Municipality Cannot Benefit Private Party At Cost Of State; Disposal Of Public Property Must Be In Public Interest & Free From Bias: Gujarat HC
The Gujarat High Court has held that the State and municipal authorities cannot act in a manner that benefits a private party at the cost of public property, and that any such action would be unreasonable and contrary to public interest. The Court observed that public authorities are bound by the doctrine of public trust and cannot alienate municipal land in an arbitrary manner.A Single...
The Gujarat High Court has held that the State and municipal authorities cannot act in a manner that benefits a private party at the cost of public property, and that any such action would be unreasonable and contrary to public interest. The Court observed that public authorities are bound by the doctrine of public trust and cannot alienate municipal land in an arbitrary manner.
A Single Judge Bench of Justice J. C. Doshi was hearing the second appeal arising from a suit for specific performance and declaration of rights in respect of municipal land at Mangrol. The appeal was filed by the original defendant against concurrent judgments of the Trial Court and the First Appellate Court, which had decreed the suit in favour of the original plaintiff and directed execution of a sale deed on the basis of an alleged resolution passed by the Nagarpalika in 1973.
The appellant submitted that the General Body of Nagar Seva Sadan, Mangrol had no authority, legal competence or locus to pass any resolution for alienation of immovable property vested in the municipal body. It was argued that municipal property is held in trust for the benefit of the public at large, and that the elected body, instead of adhering to the doctrine of public trust, had acted arbitrarily and autocratically in transferring the suit land to a private individual without any public auction or transparent procedure ensuring fairness and equal opportunity.
Reliance was placed on a circular dated 27 December 1971 issued by the Urban Development and Urban Housing Department, under which the power to grant sanction for sale of municipal property vests in the Collector alone. It was contended that every disposition of government or municipal land must conform to the conditions prescribed by the State Government and must also satisfy the Doctrine of Public Trust and the Doctrine of Equality. It was further argued that even dehors the statutory and constitutional infirmities, the suit itself was ex facie barred by limitation.
The respondent opposed the appeal by submitting that the jurisdiction of the High Court in a second appeal is extremely limited, particularly when concurrent findings of fact recorded by the courts below are under challenge. It was contended that the High Court cannot undertake a re-appreciation of evidence or substitute its own factual conclusions for those concurrently reached by the Trial Court and the First Appellate Court.
The Gujarat High Court held that although findings of fact recorded by the courts below are ordinarily immune from interference in a second appeal, such restraint is not absolute. The Court observed that where a finding is perverse, based on no evidence, founded on a misreading of material evidence, or rendered in disregard of a statutory mandate, the High Court would be justified, and indeed duty-bound, to interfere within the limited scope of Section 100 of the Code of Civil Procedure.
On a careful scrutiny of the impugned judgments, the Court found that the Trial Court had failed to examine the crucial issue of limitation and had also ignored the binding notifications and resolutions issued by the Town Development and Urban Development Department, despite specific pleadings to that effect in the written statement. The Court noted that the Trial Court had erroneously relied on Sections 65 and 146 of the Gujarat Municipalities Act to hold that the General Body of Mangrol Nagar Palika was competent to alienate the land, while overlooking statutory restrictions and binding governmental directives governing alienation of municipal property.
On the issue of limitation, the High Court noted that the plaintiff sought specific performance of an alleged resolution passed on 31 July 1973, whereas the suit was instituted nearly thirty-seven years later. Describing this delay as a “yawning hiatus”, the Court held that under Article 54 of the Limitation Act, a suit for specific performance must be instituted within three years from the date fixed for performance, or, in its absence, from the date when the plaintiff has notice of refusal. The Court held that the suit was ex facie barred by limitation, and that the pleadings were conspicuously silent and devoid of any explanation for the prolonged interregnum.
The High Court further relied on the Government Notification dated 19 May 1988 and held that a conjoint reading of the said notification with the earlier Government Resolutions makes it clear that, under Sections 65(2) and 146(1) of the Gujarat Municipalities Act, the power to sanction sale of municipal or government land vests in the Collector, and even such power is subject to strict statutory conditions and procedural safeguards. Despite specific pleadings on this aspect by the municipal body, both the Trial Court and the First Appellate Court had proceeded sub silentio on this vital issue. The Court noted:
“It thus emerges that the General Body of the Nagar Palika had no locus, authority, or jurisdiction to resolve upon the sale of municipal land to a private individual. Alienation of public property cannot be effectuated through resolutions passed in excess of statutory powers. This brings into focus another profound constitutional dimension whether public land, held by the State or by a local authority in trust for the people, can at all be transferred in derogation of the doctrine of public trust and the mandate of equality enshrined under Article 14 of the Constitution of India.”
The High Court also relied upon the decision of the Supreme Court of India in Akhil Bhartiya Upbhokta Congress v. State of Madhya Pradesh & Ors., (2011) 5 SCC 29, wherein it has been expansively enunciated that, in a democratic polity, the State acts as a trustee of public resources. Further, placing reliance on a Division Bench judgment of the Gujarat High Court in Babalabhai Tapubhai Khuman v. State of Gujarat (2013), the Court reproduced and reiterated the earlier observations to the effect that:
“Bearing the aforesaid principles in mind, we hold that the Government should not act in a manner which would benefit a private party at the cost of the State. Such an action would be both unreasonable and contrary to public interest. The Supreme Court in the case of Shri Sachidanand Pandey and another V/s. State of West Bengal and others, reported in (1987) 2 SCC 295, has observed that the State-owned or public-owned property is not to be dealt with at the absolute discretion of the executive. Certain precepts and principles will 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 the property, is to sell the property by public auction or by inviting tenders. In the words of the Supreme Court, nothing should be done which gives an appearance of bias, jobbery or nepotism.”
Thus, the High Court held that the courts below had failed to even advert to, much less examine, the applicability of the doctrine of equality and the doctrine of public trust. The Court observed that the dispute had been erroneously treated as a purely private dispute for specific performance between two individuals, while completely ignoring the public law elements indubitably embedded in the controversy, particularly since the subject matter concerned alienation of municipal property. The High Court held that such an approach was legally unsustainable, as the issue could not be divorced from the constitutional and statutory obligations governing disposal of public property.
Accordingly, the High Court allowed the second appeal and set aside the judgments and decrees passed by the Trial Court and the First Appellate Court.
Case Title: Nagar Seva Sadan, Mangrol v. Motivarash Premjibhai Damabhai.
Case Number: R/Second Appeal No. 272 of 2022.
Appearance: Mr. C. P. Champaneri appeared for the Appellant. HCLS Committee and Mr. Ravi B. Shah appeared for the Respondents.