IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 14TH DAY OF MARCH 2019 BEFORE THE HON’BLE MR. JUSTICE ALOK ARADHE WRIT PETITION NOS.29958/2011 & 30653/2011 (GM-KSSIDC) BETWEEN M/S MEDIWINGS BIO-SCIENCE PVT LTD HAVING ITS OFFICE AT SUBODH BHAVAN NO.13/1, 2ND KV TEMPLE STREET, SOURASHTRAPET, OPPOSITE STREET CHICKPET POLICE STATION, BANGALORE 560 053, REP BY ITS DIRECTOR SRI ARVIND KUAMR JAIN S/O.MOOLCHAND PORW ... PETITIONER (By Sri K SUMAN - ADVOCATE) AND 1.STATE OF KARNATAKA BY ITS SECRETARY DEPARTMENT OF COMMERCE AND INDUSTRIES ROOM NO.136, VIKAS SOUDHA BANGALORE 560 001 2.THE KARNATAKA STATE SMALL SCALE INDUSTRIES DEVELOPMENT CORPORATION LTD A O BUILDING, INDUSTRIAL ESTATE RAJAJINAGAR, BANGALORE 560 010 REP BY ITS MANAGING DIRECTOR 3.THE ASSISTANT GENERAL MANAGER (IES) KARNATAKA STATE SMALL SCALE INDUSTRIES DEVELOPMENT CORPORATION LTD A O BUILDING, INDUSTRIAL ESTATE RAJAJINAGAR BANGALORE 560 010 4.M/S.GNANA BHARATHI PRAKASHANA ® NO.1/1, IST FLOOR, 6TH CROSS, 8TH MAIN, MALLESWARAM BANGALORE 560 003 ... RESPONDENTS (By Sri PUTHIGE R RAMESH – ADV. FOR R2 & 3; SMT.NILOUFER AKBAR – AGA FOR R1; SRI.RAMESHCHANDRA – ADV. FOR R4) THESE WRIT PETITIONS FILED UNDER ARTICLES 226 AND 227 OF THE CONSTITUION OF INDIA PRAYING TO QUASH THE ORDER OF ALLOTMENT DATED 18.8.2010 ISSUED BY THE 3RD RESPONDENT ALLOTTING THE TWO CEMENT GODOWNS G1 & G2 IN INDUSTRIAL AREA, RAJAJINAGAR, BANGALORE TO THE 4TH RESPONDENT i.e. ANNEXURE-L AS ARBITRARY, ILLEGAL AND UNJUST AND ETC.
THESE PETITIONS COMING ON FOR PRELIMINARY HEARING IN B GROUP THIS DAY, THE COURT MADE THE FOLLOWING:-
ORDER Sri K Suman, learned counsel for the petitioner. Smt.Niloufer Akbar, learned Additional Government Advocate for respondent No.1, Sri.Puthige R Ramesh, learned counsel for respondents 2 and 3 and Sri.Rameshchandra, learned counsel for respondent No.4.
2. Petition is admitted for hearing and with consent heard finally.
3. In this petition under Article 226 and 227 of the Constitution of India, the petitioner inter alia seeks a writ of certiorari for quashment of order of allotment dated 18.8.2010 issued by respondent No.3 in favour of respondent No.4. The petitioner also seeks a writ of mandamus directing respondents 1 to 3 to forthwith allot two godowns viz. gowdown Nos.G1 and G2 at Industrial Estate Rajajinagar, Bengaluru. Recommendation was made in favour of the petitioner for allotment.
4. Facts giving rise to the filing of these petitions briefly stated are that the petitioner is a company registered as SSI Unit. The petitioner applied on 17.12.2009 to respondent No.2 for allotment of two cement godowns/industrial sheds in Rajajinagar industrial area. The respondent No.4 also submitted an application on 26.11.2009 for allotment of the said godowns/sheds. The petitioner deposited a demand draft for Rs.23,95,390/- towards earnest money deposit. However, it is the case of the petitioner that despite recommendations being made by the State Government for allotment of godowns for a sale consideration of Rs.2,39,53,900/- in favour of the petitioner, the allotment subsequently was made in favour of respondent No.4 on 25.10.2010 for a sale consideration of 1,13,36,200/-. In the aforesaid factual background the petitioner has approached this Court.
5. The learned counsel for the petitioner submitted that the Chairman of respondent No.2/Corporation had made a recommendation in favour of the petitioner for allotment of godowns in question. Thereafter on 20.1.2011 , 11.3.2011, reminders were sent by the state government to respondent No.2 for allotment of godown in favour of the petitioner. However, instead of taking any action on the recommendation made by the State government, the godowns in question were allotted to respondent NO.4 initially for a consideration of Rs.4,80,56,500/- which was later on reduced to 1,13,36,200/-. It is also pointed that respondent No.4 did not deposit earnest money amount along with the application. It is further submitted that during subsistence of the recommendation for allotment of the godowns in favour of the petitioner, the same could not have been allotted in favour of respondent No.4 at the concessional rate. It is alleged that the action of respondent No.2 in allotting the godowns in question in favour of respondent No.4 is arbitrary and amounts to colourable exercise of power in the facts of the case.
6. On the other hand, the learned counsel for respondents 1 and 2 submitted that the recommendation for allotment was made in favour of the petitioner without issuing any notification for allotment of the godowns in question. It is also pointed out by the learned counsel for the respondents 1 and 2 that allotment of godowns in favour of respondent No.4 has been made without issuing any notification inviting applications for allotment of godowns in question. It is further submitted that the State Government had directed the respondent-Corporation to take action for allotment in favour of the petitioner in accordance with the provisions contained in the Articles of Association of the respondent No.2-Corporation. It is also submitted by an order dated 17.8.2010, the State Government directed the respondent No.2 to allot the godown in question to respondent No.4 and the respondent No.2 /Corporation has acted on the direction issued by the State Government. However, it is clearly admitted that the allotment has been made in favour of respondent NO.4 without issuance of any notification.
7 Learned counsel for respondent No.4 while adopting the submissions made by learned counsel for respondents 1 and 2,submitted that in fact, the respondent No.4 had submitted an application at an earlier point of time and respondent No.4 is a registered trust and is engaged in the activity of publication of daily newspaper in Kannada language. It is further submitted that Article 87 of the Memorandum of Association, the State Government was well within its rights to pass an order directing allotment of the godown in question in favour of respondent No.4. It is further submitted that the petitioner is ineligible for allotment of the godowns in question.
8. By way of rejoinder reply, the learned counsel for the petitioner submitted that in exercise of the powers under Article 86(2) of Memorandum of Association, a recommendation being made by the State Government was rightly recommended to be allotted in favour of the petitioner and the godowns can be allotted in favour of the petitioner after obtaining approval from the Government.
9. I have considered submissions of the learned counsel for the parties and perused the material on record. In ‘R.D.SHETTY V. INTERNATIONAL AIRPORT AUTHORITY OF INDIA’, AIR 1979 SC 1628, it was held that power of discretion of the Government in the matter of grant of largess including award of jobs, contract, quotas, licence etc. must be confined or structured by rational, relevant and non-
discriminatory standard and if the Government departs from such standards or norms in a particular case, the action of the Government is liable to be struck down. The Government cannot act in a manner which would benefit a private party at the cost of the State, as such an action would be both unreasonable and contrary to public interest. The Government therefore cannot give a contract or lease out its property for a consideration less than the highest that can be obtained for it unless ofcourse there are other considerations which render it reasonable and in public interest to do so. See : ‘KASTURILAL LAKSHMY REDDY V. STATE OF J & K’, AIR 1980 SC 1992. It is well settled in law that State owned or public owned property is not to be dealt with at the absolute discretion of the executive. Certain precepts and principles have to be observed. The public interest is the paramount consideration. One of the methods of securing 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 yet 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 departure must be rational and should not be suggestive of discrimination. See : ‘SACHIDANAND PANDEY V. STATE OF WEST BENGAL’, AIR 1987 SC 1109. A transparent and objective procedure has to be evolved for disposal of the property which is based on reason, fair play and non-arbitrariness. See : ‘COMMON CAUSE V. UNION OF INDIA’, (1996) 6 SCC 530 : (AIR) 1996 SC 3538) AND ‘AKHIL BHARTI UPBHOKTE CONGRESS v. STATE OF MADHYA PRADESH’, (AIR 2011 SC 1834) and also ‘INDIAN OIL CORPORATION LTD. AND OTHERS VS. SHASHI PRABHA SHUKLA AND ANOTHER’ - (2018) 12 SCC 1985.
10. In view of the aforesaid well settled legal principles, it is evident that the public owned property has to be dealt with bearing in mind the public interest and one of the methods to secure public interest is to dispose of the property by selling the same by way of public auction or by inviting tenders. Now, I may advert to facts of this case. Admittedly, respondent No.3 has not issued any notification by inviting applications for allotment of the godowns in question. The allotment in favour of the petitioner as well as respondent No.4 have been made on the basis of application filed by them. The aforesaid action of respondent No.3 in dealing with the public property by allotting the same property to the petitioner as well as respondent No.4 for a consideration of Rs.1,13,36,200/- cannot but be termed as arbitrary and irrational, which is not permissible in view of the aforesaid well settled legal principles. So far as the submission made by learned counsel for the petitioner that the allotment can be made without issuing notification under Clause 87 of the Articles of Association is concerned, suffice it to say that reliance on the aforesaid Clause in the fact situation of the case is misconceived. In the instant case, recommendation has been made in favour of the petitioner and respondent No.4 by the Chief Minister and not the Governor, who is the authority prescribed under Clause 87 of the Articles of Association. Besides that, Clause 87 does not confer the power on the authority to allot a particular property to an individual de hors the well settled legal position as such. The aforesaid Clause empowers the prescribed authority to issue directives or instructions with regard to conduct of business and affairs of the company. Therefore, the question of allotment of the property belonging to the State is clearly outside the purview of Clause 87. Therefore, neither the petitioner nor respondent No.4 can claim any right in respect of the godowns in question.
11. In view of preceeding analysis the impugned order dated 18.8.2010 by respondent No.3 in favour of respondent No.4 is quashed and the respondent No.2-Corporation is directed to issue notification inviting applications for allotment of godowns in question by a publication in the newspaper, if so advised, and thereafter to deal with the applications for allotment in accordance with law. It is made clear that the petitioner as well as respondents 1 and 4 shall be at liberty to participate in the notification seeking allotment of godowns in question.
With the above directions, the petitions are disposed of.
Sd/- JUDGE rs