'This Is A Scam' : Supreme Court Suprised At Gujarat APMC Allowing 5-Star Hotel On Land Meant For Agriculture Market Yard

The Supreme Court on Friday (April 19) declined to interfere with the order passed by the Gujarat High Court directing the Agricultural Produce Market Committee (APMC), Surat to auction the land allegedly misappropriated for the construction and running of a 5-star hotel. The Supreme Court observed that the High Court was correct in directing such an auction for the land allotted to be utilized for making a district market yard. 

The bench comprising CJI DY Chandrachud and Justice JB Pardiwala was hearing the challenge against the interim order of the High Court filed in a batch of SLPs by APMC and Hotel Shilpi Pvt. Ltd.   

"How can the Agriculture Produce Market Committee construct a five-star hotel on the land meant for constructing market yards for agricultural products?”, CJI asked.

"Thank God! The High Court intervened! This is a scam... The government may be a willing accomplice,” the CJI said.

The matter pertains to a Public Interest Litigation filed before the Gujarat High Court on the alleged misappropriation of public funds by the office bearers of the APMC. It was the case of the PIL petitioners that the APMC had wrongly utilized the 'Market Committee Fund' worth Rs. 98 crores in the construction of a Five Star Hotel on a piece of land given by the State Government for the construction of a principal market yard in District- Surat. The hotel was constructed in 2013-14 and leased to a private person, namely Hotel Shilpi Pvt Ltd. It was contended that such an instance of misutilization of funds came to light in the Auditor's report . The petitioners contended that no approval was taken by the Market Committee for the allocation of the public funds for the hotel project.

The Gujarat High Court bench of Chief Justice Sunita Agarwal and Justice Aniruddha P Mayee on March 27 directed that (1) an exhaustive inquiry be conducted by the Director of Agriculture Marketing and Rural Finance, State of Gujarat into the affairs of the Market Committee; (2) cancellation of the lease deed in favour of Hotel Shilpi Pvt Ld to run the five-star hotel; (3) immediate possession of the land in question be taken by the Secretary, Agriculture and Farmer Welfare Co-operation Department and (4) the land in question, being of 14000 sq meters along with the hotel building shall be auctioned by the public auction, with the fetched amount to be divided amongst the state and the Market Committee.  

Arguments before the Supreme Court

Appearing on behalf of APMC, Senior Advocates Mr Mukul Rohatgi and Mr Amar Dave along with Mr Ankur Saigal and AOR Mr Abhinav Agarwal contended that the building of the hotel and a 'Krushi Bazaar' at the concerned land was done with all prior approvals and permission of the State Government, after undertaking a feasibility study.

Moreover, as per their written submissions, it was argued that the said construction was done in tandem with Operational Guidelines, for setting up of 'Terminal Market Complex' through the Agricultural Marketing Board, as issued by the Ministry of Agriculture, Department of Agriculture & Cooperation. The said guidelines provide that ".... the project should also provide for support infrastructure like roads, water supply, drainage, and grid power connection and back up, petrol pump, banking and postal services, canteen and restrooms, area for truck parking, ETP systems and public conveniences etc". Thus the building of the hotel and Krushi Bazaar was part and parcel of the Terminal Market Project. 

Appearing on behalf of Hotel Shilpi Pvt Ltd, Senior Advocate Mr Nidhesh Gupta challenged the directions for auctioning of the land and building per see. It was the contention of the lessee that they had paid more than 5 crores to APMC as a secured deposit under the lease agreement in 2013 itself. He contended that dividing the auction proceeds only amongst the State Government and Market Committee would cause prejudice to the financial investment made by Hotel Shilpi.

Expressing disinclination to interfere in the impugned order of the High Court, CJI remarked, " The Chief Justice of Gujarat, she has rightly done this". 

The bench while dismissing the SLP filed by APMC,  granted liberty to the lessee to approach the High Court for appropriate remedies and allowed the withdrawal of the SLP filed by the lessee.  

Case Details : AGRICULTURE PRODUCE MARKET COMMITTEE, SURAT vs. STATE OF GUJARAT SLP(C) No. 008250 - 008251 / 2024 & other connected matters