M/s Deepak Steel and Power Ltd. and Another vs Union of India and Others

Hon''ble Justice Debasish Kar Gupta

The first writ application bearing W.P. No. 77 of 2010 is filed by the petitioner company assailing the policy guideline for permission of private siding for loading Iron ore framed by the Government of India, Ministry of Railways (Railway Board) under Freight Marketing Circular No. 12 of 2008 dated August 28, 2008, and the Revised Land Licence Bill dated November 5, 2009 as also final notice dated January 1, 2010. The second writ application is filed by the petitioner company assailing a reasoned order dated February 16 of 2010 passed by the General Manager, South Eastern Railway in compliance of an order dated January 6, 2010 passed in an application under article 226 of the constitution of India in the matter of M/s. Deepak Steel & Power Ltd. & Anr. Vs. Union of India (in re. W.P. no. 830 of 2010). By virtue of the impugned order the respondent authority upheld the decision of fixing the value of the land in question @ Rs. 50,000,00/- per acre for the year 2007-08.

The aforesaid writ applications are taken up for analogous hearing with the consent of the parties.

The facts of these cases in a nutshell are as under:-

Government of India, Ministry of Railways (Railway Board) framed a policy on licensing of railway land for commercial plots etc. (Master Circular) and the same was circulated under memo no. 2005/LML/18/8 dated February 10, 2005 (hereinafter referred to said Master Circular). Clauses 3, 4, 5 of the said Master Circular provided for the rates of licence fee, formation of a standing committee and fixing of land value respectively. Those provisions are quoted below:

"3. Rates of licence fee

3.1. Licence fee of plots will continue to be fixed as a percentage of the land value, determined as per the procedure detailed in para-5 below. The percentage applicable w.e.f. 1.4.04 to various types of plots will be as under:

4.0 Formation of a Standing Committee

4.1 A standing Committee of three HODs will be set up at the Headquarters of each Zonal Railway and other Railway Units. The Standing Committee consisting of CE, CCM and FA & CAO shall examine fresh cases connected with railway working as indicated in Para 3(a) to (e) ans submit its recommendation to G.M. for approval.

4.2 The periodical review will, however, be done by DRM on the recommendations of Divisional Heads of Engineering, Commercial and Finance Departments. The Committee will review annually whether the traffic commitments by the licensees of the commercial plots have actually materialised or not and in case of any deviation, initiate suitable corrective action including delicensing and vacation as necessary.

5.0. Fixing of land value

5.1. A market value would however, he required to be taken to serve as a base value for working out rental fee payable. This shall be fixed on the basis of the land value of the surrounding area as on 1.1.1985, as determined from the Revenue Authorities and/or from the following:

(a) Evaluation of Town Planing Department;

(b) Actuals as per PWD and CPWD transactions;

(c) Actual Transactions, as per documents filed in the Office of the Sub-Registrar;

(d) Value of land as assessed by professional evaluators of the State and Central Governments;

5.2. The land value as worked out shall be increased every year on the 1st of April, starting from 1.4.1986, at the rate of 10% over the previous year''s land value to arrive at the land value for the following year based on which the annual licence, fee shall be fixed. From 1.4.2004 onwards, the land value shall be increased at the rate of 7% every year ever the previous year''s value.

5.3. However, for fresh cases of licensing of plots, for any purpose (s) defined in para 3.1(a) to (e) above, the licence fee shall be fixed after obtaining the current value of land in very rate cases where it is not possible to obtain the current cost (reasons for which should be brought on record 0, the uptates cost based on 1.1.1985 land price should be adopted.

However, for the Metropolitan towns of Mumbai, Kolkata, Delhi, and Chennai if the HODs'' Committee feel that the land rates are widely varying within the City, two or more rates can be utilised for that city. Using this method, arrears of collection of license fee on this account should not be allowed to accumulate."

In response to an application submitted by the petitioner company, the respondent authority granted permission in favour of the petitioner company under communication dated June 6, 2006 to start construction on proposed private siding of the petitioner company taking off from Barajamda Station in Chakradharpur Station under South Eastern Railway. After completion of the construction of the above private siding as also after complying with all formalities, a notification was issued by the respondent authority for information and guidelines of all concern that the petitioner company had commissioned the above private siding for picking onward/ downward goods traffic.

The Government of India Ministry of Railway (Railway Board) framed policy guideline for permitting construction of private siding for loading of Iron ore under Freight Marketing Circular No. 12 of 2008 and it was circulated under memo no. 99/TC (FM)/26/1 dated August 28 of 2008. The respondent authority sent Revised Land Licence Bills dated November 5, 2009 assessing amount to be paid by the petitioner company for period of 2008-2009 at Rs. 69,86,797 and for the period from 2009-2010 at Rs. 1,33,60,800. It was followed by a final notice dated January 1, 2010 insisting upon the petitioner company to pay the aforesaid bill.

The petitioner company filed an application under article 226 of the constitution of India in the matter of M/s. Deepak Steel and Power Ltd., Vs. Union bearing W.P. No. 77 of 2010 challenging the aforesaid actions of the respondent authority. It was disposed of on January 6, 2010 directing the General Manager, South Eastern Railway to consider to consider the grievance of the petitioner company. Pursuant to the above directions, the General Manager South Eastern Railway passed a reasoned order dated February 16, 2010 upholding the decision of fixing the value of the land in question @ Rs. 5,00,000/- per acre for the year 2007-08. The above order is the subject matter of challenge in writ application bearing W.P. No. 830 of 2010.

It is submitted by Mr. L.C. Behani, learned Senior Advocate appearing on behalf of the petitioner company, that in accordance with the provisions of clauses 3 and 5 of the said Master Circular the licence fee for private siding under reference should be raised @ 6% of land value as on January 1, 1985 as assessed by the Revenue Authority. According to clause 7 of the said Master Circular the licence fee should be revised @ 7% per annum. According to him, the value of the land in question was assessed by the Revenue Authority @ Rs. 16,00,000/- per acre. The land value of the surrounding area was assessed by the same authority @ Rs. 50,00,000/- per acre. According to him, the licence fee was assessed at Rs. 50,00,000/- per acre taking into consideration irrelevant factor of the value of surrounding area and ignoring the relevant fact of the value of the land in question on the recommendation of the Standing Committee. According to him, the decision making process of determining the licence fee suffered from procedural impropriety for the above reason. It is further submitted by him that the reasoned order passed by the respondent authority cannot be sustained in law for the same reason.

Mr. Behini relies upon the decisions of Jamshed Hormusji Wadia Vs. Board of Trustees, Port of Mumbai and Another, nd Union of India (UOI) and Another Vs. Kartick Chandra Mondal and Another, in support of his above submissions.

On the other hand, it is submitted by Mr. Partha Sarathi Bose, learned Senior Advocate appearing for the respondents that clause 5.3 of the said Master Circular provided for taking into consideration current value of lands for fixing the licence fee in terms of clause 5(1) of the said Master Circular. After receiving the land value from the revenue authority, the licence fee of the private siding in question was determined by the Standing Committee in terms of the clause 4(1) of the said Master Circular. According to him Code 1023 of the Indian Railways Code for the Engineering Department, 1999 provided that market value might not be treated as Standard Rent always for good and sufficient reasons the same might be escalated suitably. According to him, the Standing Committee took into consideration the valuation of surrounding lands in view of the above provisions. It is also submitted by him that the petitioner company paid licence fees for the year 2006-2007, 2007-2008 and 2008-2009 on the basis of aforesaid valuation and stopped payment of licence fees thereafter. A communication issued by the Tahasildar, Barbil under memo no. 3334 dated September 15, 2011 is relied upon to submit that kissam of the lands recorded as "G.B" means "Gharabari" which are homestead lands. So, according to him, the right of the petitioner company to challenge the impugned decision of the respondent authority should not be entertained following the doctrine weaver of his right.

The decisions of Basheshar Nath Vs. The Commissioner of Income Tax, Delhi and Rajasthan and Another, , P. Dasa Muni Reddy Vs. P. Appa Rao, , Provash Chandra Dalui and Another Vs. Biswanath Banerjee and Another, , Babulal Badriprasad Varma Vs. Surat Municipal Corporation and Others, , Harbanslal Sahnia and Another Vs. Indian Oil Corpn. Ltd. and Others, , ABL International Ltd. and Another Vs. Export Credit Guarantee Corporation of India Ltd. and Others, , The Empire Jute Co. Ltd. and Others Vs. The Jute Corporation of India Ltd. and Another, , Union of India (UOI) and Another Vs. K.G. Soni, , Ganesh Bank, Kurundwad Ltd. and Others Vs. The Union of India (UOI) and Others, , Amba Bai and Others Vs. Gopal and Others, and Haryana State Industrial Dev. Corp. Vs. Shakuntla and Others, are placed before me by Mr. Bose.

I have heard the learned Counsel appearing for the respective parties at length and I have considered the facts and circumstances of this case. Admittedly, the said Master Circular prescribed a procedure for assessment of value of the land relating a private siding. It is not in dispute that the Standing Committee took into consideration the assessment of land values of the Revenue Authority concern. For proper adjudication of this case the communication of Tahasildar, Barbil his memo no. 26 dated August 10, 2007 is quoted below:

"OFFICE OF THE TAHASILDAR, BARBIL NO. 2368/ Dated, 10.08.2007

To

The Asst. Divisional Engineer,

S.E. Railway, Dangoapos1.

Sub: Supply of highest land value for fixing the license fee in Railway land. Ref: Your letter dated, 4.8.2007.

Sir,

With reference to your letter on the subject cited above, I am to say that the present sale statistics report/highest valuation in respect of the following villages have been obtained from the Office of the Sub-Registrar, Barbil which is detailed below:-

This is for your information and necessary action.

Yours faithfully,

Tahhasildar, Barbil.

In order to examine the decision making process of the respondent authority the relevant portions of the minutes of the Standing Committee constitute under clause 4(1) of the of said Master Circular is quoted below:

"The committee notes that while vetting the proposal, Sr. DFM/CKP has made the following observations:-

(i) Subject proposal is vetted based on a market value collected from Engineering Department from Tahasildar/Barbil.

(ii) The year-wise market value of land has not been made available.

It is noted from letter dated 31.07.07 and 10.8.07 at (F.18) & (F/21) that (i) the value of land is Rs. 34,50,000/- per acre and (ii) the rates are as per present sales statistics /highest valuation collected from the office of Sub-registrar, Barbil.

Further, vide letter No. LC/Engg/; Proposal/Pvt. Sdg/CKP Dt. 17.10.07(F/28), Sr. DEN/Coord/CKP has stated that once again he enquired with Tahasildar and clarified that the rates furnished by Tahasildar are as per the present sale statistics/highest valuation prevailing on the date of issue of his letter.

Committee is of the view that all the sidings, which have been commissioned, or to be commissioned will be used for Iron ore loading and are available in the same geographical area. The highest land rate available will be applicable to all the sidings being in the same geographical area that is area around Barajamda - Barbil etc. As above, highest rate available is Rs. 50,00,000 per acre for 2007-08. Therefore, same will be used for licensing purpose for all the sidings. Rate for earlier years will be reduced @ 7% per year as per extant procedure. The annual licence fee is liable to be increased at any time by Railway Administration. Rate of License fee is at present 6%(Six percent) of value of land. The annual license fee is worked out with rate of Rs. 50,00 lakhs per acre for the base year 2007-08 and furnished below:

Code 1023 of the Indian Code for the Engineering Department, 1999 is also quoted below for proper adjudication and the issue involved in this writ application.

1023. License fee for Railway land licensed to private parties.- For fixation of license fee for Railway land licensed to private parties, a return of six per cent on the market value of the land as assessed by the local revenue, authorities should be treated as "standard rent". But in actual licensing out, Railway Administration should aim at obtaining the best possible rent. They may accept in individual cases, variation from "standard rent" on merits and for good and sufficient reasons. The minimum rent in such cases should be Rs. 100/- per annum.

The assessment of market value of the land as made by the revenue authorities need not always be treated as final or binding. It may require to be suitably adjusted and escalated if sufficient time has passed since the last assessment was made or if information was available with the railway of higher prices having been paid for private and other transactions of land in the vicinity.

After perusing the above communication dated August 10, 2007, I find that the value of the land lying and situated at Sundara was 50,00,000/- per acre while land value of Nalda was Rs. 16,000,00/- per acre. It is not in dispute that the private siding in question was lying and situated at Nalda and not at Sundara.

After perusing the minutes of the meeting for the Standing Committee I find that the highest land rate available in the same geographical area, i.e. areas around Barajamda and Barbil etc. was taken into consideration. But the value of the land on which the private siding in question was lying and situated was not taken into consideration. In Chief Constable of North Wales Police Vs. Evans, reported in (1982) 1 W.L.R. 1155 refers to the merits-legality distinction in judicial review. Lord Hailsm said as follows:

The purpose of judicial review is to ensure that individual receives fair treatment, and not to ensure that the authority, after affording fair treatment, reaches on a matter which it is authorised by law to decide for itself a conclusion which is correct in the eyes of the court.

The above proposition of law has been adopted by the Hon''ble Supreme Court in the matter of State of Uttar Pradesh and Others Vs. Maharaja Dharmander Prasad Singh and Others, In view of the above settled principles of law, the impugned decision cannot be sustained.

After considering Code 1023 of the Indian Railways Code of Engineering Department, 1999 I find that the assessment of market value of the land as made by the Revenue Authorities need not always be treated as final or binding but such method could be followed for good and sufficient reason like availability of information with the Railway of higher prices having been paid for private and other transactions of land in the vicinity. It is revealed from the material on record that Sundara was a place 13 k.m. away from Nalda where the private siding in question was lying and situated. No reason is available from the minutes of the meeting dated November 2, 2007 and February 6, 2008 of the Standing Committee in support of non-acceptance of the land value Nalda as furnished by the Revenue Authority concerned. Therefore, the decision making process of the respondent authority was arbitrary. Non-arbitrariness, being necessary concomitant of the rule of law, it is imperative that all actions of every public functionary in whatever sphere must be guided by reasons and not humour, whim caprice or personal predilections of the persons entrusted with the task on behalf of the State. Reference may be made to the decision M/s. Style (Dress Land) Vs. Union Territory Chandigarh and Another, and the relevant portions of the above decision are quoted below:

This Court in Shrilekha Vidyarthi (kumari) v. State of U.P. held that every State action, in order to survive, must not be susceptible to the vice of arbitrariness which is the crux of Article 14 and basic to the rules of law, the system which governs us, arbitrariness being the negation of the rule of law. Non-arbitrariness, being a necessary concomitant of the rule of law, it is imperative that all actions of every public functionary in whatever sphere must be guided by reason and not humour, whim, caprice or personal predilections of the persons entrusted with the task on behalf of the State and exercise of all powers must be for public good instead of being as abuse of power. Action of renewability should be gauged not on the nature of function but public nature of the body exercising that function and such action shall be open to judicial review even if it pertains to the contractual field. The State action which is not informed by reason cannot be protected as it would be easy for the citizens to question such an action as being arbitrary.

I am not inclined to accept the submissions made by Mr. Bose on behalf of the respondents that there was no arbitrariness in the decision making process of the respondent authority which was supported by reasons assigned in the communication of the Tahasider, Barbil, issued under memo No. 334 dated September 15, 2011 because the above communication was a subsequent event to the impugned decision of the respondent authority. it is the settled principles of law that when a statutory functionary makes an order based on certain grounds it cannot be supplemented by fresh reasons in the shape of affidavit or otherwise. Reference may be made to the decision of Mohinder Singh Gill and Another Vs. The Chief Election Commissioner, New Delhi and Others, and the relevant portions of the above decision are quoted below:

The second equally relevant matter is that when a statutory functionary makes an order based on certain grounds, its validity must be judged by the reasons so mentioned and cannot be supplemented by fresh reasons in the shape of affidavit or otherwise. Otherwise, an order bad in the beginning may, by the time it comes to court on account of a challenge, get validated by additional grounds later brought out. We may here draw attention to the observations of Commissioner of Police, Bombay Vs. Gordhandas Bhanji,

Public orders publicly made, in exercise of a statutory authority cannot be construed in the light of explanations subsequently given by the officer making the order of what he meant, or of what was in his mind, or what he intended to do. Public orders made by public authorities are meant to have public effect and are intended to effect the action and conduct of those to whom they are addressed and must be construed objectively with reference to the language used in the order itself.

Orders are not like old wine becoming better as they grow older.

The doctrine of weaver has no manner of application in this case because of the effect of the impugned action of the respondent authority continued after the year 2008-09.

In view of the above distinguishable facts and circumstances I find that the decision of Bashehar Nath (supra), P. Dasa Muni Reddy (supra), Provash Chandra Dalui (supra), Babulal Badriprasad Verma (supra) on doctrine of weaver are not applicable in this case. Since the impugned decision is liable to be set aside on the ground of arbitrariness, the decisions of Harbanslal Sahnia (supra), ABL international Ltd. (supra), Empire Jute Company Ltd. (supra), K.G. Soni (supra), Ganesh Bank of Kurundwad, Global Energy Ltd. (supra) do not help the respondent authority in any way. Since it has been discussed hereinabove that the decision making process of the Standing Committee are based on irrelevant factors, the decision of Haryana State Development Corportion (supra) does not help the respondents in any way.

Therefore, the resolution adopted in the meetings of the standing committee held on November 2, 2007 and February 6, 2008, revised land licence bill dated November 5, 2009, final notice dated January 1, 2010 as also the reasoned order dated February 16, 2010 passed by the respondent authority are quashed and set aside. The respondent authority is directed to assess the licence fee in respect of the private siding in question for the periods from 2009-10 in the light of the discussions and observation made herein above.

These writ applications are disposed of accordingly.

There will be, however, no order as costs. Urgent Photostat certified copy of this judgment, if applied for, be given to the parties, as expeditiously as possible, upon compliance with the necessary formalities in this regard.