authorities to establish that the government cannot act arbitrarily when dealing with the public and that all government actions must conform to non-arbitrary standards. Cases like Erusian Equipment and Chemicals Ltd. v. State of West Bengal [1975] 1 SCC 70 and Ramana Dayaram Shetty v. International Airport Authority of India [1979] 3 SCC 489 were used to emphasize the need for fairness and equality in government transactions. The Court also used Common Cause, A Registered Society v. Union of India [1996] 6 SCC 530 to highlight that government benefits must be distributed fairly and that Article 14 applies to government policies and contracts, as stated in Shrilekha Vidyarthi v. State of Uttar Pradesh [1991] 1 SCC 212.

The Court relied on Subramanian Swamy v. Director, Central Bureau of Investigation [2014] 8 SCC 682, Ram Krishna Dalmia v. Justice S.R. Tendolkar AIR 1958 SC 538, and Nagpur Improvement Trust v. Vithal Rao and Others [1973] 1 SCC 500 to emphasize the need for a rational nexus between classification and the object of the policy, and to show that the object of a classification must be lawful and non-discriminatory. The Court also used In Re: The Special Courts Bill, 1978 [1979] 1 SCC 380 to discuss the State’s power to classify individuals for specific ends, and State of West Bengal v. Anwar Ali Sarkar [1952] 1 SCC 1, and Kathi Raning Rawat v. State of Saurashtra [1952] 1 SCC 215 to question the propriety of the classification test.

The Court used State of Jammu and Kashmir v. Triloki Nath Khosa [1974] 1 SCC 19 to caution against overdoing classification, and LIC v. Consumer Education Centre [1995] 5 SCC 482 and Indian Council for Legal Aid and Advice v. Bar Council of India [1995] 1 SCC 732 to show examples of discriminatory policies that were struck down. The Court also relied on AjayHasia v. Khalid Mujib Sehravardi [1981] 1 SCC 722 to discuss the requirements for reasonable classification, and A.L. Kalra v. Project and Equipment Corporation of India Ltd. [1984] 3 SCC 316 to state that a policy can be arbitrary per se. The principle of reasonableness as an essential element of equality was established using Maneka Gandhi v. Union of India [1978] 1 SCC 248.

The Court also referred to National Legal Services Authority v. Union of India and Others [2014] 5 SCC 438 to highlight the relationship between equality and dignity, and Navtej Johar v. Union of India [2018] 10 SCC 1 to articulate the principle of substantive equality. The Court used Lt. Col. Nitisha v. Union of India [2021] 15 SCC 125 to refer to jurisprudence relating to indirect discrimination. The Court also used Ram & Shyam Co. v. State of Haryana [1985] 3 SCC 267 and NOIDA Entrepreneurs Association v. NOIDA and Others [2011] 6 SCC 508 to emphasize that the State is obligated to sell public property only at the market price, with the sole exception of achieving a constitutionally recognised public purpose, and that the State is a trustee for the benefit of the citizens.

Final Verdict

The Supreme Court dismissed the appeals filed by the State of Telangana, the Cooperative Societies, and their members. The Court allowed the cross-appeal filed by Mr. Keshav Rao Jadhav. The Court quashed the GoMs that laid down the allotment policy and facilitated the allotments to the Cooperative Societies. The Court directed the State to restore the land to the Government and to refund the amounts paid by the Cooperative Societies along with interest at 9% per annum from the date of payment. The Court also directed the State to frame a new policy for land allotment, adhering to the principles of equality and fairness, without any preferential treatment for any particular class.

Ratio Decidendi

The Supreme Court held that the preferential land allotment policy was violative of Article 14 of the Constitution of India. The Court found that the policy arbitrarily classified beneficiaries, favoring a privileged class over the general public. The Court emphasized that the State must act fairly and reasonably in the distribution of public resources, and that the State cannot act as a private owner when dealing with public assets. The Court also highlighted that the State cannot create artificial classes to bestow benefits upon a select few, and that the State must ensure that public resources are utilized for the benefit of all, not just a privileged few.

The Court emphasized the principle of substantive equality, stating that equality is not merely a formal concept but requires addressing the underlying causes of inequality. The Court held that the State must ensure that its policies do not perpetuate existing inequalities and that it must actively work towards creating a more just and equitable society. The Court also highlighted the importance of public trust and stated that the State must act as a trustee of public resources, ensuring that they are used for the benefit of all citizens.

Analysis

The Supreme Court’s judgment in this case is a significant step towards ensuring equality and fairness in the distribution of public resources. The Court’s emphasis on substantive equality and public trust is a welcome development, and it sends a strong message that the State cannot act arbitrarily when dealing with public assets. The judgment is also a reminder that the State must act as a trustee for the benefit of all citizens, and that it cannot favor a privileged class over the general public.

The judgment has far-reaching implications for land allotment policies across the country, and it is likely to have a positive impact on the lives of marginalized communities. The Court’s emphasis on transparency and accountability is also crucial, and it is likely to lead to greater public scrutiny of government policies and actions. The judgment also highlights the need for a more robust legal framework for the distribution of public resources, and it is likely to spur further debate and discussion on this important issue.

However, the judgment also raises some important questions. For instance, how should the State balance the need for affordable housing with the principle of equality? How should the State ensure that its policies are inclusive and do not perpetuate existing inequalities? These are complex questions that require careful consideration, and it is important that the State engages in a broad-based consultation process to address these issues.

Impact

The Supreme Court’s judgment is likely to have a significant impact on land allotment policies across the country. It sets a precedent that preferential treatment for elites is unconstitutional, and it emphasizes the need for transparency, fairness, and equality in all government dealings.

Potential Impacts:

• ✓ Policy Reform: State governments will need to review and reform their land allotment policies to ensure they comply with the principles of equality and fairness.
• ✓ Transparency: Increased transparency in land allotment processes, with public auctions becoming the norm for land allocation.
• ✓ Accountability: Greater accountability for government officials in the allocation of public resources.
• ✓ Protection of Marginalized Groups: Policies that prioritize the needs of marginalized and vulnerable communities in the allocation of land.
• ✓ Reduced Corruption: A reduction in corruption and favoritism in land allotment processes.
• ✓ Public Trust: Increased public trust in government processes and policies.
• ✓ Judicial Precedent: The judgment will serve as a precedent for future cases involving the allocation of public resources.

Flowchart of the Case

Analysis Ratio Table

Sentiment Analysis