R. Chander vs Chennai Metropolitan Development Authority and A. Bond Strands Pvt. Ltd.

K. Mohan Ram, J.—The above writ appeal is directed against the order, dated 5.4.2006 passed by F.M. Ibrahim Kalifulla, J., in W.P. No.

9404 of 2006. The writ appeal has been filed by the petitioner in the writ petition. The above writ petition has been filed for the issuance of a Writ

of Certiorarified Mandamus to call for the records of the first respondent made in letter No. FA1/A372/2005, dated 18.10.2005 and quash the

same and direct the first respondent to issue notification in respect of plot bearing No. 7, Thirukatchur and Sengundram Area, Maraimalai Nagar

for allotment so as to enable the petitioner to submit his application for allotment.

The brief facts, which are necessary for the disposal of the above writ appeal are set out below:

a. The petitioner is an employee in Rane Engine Valves Limited at Alandur. The petitioner would state that by virtue of his experience and practical

knowledge, he is capable of starting an industry of his own with financial assistance that may be rendered by his relatives and industrial

development banks. He would also state that when he approached the first respondent for getting allotment of a land, he was informed that the

industrial plots have already been allotted after publication of notifications and that if any default is committed by any of the allottees which results in

cancellation, such plots would be re-notified. According to the petitioner while he was awaiting for such publication in October 2004, he came to

know about the allotment of industrial plot No. 7, Thirukatchur Sengundram to one Thiru. Ganesan and the same was under the process of

cancellation. It is further stated that after its cancellation on 22.8.2005, the re-notification was not issued due to grant of stay by this Court and that

subsequently, the said plot has been allotted to the second respondent without re-notifying the same. The petitioner seeks to challenge the

impugned proceedings by which the allotment came to be made in favour of the second respondent.

The learned Judge considering the fact that the petitioner continued to be an employee in Rane Engine Valves Limited and in the absence of any

material to substantiate the stand of the petitioner that he approached the first respondent as regards the availability and allotment of industrial plots

and in the absence of any material to show that he had technical know-how and he is capable of starting an industry of his own, doubted his bona

fides in challenging the impugned proceedings. The learned Judge has also pointed out that the petitioner had not placed any material to show that

he had taken any steps for starting an industry or even what type of industry he wants to promote by using technical expertise. The learned Judge

also took into consideration the fact that the petitioner had filed the cancellation letter issued to the original allottee Mr.Ganesan as well as the

impugned proceedings under which the allotment came to be made in favour of the second respondent and on that ground came to the conclusion

that the claim of the petitioner is not bona fide and he must be acting either at the instance of the erstwhile allottee or with some other ulterior

motive and in view of the aforesaid conclusion, the writ petition came to be dismissed.

Being aggrieved by that, the above writ appeal has been filed.

In the counter filed by the first respondent in the writ appeal, it is stated that the allotments were made under various schemes promoted by the

first respondent after giving wide publicity through newspapers and such allotments were made by a Committee constituted for the purpose of

allotment of industrial plot; subsequently, when there was no takers of industrial plots despite the fact of repeated advertisements, the Allotment

Committee was suspended vide Authority Resolution No. 196/92, dated 3.12.1992; later to avoid the high cost of advertisement and dispose the

plots expeditiously, it became necessary to respond to the applicants as and when they approach CMDA; hence, the Authority by resolution No.

150/94, dated 27.10.1994 had resolved to review the Committee for allotment of industrial plots; subsequently on a study made by the first

respondent it came to light that number of plots were lying vacant and to encash this stock in all projects, the Authority in the meeting held on

12.2.2002 passed a resolution in the following terms, namely, :-

There is urgent need to speed up off take of sale of locked up assets. Noting that there is now no significant competition for allotment in any of the

CMDA projects of Manali, Maraimalai Nagar, Sathangadu and Madhavaram, except in Koyambedu Wholesale Market Complex, the Authority

resolved to rationalise and speed up the allotment procedure hitherto followed and to allot on first come first served basis for the designated price,

without the need for repeated new advertisements for these projects (except Koyambedu Wholesale Market Complex). The allotment will be

made on the orders of the Member Secretary with the recommendations of the Chief Executive Officer.

In the counter affidavit, it is further stated that the appellant did not apply for allotment of any industrial plot at Maraimalai Nagar and hence, he

has no locus standi to challenge the order made in favour of the second respondent. It is further stated that the second respondent by a letter,

dated 15.7.2005 had sought for allotment of industrial plot and the same was considered in detail by the Allotment Committed headed by Vice

Chairperson on 7.10.2005 and allotment order was issued in letter Ref. No. FA1/8372/2005, dated 18.10.2005 and the possession was handed

over to the second respondent on 29.5.2006.

In the additional Counter filed by the first respondent, it is stated that there was no takers for Industrially Developed Plots for Industrial

purposes and the cost of advertisement would also increase the cost of plots and hence, it was decided by Chennai Metropolitan Development

Authority to allot industrial plots on First come First served basis. In the counter affidavit, it is further stated that even the allotment in favour of the

original allottee Mr.Ganesan was made only by applying the Rule of First Come First Served basis.

The second respondent has filed a detailed counter, inter alia, contending as follows:

a. The second respondent was incorporated as a Private Limited Company in the year 1978; it is a Small Scale Industry involved in the

manufacture of electrical products like Switchgear Panels, Insulating items and Cable Accessories etc.; the second respondent was in the process

of expansion and diversification in related areas and planned to go for the manufacture of Isolators and Disconnectors and for that purpose, they

needed more area; hence, they chose Maraimalai Nagar as an ideal area and accordingly applied to the first respondent in Application No. 1724,

dated 19.7.2005 seeking for the allotment of a plot at Maraimalai Nagar Industrial Area; the first respondent vide their letter No.

FA1/ADU/8372/2005, dated 3.10.2005 had directed the second respondent to appear before the Industrial Plot Allotment Committee on

7.10.2005 with the project report and other details and accordingly, they appeared before the Allotment Committee on 7.10.2005 and on being

satisfied as to the bona fide need of the second respondent, the first respondent vide his letter No. FA1/8372/2005, dated 18.10.2005 allotted the

plot No. 7 measuring approximately 3.50 acres for setting up electrical HT Switchgear Factory; pursuant to the issuance of allotment letter, dated

18.10.2005, the second respondent remitted a sum of Rs. 21,89,000/-on 17.11.2005; the second respondent requested the first respondent to

hand over the possession of the Plot No. 7; at that juncture, it was brought to the notice that one Ganesan has filed W.P. No. 34802 of 2005 and

W.A.M.P.No.37677 of 2005 aggrieved by the cancellation of the allotment by the first respondent; by order of this Court, dated 28.10.2005 the

order cancelling the allotment made in favour of the said Ganesan was stayed; but much prior to the grant of stay, namely, 18.10.2005, the

allotment in favour of the second respondent had been made and therefore, the second respondent filed a petition to vacate the interim stay; by

order, dated 31.3.2006 interim stay was vacated; the writ petitioner Ganesan challenged the order vacating interim stay by filing W.A.No.752 of

2006 and the writ appeal was also dismissed at the admission stage itself on 26.6.2006.

b. It is further stated in the counter affidavit filed by the second respondent that the very same allotment is challenged in the present writ petition

and the same has been rightly dismissed by the learned Single Judge.

c. It is further contended in the counter affidavit that the present writ petition came to be filed on 2.4.2006 within two days from the date on which

the order of stay granted in favour of the said Ganesan was vacated which shows that there should be some collusion between the said Ganesan

and the writ petitioner. It is further contended that the writ petitioner has no locus standi to challenge the order made in favour of the second

respondent. It is further stated that subsequent to the allotment made in favour of the second respondent, entire amount has been paid by the

second respondent and the possession of plot No. 7 was taken and developmental activities are being carried out in the allotted plot.

Heard both.

Mr. K. Doraiswamy, learned Senior Counsel for the appellant contended that when the property of the public authority is conveyed, there

must be transparency and it should be free from any arbitrariness and the interested persons should be given an opportunity by such authority.

The learned Senior Counsel submitted that in the affidavit filed in support of the writ petition, the petitioner has clearly stated that he

approached the authorities and the authorities have informed that the notification will be issued calling upon applications and that when he was

awaiting for the notification, he came to know that the allotment was made in favour of the second respondent. The learned Senior Counsel

contended that had an opportunity been afforded to the petitioner and other similarly placed persons, they might have participated in the auction or

tender as the case may be and all these aspects have not been properly considered by the learned Single Judge. The learned Senior Counsel

submitted that the impugned order is contrary to the rulings laid down by the Apex Court in a number of cases viz., that the public authority dealing

with the property should give ample publicity and invite applications and dispose of the same for the best price and not by private sale to a

particular individual.

In support of his contentions, the learned Senior Counsel relied upon the decision of the Apex Court reported in Padma Vs. Hiralal Motilal

Desarda and Others, . In this decision, the Apex Court considered the procedure for allotment or auction of flats or plots or shops by Housing

Board or Development Authority and while considering such procedure has held that allotment by Special Planning Authority to a party without

affording other competitors or rivals an opportunity to participate in the bid is improper and against law. In this decision, the Apex Court

emphasised the necessity for affording an opportunity to all prospective bidders.

Basing reliance on the said decision, the learned Senior Counsel submitted that the allotment in favour of the second respondent has been made

in secrecy by depriving due opportunity to others including the petitioner and therefore, the allotment made in favour of the second respondent is

liable to be cancelled and the property should be brought for re-auction or re-tender; the tentative cost of the plot was fixed at Rs. 618/- per

sq.metre and tentative cost of the entire plot was Rs. 87,56,000/-.

Mr. D. Veerasekaran, learned Counsel for the first respondent reiterated the contentions put forth in the counter affidavit and submitted that

there is absolutely no irregularity in the allotment made in favour of the second respondent. The learned Counsel submitted that only for the reasons

stated in the counter affidavit, the allotment procedure was changed and to avoid unnecessary additional expenses towards repeated

advertisements were avoided. But after the resolution dated 12.2.2002, an advertisement was issued in February 2003 in the Tamil daily

''Dinathanthi'' inviting applications for the allotment of house sites in Maraimalai Nagar Scheme. In the very same advertisement, it was put on

notice that apart from house plots and shops in Maraimalai Nagar industrial plots are also available and in respect of that applications are invited

and allotment will be made on First Come First Served basis.

The learned Counsel submitted that in the light of the above facts, the contention of the writ petitioner that no advertisement or notification was

issued by the first respondent cannot stand scrutiny. The learned Counsel further submitted that totally six persons applied seeking allotment of

industrial plots and all the applications were considered by the Allotment Committee as is evident from page 125 of the original files produced by

the first respondent and the second respondent was one among them and after scrutinising each of the applications and on being satisfied with the

fitness of the second respondent, his request was accepted and plot No. 7 , which was originally allotted to the said Ganesan, was allotted to the

second respondent. While making the allotment, the eligibility of the each applicant was considered and only thereafter the allotment was made. If

the petitioner was interested in getting the allotment, he could also have applied for allotment of an industrial plot, but, admittedly, he had not

applied and hence, he cannot be heard to say that he is aggrieved.

Mr.AL.Somayaji, learned Senior Counsel for the second respondent submitted that with a view to expand the industry, the second respondent

made an application, dated 19.7.2005 seeking allotment of a plot. In his application, the second respondent had not specified any plot number, but

it was only a general application. The Allotment Committee met on 7.10.2005 to ascertain the bona fides of the various applicants and after being

satisfied with the details of facts furnished by the second respondent, he was allotted plot No. 7 at a cost of Rs. 87.56 lakhs. The original allottee

Ganesan filed W.P. No. 34802 of 2005 challenging the order of cancellation on 24.10.2005 and the order of interim stay of cancellation was

granted on 28.10.2005, but at the instance of the second respondent the order of interim stay was vacated on 31.3.2006. Within two days of the

order vacating the stay, the present writ petition was filed on 2.4.2006 and the writ petition was dismissed as aforesaid on 5.4.2006 and the

possession of the plot was handed over to the second respondent on 29.5.2006. On 31.5.2006 a lease-cum-sale agreement was executed in

favour of the second respondent.

The learned Senior Counsel further submitted that the said Ganesan filed a writ appeal against the order of vacating the stay and the same was

dismissed on 22.6.2006 and thereafter, the second respondent had paid the instalments as per the schedule of payment. The learned Senior

Counsel further submitted that on 28.2.2008 the Tamil Nadu Pollution Control Board has issued a clearance certificate for establishing the

manufacturing unit in the allotted plot and thereafter, on 23.4.2008 the writ petition filed by the said Ganesan was also dismissed by which the

allotment made in favour of the second respondent was confirmed. The learned Senior Counsel further submitted that on 24.7.2008 the second

respondent had obtained planning permission from the local Authority to put up construction and necessary fee of Rs. 7,55,030/- was paid and in

the light of the aforesaid developments that have taken place, it will be highly inequitable to cancel the allotment made in favour of the second

respondent.

The learned Senior Counsel further submitted that non floating of tenders or non holding of public auction would not in all cases be deemed to

be the result of the exercise of the executive power in an arbitrary manner and making an exception to the general Rule could be justified by the

State Executive, if challenged in appropriate proceedings. In support of the said submission, the learned Senior Counsel based reliance on the

following decisions:

a. In Shri Sachidanand Pandey and Another Vs. The State of West Bengal and Others, , the Apex Court in paragraph 39 has laid down as under:

On a consideration of the relevant cases cited at the bar the following propositions may be taken as well established; State-owned or public-

owned property is not to be dealt with at the absolute discretion of the executive. Certain percepts and principles have to be observed. Public

interest is the paramount consideration. One of the methods of securing the public interest, when it is considered necessary to dispose of a

property, is to sell the property by public auction or by inviting tenders. Though that is the ordinary rule, it is not an invariable rule. There may be

situations where there are compelling reasons necessitating departure from the Rule but then the reasons for the departure must be rational and

should not be suggestive of discrimination. Appearance of public justice is as important as doing justice. Nothing should be done which gives an

appearance of bias, jobbery or nepotism.

b. In Netai Bag and Others Vs. The State of West Bengal and Others, , the Apex Court by following its decision reported in Shri Sachidanand

Pandey and Another Vs. The State of West Bengal and Others, , in paragraphs 19 and 20 has laid down as under:

...There cannot be any dispute with the proposition that generally when any State land is intended to be transferred or the State Largesse

decided to be conferred, resort should be had to public auction or transfer by way of inviting tenders from the people. That would be a sure

method of guaranteeing compliance with the mandate of Article 14 of the Constitution. Non-floating of tenders or not holding of public auction

would not in all cases be deemed to be result of the exercise of the executive power in an arbitrary manner. Making an exception to the general

Rule could be justified by the State executive, if challenged in appropriate proceedings. The constitutional courts cannot be expected to presume

the alleged irregularities, illegalities or unconstitutionality nor the courts can substitute their opinion for the bona fide opinion of the State executive.

The courts are not concerned with the ultimate decision but only with the fairness of the decision-making process.

The Government is entitled to make pragmatic adjustments and policy decision which may be necessary or called for under the prevalent

peculiar circumstances. The court cannot strike down a policy decision taken by the Government merely because it feels that another decision

would have been fairer or wiser or more scientific or logical. In State of M.P. v. Nandlal Jaiswal it was held that the policy decision can be

interfered with by the court only if such decision is shown to be patently arbitrary, discriminatory or mala fide.

c. In 2002 (1) CTC 193 (United Labour Federation represented by its General Secretary K. Nithyanandam, Chennai-1), the First Bench of this

Court in paragraph 21 has held as under:

Unlike in private contracts, the public contracts of the works relating to Government and Governmental Corporations should ordinarily be

awarded by way of inviting tenders or public auction, i.e. with a view to give opportunity to all eligible persons to compete and also to fetch

competitive price to the Government and the Governmental Corporations. Such process also ensures transparency. But that may not be possible in

all types of works relating to Government or its Corporations. There may be circumstances to make an exception to the normal Rule of

tender/auction method. But the validity of such exemptions/exceptions has to be considered in the context of facts of each case. Such exemption

should not be arbitrary and must be justifiable on the basis of some policy or valid principles, which, by themselves, are reasonable and not

discriminatory.

We have considered the aforesaid submissions made by the learned Senior Counsel for the respective parties and perused the materials

available on record including the original files.

Admittedly due to the non-compliance of the terms and conditions of the Lease-cum-Sale agreement the allotment of plot No. 7 made in

favour of the said Ganesan was cancelled on 22.8.2005. The said cancellation was challenged by Ganesan by filing W.P. No. 34802 of 2005 on

24.10.2005. But even earlier to that on 18.10.2005 the plot No. 7 was allotted to the second respondent by the first respondent for a total cost of

Rs. 87.56 lakhs. Since that fact was not brought to the notice of the Court an order of stay of cancellation was granted on 28.10.2005, but the

interim stay was vacated at the instance of the second respondent on 31.3.2006. Within two days therefrom i.e., on 2.4.2006 the present writ

petition came to be filed by the appellant.

Taking into consideration, the aforesaid facts and also the further fact that the appellant was in service in a private company on the date when

he alleged to have made enquiries with the first respondent and in the absence of any materials to substantiate that he had required experience and

expertise and financial capacity to start an industry, doubting his bona fides in filing the writ petition, the learned Single Judge dismissed the writ

petition on 5.4.2006. The reasons recorded by the learned Single Judge for dismissing the writ petition, in our considered view, cannot be said to

be either erroneous or irrelevant.

The aforesaid facts undoubtedly, prima facie, raises a bona fide doubt about the possible collusion between the appellant and the original

allottee Ganesan and therefore, we are not inclined to interfere with the order passed by the learned Single Judge.

Even otherwise on merits also, we are unable to countenance of the contentions put forth by the learned Senior Counsel for the appellant. The

main thrust of the contention of the learned Senior Counsel for the appellant is that after the allotment made in favour of the said Ganesan was

cancelled, no re-notification was issued to enable the appellant and other similarly situated persons to participate in the auction or tender. The

contention of the learned Senior Counsel is that if re-notification had been issued and the plot had been brought for auction or re-tender as per the

law laid down by the Apex Court in umpteen number of decisions, the appellant and others who intended to purchase the plot would have

participated in the auction or tender as the case may be and by the absence of such re-notification, such opportunity was denied which will amount

to arbitrariness. The learned Senior Counsel further submitted that if the plot had been sold in public auction or tender it would have fetched a

higher price. In support of his contention, the learned Senior Counsel relied on the decision of the Apex Court reported in Padma Vs. Hiralal

Motilal Desarda and Others, .

In answer to the said contentions, Mr.AL. Somayaji, learned Senior Counsel for the second respondent submitted that generally when State

land is intended to be transferred, resort should be had to public auction or by way of inviting tenders from the public. But the Government is

entitled to make pragmatic adjustments and policy decision which may be necessary or called for under the prevalent peculiar circumstances. The

learned Senior Counsel further submitted that non-floating of tenders or non holding of public auction would not in all cases be deemed to be result

of the exercise of the executive power in an arbitrary manner and making an exception to the general Rule could be justified by the State executive,

if challenged in appropriate proceedings. For the aforesaid propositions, the learned Senior Counsel relied on the decisions reported in Shri

Sachidanand Pandey and Another Vs. The State of West Bengal and Others, , Netai Bag and Others Vs. The State of West Bengal and Others,

and 2002 (1) CTC 193 referred to above.

Therefore, in the light of the aforesaid decisions of the Apex Court it has to be seen as to whether the exception made by the first respondent in

going for allotment on the basis of Fist come First served without going for auction or tender could be justified by the facts pleaded by the first

respondent.

In the counter and additional counter affidavits filed by the first respondent, it has been stated that after giving wide publicity through

newspapers, the Committee constituted for the purpose of allotment of industrial plots made allotments, but number of plots were left unsold as

there were no takers of industrial plots despite the fact of repeated advertisements. In such circumstances, the Allotment Committee was

suspended vide Authority Resolution No. 196/92, dated 3.12.1992 and later to avoid the high cost of advertisement and dispose the plots

expeditiously, it became necessary to respond to the applicants as and when they approach CMDA. Hence, the Authority by Resolution No.

150/94, dated 27.10.1994 had resolved to review the Committee for allotment of industrial plots. Subsequently, on a study made by the first

respondent it came to light that number of plots were lying vacant and to encash this stock in all projects, the Authority in the meeting held on

12.2.2002 passed a resolution, which has been extracted in the preceding paragraphs. The said facts are also borne out from the original files

produced by the first respondent.

It is further seen that after the resolution, dated 12.2.2002 an advertisement was issued in February 2003 in the Tamil daily ''Dinathanthi''

inviting applications for the allotment of house sites in Maraimalai Nagar Scheme. In the very same advertisement, it was put on notice that apart

from house plots and shops in Maraimalai Nagar, industrial plots are also available and in respect of that applications are invited and allotment will

be made on Fist Come First Served basis.

In the light of the aforesaid advertisement, it cannot be said that no advertisement was made by the first respondent. If really the petitioner was

bona fidely looking out for an industrial plot with an intention to start a new industry, he could have very well applied for allotment of an industrial

plot under Maraimalai Nagar Scheme without specifying any plot number. Had he applied so, the same would have been considered on priority

basis by the CMDA along with other applications made by others. But, admittedly, the appellant had not applied for allotment of a plot, whereas

the second respondent had applied for allotment of a plot without specifying any plot number as it was only a general application seeking allotment.

The aforesaid resolution passed by the CMDA contains reasons for not going for auction or tender but for going for allotment on the basis of

First Come First Served. The said reasons cannot be said to be arbitrary or unjustifiable reasons. In our considered view, these are all justifiable

reasons and only to avoid unnecessary additional expenses which will increase the cost of the plots, giving of repeated advertisements had been

avoided.

Therefore, in the light of the law laid down by the Apex Court in the decisions relied upon by the learned Senior Counsel for the second

respondent, we are convinced that the first respondent has justified in going for allotment on the basis of the First Come First Served without

resorting to auction or tender. Therefore, we are unable to accept the contention of the learned Senior Counsel for the appellant.

It is further seen that the allotment made in favour of the said Ganesan was also not pursuant to auction or tender notification but the allotment

was made on the basis of First Come First Served. It has to be pointed out that on 19.7.2005 when the second respondent made an application to

the first respondent seeking allotment of plot, he had not mentioned about the plot No. 7 and as on that date the allotment made in favour of

Ganesan had not been cancelled, but admittedly it was cancelled only subsequently on 22.8.2005. Therefore, by no stretch of imagination it could

be contended that only to help the second respondent, the allotment made in favour of Ganesan was cancelled and without going for auction or

tender, the plot had been allotted by private allotment in favour of the second respondent.

It is also pertinent to point out that the allotment made in favour of the second respondent was challenged by the said Ganesan in the writ

petition filed by him but his contention was rejected and the allotment made in favour of the second respondent was confirmed. It is not in dispute

that pursuant to the allotment made in favour of the second respondent, he has paid the entire cost of the plot and he had also obtained a clearance

certificate from the Tamil Nadu Pollution Control Board for establishing the manufacturing unit in the allotted plot on 28.2.2008.

It is also seen that on 24.7.2008 the second respondent had obtained planning permission from the local Authority to put up a construction by

paying a fee of Rs.7,55,030/-. Pursuant to the planning permission, it is submitted that the second respondent had put up the construction by

investing huge amount and therefore, at this stage, we do not find any reason whatsoever to interfere with the order passed by the learned Single

Judge.

We are satisfied that the first respondent has established the circumstances to make an exception to the general Rule of tender or auction. In the

facts and circumstances stated above, the exception taken by the first respondent cannot be considered to be either arbitrary or unjustifiable and

therefore, we are of the view that the above writ appeal is liable to be dismissed and accordingly, the same is dismissed confirming the order

passed by the learned Single Judge. However, there will be no order as to costs. Connected M.Ps. are also dismissed.