Supreme Court Upholds Regularization of Industrial Plot: Odisha Industrial Infrastructure Development Corporation Ltd. vs. Pitabasa Mishra (2018)

Date of the Judgment: 19 February 2018

Citation: 2018 INSC 128

Judges: S.A. Bobde, J., L. Nageswara Rao, J.

Can a government corporation regularize the unauthorized occupation of land without specific regulations in place? The Supreme Court of India addressed this question in a recent case involving the Odisha Industrial Infrastructure Development Corporation (IDCO). The court examined whether IDCO’s actions were valid despite the absence of formal regulations and whether public auction is the only permissible method for land disposal. This judgment clarifies the powers of the corporation in dealing with land and the extent to which policy decisions can guide such actions. The bench consisted of Justice S.A. Bobde and Justice L. Nageswara Rao, with the judgment authored by Justice L. Nageswara Rao.

Case Background

In 1996, M/s. Sai Sankar Associates (Respondent No. 7) began operating a small-scale industry on 14 decimals (6300 sq. ft.) of land within the Commercial Estate at Rourkela, without authorization. Over the years, they made multiple requests to the Odisha Industrial Infrastructure Development Corporation (Appellant-Corporation) to regularize their occupation of the land. These requests, made on September 28, 1996, January 27, 1999, and July 25, 2002, were not initially addressed by the Appellant-Corporation. Frustrated by the lack of response, Respondent No. 7 filed a writ petition in the High Court of Orissa in 2008, seeking a direction for regularization. The High Court directed the Appellant-Corporation to consider the representation. Subsequently, the Board of IDCO approved the regularization of the land in favor of Respondent No.7 for a payment of Rs. 7,89,350. This decision was then challenged by other allottees in the same commercial estate.

Timeline

Course of Proceedings

The High Court of Orissa initially directed the Appellant-Corporation to consider the regularization request of Respondent No. 7. Following this, the Appellant-Corporation approved the regularization in its 74th Board Meeting. This decision was challenged by Respondent Nos. 1 to 6, who were existing allottees of shop-cum-residences in the same Commercial Estate. They argued that the regularization was illegal, environmentally hazardous, and done without proper notice. The High Court allowed the writ petition filed by Respondent Nos. 1 to 6 and set aside the order of regularization. The Appellant-Corporation and Respondent No. 7 then appealed to the Supreme Court.

Legal Framework

The case revolves around the interpretation of the Orissa Industrial Infrastructure Development Corporation Act, 1980. Key sections include:

• Section 14 of the Act outlines the functions of the Corporation, emphasizing the promotion of industrial development and the establishment of industrial estates. It states: “The functions of the Corporation shall be – (i) generally to promote and assist in the rapid and orderly establishment, growth and development of industries, trade and commerce in the State; and (ii) in particular, and without prejudice to the generality of Cl. (i) to- (a) establish and manage industrial estates at places notified by the State Government; (b) develop industrial areas notified by the State Government for the purpose and make them available for undertakings to establish themselves;”
• Section 15 of the Act provides the Corporation with general powers, including the power to allot plots in industrial estates. It states: “Subject to the provisions of this Act, the Corporation shall have power : (c) to allot plots, factory sheds or buildings or part of buildings, including residential tenements, to suitable persons in the industrial estates established or developed by the Corporation;”
• Section 31 of the Act deals with the acquisition of land by the State Government for the Corporation. It states: “Whenever any land is required, by the Corporation for any purpose of furtherance of the objects of this Act, but the Corporation is unable to acquire it by agreement, the State Government may, upon an application of the Corporation in that behalf, order proceedings to be taken under the Land Acquisition Act, 1894 (1 of 1894 ) for acquiring the same on behalf of the Corporation as if such lands were needed for a public purpose within the meaning of that Act.”
• Section 32 of the Act pertains to the transfer of Government lands to the Corporation, stating that such land shall be dealt with by the Corporation in accordance with regulations and directions from the State Government. It states: “After any such land had been developed by or under the control and supervision of the Corporation it shall be dealt with by the Corporation in accordance with the regulations made under this Act and the directions given by the State Government in that behalf.”
• Section 33 of the Act outlines the procedure for the disposal of land by the Corporation, including offering surplus land to the original owners. It states: “Subject to any directions given by the State Government the Corporation may dispose of- (a) any land acquired by the State Government and transferred to it, without undertaking or carrying out any development thereon; or (b) any such land after undertaking or carrying out such development as it thinks fit. to such person in such manner and subject to such terms and conditions, as it considers expedient for securing the purposes of this Act.”
• Section 34 of the Act mandates a periodic review of land utilization and allows for the acquisition of unutilized land.
• Section 58 of the Act empowers the State Government to make rules to carry out the purposes of the Act.
• Section 59 of the Act empowers the Corporation to make regulations, including those related to the disposal of land and buildings.

Arguments

Arguments by Respondent Nos. 1 to 6 (Original Petitioners):

• The regularization of land in favor of Respondent No. 7 was illegal because the unit of Respondent No. 7 was environmentally hazardous and not conducive to their business activities.

• They were entitled to notice as per Section 34(4) of the Orissa Industrial Infrastructure Development Corporation Act, 1980 before any allotment of land.

• The regularization was not permissible without specific regulations being framed under the Act.

• Public property could not be transferred without conducting a public auction.

• The land was allotted for a paltry sum of Rs. 7,89,350, while the market value was approximately Rs. 2,00,00,000.

Arguments by Appellant-Corporation:

• The regularization of the land was done at the auction price for a similarly situated plot and was in accordance with the policy decision of the Appellant-Corporation.

• Sections 33 and 34 of the Act are not applicable to the regularization of the industrial plot in question.

Arguments by Respondent No. 7 (M/s. Sai Sankar Associates):

• Respondent Nos. 1 to 6 were also encroachers and had benefited from regularization of their encroachments at concessional rates, and therefore, they had no locus to question the allotment.

• There was no infringement of any legal right of Respondent Nos. 1 to 6.

• The absence of regulations does not prevent the Corporation from regularizing industrial plots.

• Public auction is not the only mode for transfer of public land.

• The regularization was governed by the policy decisions of the Appellant-Corporation, which were not challenged by Respondent Nos. 1 to 6.

Submissions of Parties

Issues Framed by the Supreme Court

The Supreme Court framed the following issues for consideration:

1. Acquisition and disposal of the land.
2. Regularization in the absence of regulations.
3. Transfer of land without conducting public auction.
4. Consideration for the land not commensurate.

Treatment of the Issue by the Court

The following table demonstrates as to how the Court decided the issues

Authorities

The Supreme Court considered the following authorities:

Judgment

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

How each authority was viewed by the Court?

✓ Mysore State Road Transport Corporation v. Gopinath Gundachar Char [1968] 1 SCR 767*: The court relied on this case to support the view that the absence of regulations does not prevent the Corporation from exercising its powers to achieve the objectives of the Act.

✓ U.P. State Electricity Board v. City Board, Mussoorie & Ors. (1985) 2 SCC 16*: The court cited this case to reinforce that the absence of regulations does not necessarily mean that a statutory function cannot be carried out.

✓ Surinder Singh v. Central Government & Ors. (1986) 4 SCC 667*: The court used this case to establish that the framing of rules is not a precondition for exercising statutory powers unless the statute explicitly says so.

✓ V. Balasubramaniam v. Tamil Nadu Housing Board (1987) 4 SCC 738*: The court used this case to support the view that the absence of regulations does not prevent the Corporation from exercising its powers.

✓ Natural Resources Allocation, In Re, Special Reference No. 1 of 2012 (2012) 10 SCC 1*: The court relied on this case to assert that public auction is not the only permissible method for the disposal of public property.

What weighed in the mind of the Court?

The Supreme Court’s decision was influenced by several key factors, emphasizing the need for a pragmatic approach to statutory interpretation and the importance of policy decisions in governance. The court recognized that the Corporation had the power to act in furtherance of its objectives, even in the absence of specific regulations. It also acknowledged that public auction is not the only valid method for the disposal of public property. The court found that the High Court had erred in applying Section 33 of the Act to the land in question, as it was not acquired land but government land transferred to the Corporation. The court also noted that the regularization was in line with the Corporation’s policy and that Respondent No. 7 had been seeking regularization for a long time.

Fact:Law

The court’s reasoning was primarily driven by legal considerations, focusing on the interpretation of the relevant statutes and the application of established legal principles.

The Court considered alternative interpretations, such as the argument that regularization was not permissible without specific regulations and that public auction was the only valid method for land disposal. However, the Court rejected these interpretations, relying on previous judgments and the specific provisions of the Act. The court emphasized that the Corporation has the power to act in furtherance of its objectives, even in the absence of regulations, and that public auction is not the only valid method for the disposal of public property.

The decision was reached by carefully analyzing the statutory provisions, considering the factual context, and applying relevant legal precedents. The Court found that the High Court had erred in its interpretation of the Act and that the Corporation’s actions were valid.

The Court’s decision was based on the following reasons:

• The land in question was not acquired under Section 31 of the Act but was Government land transferred to the Corporation under Section 32. Therefore, Section 33 of the Act is not applicable.
• The absence of regulations does not prevent the Corporation from dealing with the land to promote the objectives of the Act.
• Public auction is not the only permissible method for disposal of public property, and the Corporation’s policy decision was valid.
• The price charged for the land was in accordance with the Corporation’s policy decision, and there was no undue benefit conferred on Respondent No. 7.

The Court quoted the following from the judgment:

“The land transferred by the Government under Section 32 shall be dealt with by the Corporation in accordance with the regulations made under the Act and the directions given by the State Government in that behalf and the procedure prescribed for disposal of land by the Corporation in Section 33 is not applicable to Government land.”

“It is clear from the above judgments of this Court that framing of regulations is not sine qua non for land being dealt with by the Corporation. On the basis of the judgments of this Court, it can be safely held that the Appellant has the power to deal with the land, to develop and promote the object of the Act even in the absence of regulations.”

“In the absence of a finding that the policy of regularization falls fowl of the fairness requirement under Article 14 of the Constitution, the allotment of the plot to Respondent No.7 could not have been set aside by the High Court on the ground that no public auction was conducted by the Appellant- Corporation.”

Key Takeaways

• The absence of specific regulations does not prevent the Odisha Industrial Infrastructure Development Corporation from taking actions to achieve its objectives.
• Public auction is not the only permissible method for the disposal of public property; policy decisions can guide such actions.
• The Corporation’s policy decisions, if not challenged, are valid and can be relied upon for land regularization.
• The High Court’s interpretation of Sections 31, 32, and 33 of the Orissa Industrial Infrastructure Development Corporation Act, 1980, was incorrect.

Directions

The Supreme Court set aside the judgment of the High Court and allowed the appeals, thereby upholding the regularization of the industrial plot in favor of Respondent No. 7.

Development of Law

The ratio decidendi of this case is that a statutory body can exercise its powers to achieve the objectives of the statute even in the absence of specific regulations. Further, auction is not the only method for disposal of public property. This judgment clarifies the powers of the corporation in dealing with land and the extent to which policy decisions can guide such actions. It reinforces the principle that statutory bodies can act in the absence of specific regulations if such actions are in furtherance of the objectives of the statute.

Conclusion

The Supreme Court’s decision in Odisha Industrial Infrastructure Development Corporation Limited vs. Pitabasa Mishra & Ors. clarifies that the Odisha Industrial Infrastructure Development Corporation can regularize unauthorized occupation of land even in the absence of specific regulations, provided that such actions are in accordance with the objectives of the Act and the corporation’s policy decisions. The Court also affirmed that public auction is not the only acceptable method for the disposal of public property. This judgment provides important guidance for the interpretation and application of the Orissa Industrial Infrastructure Development Corporation Act, 1980.

Category

Parent Category: Land Law

Child Categories: Land Allotment, Industrial Law, Orissa Industrial Infrastructure Development Corporation Act, 1980, Section 14, Orissa Industrial Infrastructure Development Corporation Act, 1980, Section 15, Orissa Industrial Infrastructure Development Corporation Act, 1980, Section 31, Orissa Industrial Infrastructure Development Corporation Act, 1980, Section 32, Orissa Industrial Infrastructure Development Corporation Act, 1980, Section 33, Orissa Industrial Infrastructure Development Corporation Act, 1980, Section 34, Orissa Industrial Infrastructure Development Corporation Act, 1980, Section 58, Orissa Industrial Infrastructure Development Corporation Act, 1980, Section 59

FAQ

Q: Can a government corporation regularize unauthorized land occupation without specific rules?
A: Yes, the Supreme Court has ruled that a corporation can regularize unauthorized land occupation even without specific regulations, as long as it aligns with the objectives of the governing statute and the corporation’s policies.

Q: Is public auction the only way to dispose of public land?
A: No, public auction is not the only method. The Supreme Court has clarified that policy decisions can also guide the disposal of public land.

Q: What if a corporation’s policy is not challenged?
A: If a corporation’s policy is not challenged in court, it is considered valid and can be used as a basis for decisions like land regularization.

Q: What was the main issue in the Odisha Industrial Infrastructure Development Corporation case?
A: The main issue was whether the corporation could regularize the unauthorized occupation of land without specific regulations and through methods other than public auction.

Q: What did the Supreme Court decide in this case?
A: The Supreme Court upheld the corporation’s decision to regularize the land, stating that the absence of specific regulations did not prevent the action and that public auction was not the only permissible method.