Supreme Court: In a civil appeal challenging the allotment of land parcels, vide several State Government Memoranda, within the Greater Hyderabad Municipal Corporation limits, the division bench of Sanjiv Khanna*, CJI. and Dipankar Datta, J. said that the State cannot exercise discretion to benefit a select few elites disproportionately, especially ones who are already enjoying pre-existing benefits and advantages. Further, the Court allowed the appeal to the extent they classify 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. , and declared the impugned Government Memoranda (GoMs) bad in law, being violative of Article 14 of the Constitution of India.
The Court passed an order of restitution, directing that the Cooperative Societies and their members, as applicable, be entitled to a refund of the entire amount deposited, including stamp duty and registration fees, along with interest. The interest will be quantified by the State of Telangana, with the rate not exceeding the Reserve Bank of India’s prevailing rate of interest, as determined by the State. Additionally, the lease deeds executed by the State of Telangana in favor of the societies and their members will be treated as cancelled. Similarly, any development charges or expenses paid by the Cooperative Societies or their members, as reflected in the books of accounts and duly certified by income-tax returns, will be refunded along with interest at the specified rates.
Background:
The land was allocated to Cooperative Societies composed of members of various groups, including Members of Parliament, Members of both houses of the State Legislature, officers of All India Services, Judges of the Supreme Court and High Court, State Government employees, defence personnel, journalists and individuals from weaker sections of society.
In the impugned judgment, the Andhra Pradesh High Court partly allowed the Writ Petitions, quashing the Government Memoranda (GoMs) that laid down the allotment policy for land parcels to various Cooperative Societies. The Court held that the land allotments made to the respondents were to be restored to the Government, and that fresh allotments could only be made in accordance with new GoMs, which must be consistent with the Court’s ruling. Additionally, the High Court directed the State to call for details of members who meet the eligibility criteria before issuing any new GoMs. The State was further instructed to ensure that eligible members sign affidavits affirming their eligibility and to publish this information on its website for public access. The Court also emphasized that any false declarations made by applicants would lead to the cancellation of their allotments and the initiation of both civil and criminal proceedings.
While the Cooperative Societies, their members, and the State of Telangana have filed appeals challenging the High Court’s directions, the Respondent has filed a cross-appeal. In his cross-appeal, he contended that the preferential allotment of land, particularly at basic rates, to Members of Legislative Assemblies (MLAs), Members of Parliament (MPs), journalists, officers of the All-India Services (AIS), and judges is illegal, arbitrary, and unconstitutional. He argued that such allotments violate the right to equality guaranteed under Article 14 of the Constitution of India, as they grant undue benefits to certain groups while discriminating against others, thereby breaching the constitutional principle of fairness and equality before the law.
Analysis and Decision:
Res judicata and Constructive res judicata
The main argument raised on behalf of the Cooperative Societies and its members is that the principle of res judicata and constructive res judicata would apply in the present case.
The Court noted that the plea of res judicata was rejected by the High Court, but it upheld the plea of constructive res judicata raised by the Cooperative Societies, their members and the State Government.
The Court opined that the question of res judicata will certainly not apply, as the previous judgment did not examine the constitutional validity of GoM and GoM dated 25-03-2008 had not been issued at the time the said judgment was pronounced and hence, could never have been challenged. On the question of constructive res judicata, the Court accepted that the same will have limited application to public interest litigation.
The Court rejected the contention of the Cooperative Societies etc. that the principle of constructive res judicata should apply to our examination of the challenge to GOM. Thus, the Court set aside the reasoning of the High Court to this extent.
The Court said that the principles of constructive res judicata should not have been applied, given the significant public interest at stake in this public interest litigation. It is clear that GoM Nos. 243 and 244 were not part of the challenge in the first litigation, as the petitioners then believed that simply quashing the allotments would suffice. Once the allotments were cancelled and the Writ Petition was allowed, the State of Telangana had the opportunity to re-evaluate the entire issue in light of the findings recorded.
The Court held that the principles of constructive res judicata should not have been applied in this case, given the significant public interest involved in this public interest litigation. The Court observed that GoMs were not part of the challenge in the initial litigation, as the petitioners at the time believed that simply quashing the allotments would be sufficient. However, once the allotments were cancelled and the Writ Petition was allowed, the State of Telangana had the opportunity to re-evaluate the entire matter in light of the findings recorded by the Court. The Court emphasized that the complex public interest issues at stake warranted a fresh examination of the matter, rather than allowing the principle of constructive res judicata to bar further scrutiny.
The Court said that it would not be correct to place restrictions on the public’s ability to file a Writ Petition challenging the GoMs in the present factual context. It noted that constructive res judicata applies only when the cause of action is identical. In this case, the Court found that the causes of action in the two litigation proceedings were not identical. The first litigation focused on the allotment of land and its terms and conditions, whereas GoMs addressed separate and distinct matters related to the allotment process. As such, the Court concluded that challenging these Government Orders constituted a separate and independent cause of action, and therefore, the principle of constructive res judicata should not apply.
Constitutional validity of impugned Government Memoranda
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?
The Court reiterated that while the power to distribute and redistribute public assets and resources lies 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 Court, while delving into the applicable tests to evaluate the legality of State conduct under Article 14 of the Constitution, reiterated that the test of reasonable classification remains a dominant principle in constitutional jurisprudence. This test, which has evolved over several decades, consists of two prongs:
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the classification must be founded on an intelligible differentia which distinguishes persons or things that are grouped together from others that are left out of the group; and
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the differentia must have a rational relation with the object sought to be achieved by the statute/policy in question.
The Court clarified that the basis of classification and the objective of the legislation are distinct concepts under Article 14. While Article 14 requires a rational nexus between the classification and the objective of the legislation, merely designating a classification based on an identified objective does not automatically satisfy the constitutional requirement of equality. Such an approach risks descending into legal formalism, which could overlook the substantive implications of the equality guarantee. To avoid this, the Court has moved beyond exclusive reliance on the test of classification and now concurrently applies the doctrine of arbitrariness, particularly when actions lack valid reasoning. Article 14 prohibits class discrimination by preventing the conferral of privileges or the imposition of liabilities on arbitrarily selected individuals or groups who are similarly situated. The classification must never be arbitrary, artificial, or evasive, and must always be grounded in reasonable and justifiable criteria.
Thus, the Court emphasised that it is crucial to recognise that the unreasonableness of a law, policy or state action can be both relative and absolute. First, unreasonableness can be comparative, meaning it is assessed in relation to something else.
The Couret stated that Article 14 allows for reasonable and fair classification but prohibits class legislation. Classifications based on the categories outlined in Articles 15 and 16 are acceptable as long as they have a rational connection to their intended objectives. These classifications— such as those pertaining to other backward classes, scheduled castes and tribes, and women and children—aim to fulfil the principle of equal ends. This approach accepts and accommodates the said difference. They adopt an anti-subordination approach, treating these groups differently to promote greater equality. In this manner, Articles 15 and 16 of the Constitution of India explicitly recognize the necessity for legislative measures aimed at uplifting certain disadvantaged sections to achieve equality.
The Court reiterated that the substantive equality test will also fail in case the legislation or the policy, in its operation, results in indirect discrimination. The principle of indirect discrimination comes into play when legislation or policy applies equally to all but disproportionately to disadvantages individuals or groups based on protected characteristics, which cannot be justified. Therefore, unless a law meets these criteria of substantive equality, it would violate Article 14 of the Constitution of India.
Perusing the facts of the case, the Court emphasised that the policy, while not targeted towards the poor, is also aimed towards “other deserving sections of the society”, to meet their “housing requirement”.
The Court noted that the category of people who have been identified as beneficiaries of this State largesse as “other deserving sections of the society” are Judges of the Supreme Court and High Court, MPs, MLAs, journalists, State and Central Government employees. It was also noted that, not only are these classes of people being allotted land preferentially, the price of such land is also discounted to the basic rate, instead of the prevalent market rate.
The Court reiterated that not only must a distinct classification exist, but such classification should not be arbitrary, artificial or artful, and should be rationally tailored to serve the objective.
Further, the Bench mentioned that the classification giving State largesse to the abovementioned persons favours a privileged segment of society, which is already better off compared to most marginalized and socio-economically disadvantaged individuals. The benefits granted to these privileged and well-off classes come at a cost, as they effectively deprive and deny the essentials to the marginalized and socially vulnerable populations.
The Court said that “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”. Shorn of pretence, this policy of the State Government, is 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 Court emphasized 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 a privileged few, it creates a system of inequality, granting them a material advantage that remains out of reach for the common citizen. This preferential treatment sends a message that certain individuals are entitled to more, not due to the necessities of their public office or the public good, but because of their status. Such practices breed resentment and disillusionment among ordinary citizens, who view these actions as corrupt or unjust, thereby eroding public trust in democratic institutions. The Court noted that this policy undermines the principles of solidarity and fraternity, reinforcing societal hierarchies instead of actively working to dismantle them, and fostering divisions within society rather than promoting equality.
The Court also noted the wider economic ramifications of the policy. When land is offered at discounted rates, it distorts the natural market forces that govern land value. The true market price of land reflects its demand, scarcity, and utility, but when individuals receive land at a discount, it artificially lowers the property’s value. This devaluation not only undermines the principles of fair market competition but also results in a significant reduction in public revenue. The loss of potential income from the sale of land at market value has severe financial consequences for the public exchequer, limiting the government’s ability to fund essential services and development projects that benefit society as a whole.
The Court opined that accredited journalists cannot be treated as a separate class entitled to preferential treatment. A careful examination of the policy reveals that individual in the higher echelons of all three branches of government — legislators, bureaucrats, and judges of the Supreme Court and High Courts — have been granted similar preferential treatment. Journalists, often referred to as the “fourth pillar of democracy,” have also been included in this category. These four pillars are supposed to function as checks and balances on the arbitrary exercise of state power. However, the distribution of such extraordinary benefits to these groups undermines the very optics of healthy checks and balances within our democratic system, eroding public trust and raising questions about the impartiality of those who are entrusted with oversight and accountability.
Thus, the core framework of these policies suffers from the malaise of unreasonableness and arbitrariness. It reeks of a colourable exercise of power, where policymakers are bestowing valuable state resources upon their peers and associates, triggering a cycle of illegal and unjust distribution. The Court highlighted that the State holds all its resources in trust for its citizens, with the duty to utilize them in the larger public and social interest. When these resources are diverted for the benefit of a select few, it not only undermines the principles of equity and fairness but also erodes the trust the public places in the State’s governance.
Thus, the Court concluded that the allotment policy fails to satisfy the requirements of the two-pronged classification test and is also marred by arbitrariness. The Court viewed that the policies in question serve as a relevant example of how treating “likes” alike can lead to injustice. While the pursuit of consistency through classification may seem appealing in theory, it does not guarantee that the classification is either appropriate or equitable in practice. Contemporary equality jurisprudence calls for a more substantive understanding of equality, which rejects a rigid “test” in favor of a multi-pronged approach that acknowledges the various ways in which inequality and discrimination may be perpetuated.
When applying these principles to the facts at hand, the Court concluded that judges of the Supreme Court and High Courts, MPs, MLAs, officers of the All-India Services, journalists, and others cannot be treated as a separate category eligible for the preferential allotment of land at a discounted basic value. The object of the policy perpetuates inequality by creating a distinction that benefits an already advantaged group, while discriminating against and denying access to others who are equally deserving or similarly situated. This policy promotes socio-economic exclusion, favouring a small, privileged group at the expense of broader societal equity. It fails to meet the equality and fairness standards prescribed by the Constitution.
CASE DETAILS
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Citation: Appellants : Respondents : |
Advocates who appeared in this case For Petitioner(s): For Respondent(s): |
CORAM :
Dipankar Datta, J.
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