Know The Law | Why Supreme Court Frowned Upon Preferential Allotment Of Public Lands To Legislators, Civil Servants, Judges, Professionals Etc

The Supreme Court in its recent decision in State of Andhra Pradesh v. Dr Rao VBJ Chelikani , while quashing the preferential allotment of lands to the housing societies of MPs, MLAs, civil servants, Judges, defence personnel, journalists etc, dissected the important parameters in determining arbitrariness in legal challenges under Article 14. Here is a breakdown of CJI Sanjiv Khanna's analysis on (1) faults in overreliance on the Twin Test of Reasonable Classification; (2) The element of examining the legislative intent of the challenged law or policy upon which the classification is created and (3) the evolution of the 'Substantive Equality' test from Canadian to Indian Courts. The main issue before the consideration of the bench was “ Can the Government, like any private individual, 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?” At an initial level, the Court relied on the decision in Erusian Equipment and Chemicals Ltd. v. State of West Bengal, where this question was posed to this Court. The bench noted that the Court here held that when the Government is engaging in public trade, it cannot act as an private individual and exhibit discretion at his/her will but instead ensure that the principles of equality and non-arbitrariness under Article 14 are complied with. “When the Government is trading with the public, the democratic nature of Government demands equality coupled with an absence of arbitrariness and discrimination in such transactions. The activities of the Government have a public element and, therefore, they should be conducted with fairness and equality. The State need not enter into any contract with anyone, but if it does so, it must do so fairly, without discrimination and without adopting an unfair procedure.” The principle in Erusian Chemicals was also followed in Ramana Dayaram Shetty v. International Airport Authority of India, where the tender awarded by International Airport Authority of India for running an eatery at the Mumbai Airport was challenged. The Court held that “…This proposition would hold good in all cases of dealing by the Government with the public, where the interest sought to be protected is a privilege. It must, therefore, be taken to be the law that where the Government is dealing with the public, whether by way of giving jobs or entering into contracts or issuing quotas or licences or granting other forms of largesse, the Government cannot act arbitrarily at its sweet will and, like a private individual, deal with any person it pleases, but its action must be in conformity with standard or norms which is not arbitrary, irrational or irrelevant.""The power or discretion of the Government in the matter of grant of largesse including award of jobs, contracts, quotas, licences, etc. must be confined and structured by rational, relevant and non-discriminatory standard or norm and if the Government departs from such standard or norm in any particular case or cases, the action of the Government would be liable to be struck down, unless it can be shown by the Government that the departure was not arbitrary, but was based on some valid principle which in itself was not irrational, unreasonable or discriminatory.” Moving Away from Twin Test Under Article 14: Seeing From The Lens Of Non-Arbitrariness When considering the right tests to apply to determine a violation of equality principle under Article 14, the Court dissected the well settle twin test of reasonable classification. Notably under this test, the law or executive action being challenged has to satisfy two tests - (1) the existence of an 'intelligible differentia'- which is a reasonable classification between individuals which is clearly visible and (2) rational nexus to the object - the classification should have some reasonable nexus to the object of law on the basis of which the classification is said to be done. The Court however cautioned against excessive reliance on this twin test as it may lead to a technical approach overlooking the true essence of ensuring that 'substantive equality' is maintained. That is to say that the test may not necessarily determine if the object on which the classification is done is fair, non-arbitrary. The Court observes: “The basis of classification, and object of the legislation are distinct things. Article 14 postulates the need for a rational nexus. Therefore, mere designation of a classification based on an identified objective does not lead to an automatic satisfaction of Article 14. Such an approach can devolve into legal formalism, which risks disregarding the substantive implications of the constitutional guarantee of equality. This Court, to avoid such formalism, has transitioned from an exclusive reliance on the test of classification to a concurrent application of the doctrine of arbitrariness when actions are not grounded in valid reasons....

Know The Law | Why Supreme Court Frowned Upon Preferential Allotment Of Public Lands To Legislators, Civil Servants, Judges, Professionals Etc

Anmol Kaur Bawa

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