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Synopsis

The Supreme Court on Monday, November 25, 2024, declared that judges of the Supreme Court and the High Court, MPs, MLAs, officers of the All India Services, journalists etc cannot be treated as a separate category for allotment of land at a discounted basic value in preference to others.

The court cancelled the orders issued by the then Andhra Pradesh government in 2005 to allot land to cooperative societies of such persons, within the Greater Hyderabad Municipal Corporation (GHMC) limits.

A bench of Chief Justice of India Sanjiv Khanna and Justice Dipankar Datta held that the state cannot exercise discretion to benefit a select few elites disproportionately, especially ones who are already enjoying pre-existing benefits and advantages.

"The allocation of land at basic rates to select privileged groups reflects a 'capricious' and 'irrational' approach. This is a classic case of executive action steeped in arbitrariness, but clothed in the guise of legitimacy, by stating that the ostensible purpose of the policy was to allot land to 'deserving sections of society'," the bench said.

Shorn of pretence, the bench said, this policy of the state government, was an abuse of power meant to cater exclusively to the affluent sections of the society, disapproving and rejecting the equal right to allotment of the common citizen and the socio-economically disadvantaged.

"The object of the policy perpetuates inequality. The policy differentiates and bestows largesse to an advantaged section/group by resorting to discrimination and denial," the court said.

The bench held that the policy barred the more deserving, as well as those similarly situated, from access to the land at the same price. It promoted social-economic exclusion, to favour a small and privileged section/group. The policy did not meet the equality and fairness standards prescribed by the Constitution, it added.

The bench also said that the allotment policy failed to satisfy the requirements of the two-pronged classification test coupled with arbitrariness.

The bench felt the policies in question were a relevant example to show that merely likes being treated alike can lead to injustice.

"The pursuit of consistency through classification, while appealing in theory, does not ensure that the classification is either appropriate or equitable in practice. The substantive equality in contemporary equality jurisprudence calls not for a conceptually tidy 'test', but a multi-pronged approach to equality, which acknowledges the diverse ways in which inequality and discrimination may be perpetuated," the bench said.

The court also pointed out that land is a finite and highly valuable resource, particularly in densely populated urban areas, where access to land for housing and economic activities is increasingly scarce.

"When the government allocates land at discounted rates to the privileged few, it engenders a system of inequality, conferring upon them a material advantage that remains inaccessible to the common citizen. This preferential treatment conveys the message that certain individuals are entitled to more, not due to the necessities of their public office or the public good, but simply because of their status," the bench said.

"Such practices foster resentment and disillusionment among ordinary citizens, who perceive these actions as corrupt or unjust, thereby eroding trust in democratic institutions. This policy undermines solidarity and fraternity, reinforcing societal hierarchies rather than actively working to dismantle them," the bench added.

The court held that the core framework of these policies suffered from the malaise of unreasonableness and arbitrariness.

"It reeks of colourable exercise of power whereby the policymakers are bestowing valuable resources to their peers and ilk, triggering a cycle of illegal distribution of State resources. The State holds all its resources in trust for its citizens, to be utilised in larger public and social interest. The State, including the three organs Legislature, Executive and the Judiciary, are de facto trustees and agents or repositories which function and govern for the benefit of the citizens who are the beneficiaries," the bench said.

The apex court, however, acknowledged the State's discretion and duty under the Constitution, to distribute its resources to marginalised sections of society, or other imminent and deserving personalities, to the extent necessary to discharge their public functions.

Personalities who contribute to the nation’s progress through excellence in sports or other public activities may also be compensated through reasonable and non-arbitrary distribution of State largesse, it emphasised.

"We would also like to clarify that a policy or law allotting land to public servants may be justifiable provided such allotment is within the confines of Article 14. Unless the classification satisfies the twin prong test and the substantive equality benchmark, the mandate of Article 14 is not met. The State cannot exercise discretion to benefit a select few elites disproportionately, especially ones who are already enjoying pre-existing benefits and advantages," the bench said.

The court noted that during the pendency of the writ petition before the High Court, several members of the judiciary, to their credit, decided to withdraw their applications for allotment of land.

Recognizing the constitutional limitations and acknowledging that such allotment would violate Article 14, they made this decision upon thoughtful consideration. However, many others continued to defend the allotment, vigorously presenting arguments that they constituted a separate class with a rational nexus to the policy. These arguments, however, are devoid of merit and must be unequivocally rejected, the bench noted.

The court dismissed appeals filed by the Telangana government, the cooperative societies, and their members, against the 2010 judgment of the Andhra Pradesh High Court. It allowed an appeal by Keshav Rao Jadhav and quashed the orders of February 28, 2005 to the extent they classified MPs, MLAs, officers of the AIS/State Government, judges of the constitutional courts, and journalists as a separate class for allotment of land at the basic rate. The court also quashed subsequent orders issued by the state government in 2008 as bad in law, being violative of Article 14 of the Constitution.

The court directed that the lease deeds executed by the State of Telangana in favour of the societies/members will be treated as cancelled. Similarly, development charges or expenses paid by the cooperative societies and their members, as reflected in the books of accounts, duly certified by the income-tax returns, will be refunded to them along with interest at the rates specified, it directed.

"The Cooperative Societies and their members, as the case may be, will be entitled to a refund of the entire amount deposited by them, including the stamp duty and the registration fee paid by them, along with the interest which may be quantified by the State of Telangana. The rate of interest will not exceed the Reserve Bank of India’s rate of interest applicable from time to time, as may be deemed fit by the State of Telangana," it said.

The High Court, in the impugned judgment, had partly allowed the writ petitions, quashing the orders that laid down the allotment policy and facilitated the allotments to the cooperative societies.

It had held that the parcels of land allotted to the respondents were to be restored to the government, and that fresh allotments could only be made following the issuance of appropriate orders consistent with the judgment. The High Court had further directed that before such GoMs (state government memoranda) were issued, the State should call for details of members who met the eligibility criteria; ensure they signed affidavits declaring their eligibility; and published this information on its website for public access. Any false declaration will result in cancellation of the allotment, and initiation of civil and criminal proceedings, it had said.

Before the apex court, the cooperative societies raised the issue of constructive res judicata but the court rejected it, saying it would not be correct to put fetters on the members of the public in filing a writ petition challenging GoMs. "Constructive res judicata applies only when the cause of action is identical. In our view, the causes of action in the two litigation proceedings should not be considered identical, as the first litigation focused on the allotment and its terms and conditions. GoM Nos. 243 and 244 are separate and distinct from the allotment itself, and challenging these notifications constitutes a separate and independent cause of action," the bench said.

The court examined the question if the government, like any private individual, can have the absolute discretion to frame policy, distribute resources and enter into a contract with whomsoever it pleases, on any terms and conditions it so desires.

"Time and again, this court has held that while the power to distribute and redistribute public assets and resources lie within the State’s discretion, such discretion is not absolute. Article 14 and the logic of equality impose fetters on the exercise of this discretionary power. Therefore, it cannot be questioned or contested that state policy and executive action must satisfy the rigours of Article 14," the bench said.

The bench also pointed out that over the years, there is a discernible and marked shift from mere formal equality to the broader concept of substantive equality, which encompasses various dimensions of the principle of equality. On one hand, substantive equality focuses on correction of historical wrongs, checking stereotypes, stigma, prejudice etc, while on the other, it also scrutinises if a law or policy is inherently discriminatory. The latter principle applies when the legitimacy of the objective is flawed and manifests arbitrariness, the bench asserted.

Case Title: State of Andhra Pradesh And Others Vs Dr Rao V B J Chelikani And Others