Supreme Court Upholds State’s Right to Restrict Land Use in Allotments: State of Telangana vs. Dr. Pasupuleti Nirmala Hanumantha Rao Charitable Trust (2025) INSC 679

Introduction

Date of the Judgment: May 14, 2025

Citation: 2025 INSC 679

Judges: Dipankar Datta, J, Manmohan, J

Can a state government impose conditions on the use of land when allotting it to a charitable trust? The Supreme Court of India recently addressed this question in a case involving the State of Telangana and a charitable trust. The core issue was whether the state could restrict the use of land allotted to the trust, even after the trust paid the market value for it. The Supreme Court, in a judgment delivered by Justice Manmohan, held that such restrictions are valid, emphasizing the distinction between a sale and an allotment under a statutory scheme.

Case Background

The case revolves around a piece of land measuring Ac.3.01 gts. in Sy. No.72/31, located in Chinnathimmapur village, Mulugu Mandal, Medak District. This land was originally classified as Government land. The Dr. Pasupuleti Nirmala Hanumantha Rao Charitable Trust (hereinafter referred to as ‘the Trust’) applied for allotment of the said land, presumably to carry out its charitable activities.

On February 8, 2001, the District Collector, Medak, granted the allotment of the land to the Trust. This allotment was made under the powers conferred by G.O.Ms. No. 635 (Revenue) dated July 2, 1990, which empowers the Commissioner, Land Revenue/ District Collectors to dispense Government lands by alienation on payment of market value. However, this allotment came with specific conditions. The allotment letter explicitly stated that any deviation from these conditions would result in the land being resumed by the revenue authorities.

Timeline:

Course of Proceedings

The State of Telangana initially sought to resume the land, alleging that the Trust had violated the conditions of the allotment. This led to a legal challenge, with the Trust contesting the resumption order. The matter eventually reached the High Court for the State of Telangana at Hyderabad. A Single Judge bench ruled in favor of the Trust, a decision that was later upheld by a Division Bench in Writ Appeal No.1328 of 2014. The High Court reasoned that since the Trust had purchased the land by paying the market value, the government could not impose restrictions on its enjoyment, citing Section 10 of the Transfer of Property Act, 1882.

Legal Framework

The legal framework relevant to this case includes:

• Section 25 of the Telangana Land Revenue Act: This section allows the Commissioner/Collector to assign or set apart land for public benefit.
• Telangana Alienation of State Lands and Land Revenue Rules, 1975: Framed under Section 172 of the Telangana Land Revenue Act, these rules govern the alienation of state lands. Rule 6(a) states that every grant of alienation of state land for public purposes is subject to the condition that “the land shall be used …………..and for no other purpose.” and “the Government may resume the land wholly or in part with any buildings thereon, in the event of the infringement of any of the conditions of the grant.”
• G.O.Ms. No.635 dated 02nd July, 1990: This Government Order empowers the Commissioner, Land Revenue/ District Collectors to dispense Government lands by alienation on payment of market value.
• Board Standing Order 24: Referred to in G.O.Ms. No.635, this order outlines the conditions for the grant of State land, including that “the land shall be used ………………….and for no other purpose” and that “the Government may resume the land wholly or in part with any buildings thereon, in the event of the infringement of any of the conditions of the grant.”
• Section 10 of the Transfer of Property Act, 1882: This section deals with conditions restraining alienation, stating that “Where property is transferred subject to a condition or limitation absolutely restraining the transferee or any person claiming under him from parting with or disposing of his interest in the property, the condition or limitation is void…”

Arguments

Arguments on Behalf of the Appellant (State of Telangana):

• The High Court’s judgments are flawed because they did not consider the statutory scheme under which the land was allotted.
• Under Section 25 of the Telangana Land Revenue Act, the Commissioner/Collector can assign land for public benefit.
• The Telangana Alienation of State Lands and Land Revenue Rules, 1975, framed under Section 172 of the Act, govern land alienation.
• G.O.Ms. No.635 dated July 2, 1990, empowers the Commissioner, Land Revenue/ District Collectors to dispense Government lands by alienation on payment of market value.
• The District Collector, Medak, allotted the land in question under G.O.Ms. No. 635.
• The allotment letter, not a sale deed, is the primary document proving the Trust’s title, and it was subject to specific conditions.
• The State intended to allot the land for charitable purposes, not to sell it without restrictions.
• The Trust fraudulently executed a General Power of Attorney (GPA) without disclosing the allotment conditions.
• The Power of Attorney holder developed a colony on the land and sold plots to third parties, violating the allotment conditions.

Arguments on Behalf of the Respondent (Dr. Pasupuleti Nirmala Hanumantha Rao Charitable Trust):

• The land was sold by the State Government after following the procedure in G.O.Ms. No. 635.
• The District Collector, Medak, in consultation with the Commissioner of Land Revenue, sold the land to the Trust on payment of market value.
• The sale was made at market value, not at a concessional rate.
• The alienation contained a general condition that “the land would be utilized only for the purpose for which it is allotted” without specifying the exact purpose.
• There was no specific restriction on the usage of the land, and any such condition would violate Section 10 of the Transfer of Property Act, 1882, which prohibits conditions restraining alienation.
• The resumption order was passed in violation of the principle of natural justice.

Submissions Categorized by Main Arguments:

Issues Framed by the Supreme Court

1. Whether alienation of land by the District Collector, Medak, Government of Andhra Pradesh vide order dated 8th February 2001 was a sale or alienation/allotment?
2. Whether any condition was imposed pursuant to the alienation of land by the Government of Andhra Pradesh?
3. Whether any condition/restriction imposed by the State Government would be violative of Section 10 of the TPA?

Treatment of the Issue by the Court: The following table demonstrates as to how the Court decided the issues

Authorities

The court relied on the following authorities:

• Ramana Dayaram Shetty vs. The International Airport Authority of India & Ors., 1979 (3) SCR 1014, Supreme Court of India: This case was cited to support the principle that the government cannot distribute State’s largesse without getting the maximum value of the resources, especially when State-owned assets are passed over to private individuals/entities.
• Natural Resources Allocation, In Re, Special Reference No.1 of 2012, (2012) 10 SCC 1, Supreme Court of India: This case reinforces the principle that the State ‘must’ get the ‘maximum value’ of the resources.
• Manohar Lal Sharma vs. Principal Secretary & Ors., (2014) 9 SCC 516, Supreme Court of India: This case further supports the principle that the State ‘must’ get the ‘maximum value’ of the resources.

Authorities Considered by the Court

Judgment

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

How each authority was viewed by the Court?

• Ramana Dayaram Shetty vs. The International Airport Authority of India & Ors., 1979 (3) SCR 1014, Supreme Court of India: The Court followed this authority to support the principle that the government cannot distribute State’s largesse without getting the maximum value of the resources, especially when State-owned assets are passed over to private individuals/entities.
• Natural Resources Allocation, In Re, Special Reference No.1 of 2012, (2012) 10 SCC 1, Supreme Court of India: The Court followed this authority to reinforce the principle that the State ‘must’ get the ‘maximum value’ of the resources.
• Manohar Lal Sharma vs. Principal Secretary & Ors., (2014) 9 SCC 516, Supreme Court of India: The Court followed this authority to further support the principle that the State ‘must’ get the ‘maximum value’ of the resources.

What weighed in the mind of the Court?

The Supreme Court’s decision was primarily influenced by the following factors:

• The land was allotted under a statutory scheme, not sold in a typical market transaction.
• The allotment was conditional, with the Trust acknowledging these conditions.
• The Trust’s actions, particularly the execution of the GPA and the development of a colony, indicated a deviation from the intended charitable purpose.
• The State’s interest in ensuring that public resources are used for public benefit outweighed the Trust’s claim to unrestricted use of the land.

Fact:Law Ratio:

Logical Reasoning

Issue 1: Whether the alienation was a sale or allotment?

Government Land → Application by Charitable Trust → Allotment by District Collector under G.O.Ms. No. 635 ↓
Allotment Letter Issued with Conditions → Trust Acknowledged Conditions ↓
Therefore: Allotment, Not Sale

Issue 2: Whether any condition was imposed?

Allotment Letter → Specific Conditions Stated (e.g., Land Use, Construction Timeline) ↓
Trust Accepted Allotment Letter → Trust Aware of Conditions ↓
Therefore: Conditions Imposed

Issue 3: Whether the condition violates Section 10 of the TPA?

Section 10 TPA → Applies to Inter Vivos Transfers ↓
Allotment by State → Not a Typical Inter Vivos Transfer ↓
Public Interest Considerations → State’s Right to Impose Conditions for Public Benefit ↓
Therefore: Section 10 TPA Does Not Apply

Key Takeaways

• Land allotments by state governments are distinct from sales and can be subject to specific conditions.
• Charitable trusts receiving land allotments must adhere to the conditions imposed by the state.
• The state has the right to resume land if the conditions of allotment are violated.
• Section 10 of the Transfer of Property Act does not apply to land allotments made under statutory schemes for public purposes.

Development of Law

The ratio decidendi of this case is that land allotments by state governments under statutory schemes are not equivalent to sales and can be subject to specific conditions, especially when the allotment is for a public purpose. This clarifies that the restrictions imposed by the state in such allotments do not violate Section 10 of the Transfer of Property Act.

Conclusion

In summary, the Supreme Court allowed the appeal filed by the State of Telangana, setting aside the High Court’s judgments. The Court held that the land allotment to the Dr. Pasupuleti Nirmala Hanumantha Rao Charitable Trust was conditional and that the Trust had violated these conditions. The Court emphasized that such allotments are not equivalent to sales and that the state has the right to impose restrictions to ensure that the land is used for its intended public purpose.

Category

• Land Law
  • Land Allotment
  • Government Land
  • Transfer of Property Act, 1882
  • Section 10, Transfer of Property Act, 1882
• Telangana Land Revenue Act
  • Section 25, Telangana Land Revenue Act
• Charitable Trusts
  • Public Purpose

FAQ

1. Can the government take back land if I don’t use it for the purpose they gave it to me for?

   Yes, if the land was allotted to you by the government under specific conditions, they can take it back if you don’t use it as intended.

2. Does Section 10 of the Transfer of Property Act apply to government land allotments?

   No, Section 10 of the Transfer of Property Act, which deals with restrictions on selling property, doesn’t apply to land that the government allots under specific schemes for public purposes.

3. What happens if I get land from the government for a charity and then use it for something else?

   If you get land from the government to use for a charity, you have to use it for that purpose. If you don’t, the government can take the land back.