Allotment of plots by HUDA not in accordance with law: High Court

In a recent decision the High Court of Punjab and Haryana has allowed petitions challenging the allotment of industrial plots in Industrial Estate, Bhiwani made by the Haryana Urban Development Authority. The petitioners alleged that the allotments were "vitiated by nepotism, favouritism and total lack of a fair and transparent procedure that could ensure fairness and objectivity"; "the successful allottees are relatives/friends and protégé of politicians and bureaucrats. They had, therefore, succeeded in getting the allotment, not on the basis of merit but because authorities allowed them to steal march over the better candidates available."

The High Court, required to test the actions of HUDA on the touchstone of constitutional parameters as enunciated by the Supreme Court made a reference to various time-tested decisions of the Supreme Court [Ramana Dayaram Shetty v. International Airport Authority of India (1979) 3 SCC 489; Kasturi Lal Lakshmi Reddy v. State of J & K (1980) 4 SCC 1; New Horizons Ltd. v. Union of India, (1995) 1 SCC 478; Sachidananda Pandey v. State of W.B. (1987) 2 SCC 295; Haji T.M. Hassan v. Kerala Financial Corporation (1988) 1 SCC 166; Netai Bag v. State of W.B, (2000) 8 SCC 262] to cull out the principle of law as under;

(a) The State ought to dispose of public property by way of public auction or by inviting tenders as an ordinary rule. But if the State chooses to act otherwise, it has to act fairly and reasonably and action of the State must exclude arbitrariness;

(b) In case the State opts to make an exception to the general rule of disposing the property through public auction or by inviting tenders, the procedure followed should be so transparent that it overrules an impression of bias, favourtism or nepotism;

(c) In all the cases, where the general rule (sale through public auction or by invitation of tenders) is not adhered to, it must be in consonance with the criterion, which satisfies the expectation that the same is fair and reasonable.

(d) The criteria should be pre-determined and published to rule out the allegation of any bias.

In this background the High Court examined the facts relating to the allotment of the plots to the successful applications to agree with the Petitioners. It observed that "a perusal of the record reveals that no comparative merit of the applicants was drawn. No exercise to compare the successful allottees and unsuccessful applicants was undertaken. The relevant factors, i.e., experience, availability of capital, qualification, managerial capability and professional skill etc. were not considered to determine inter-se merit. The committee had interviewed the applicants and on a separate sheet, had given reasons for making the allotment of plot. The reasons given are general in nature, vague and non-specific. The reasons spelt out are such that they can stick to any applicant, to whom the committee wanted to make allotment."


The High Court noted that the allotment was made without evolving any criteria and without the comparison of the comparative merits of the applications. That alone, in view of the High Court, was sufficient to hold the allotment exercise invalid being contrary to the principles of law to thsi regard. The High Court also observed, "we are of the view that the committee ought to have evolved criteria for allotting marks under the different sub-heads, e.g. qualification, experience, financial strength, product, capability and skill. The allotment of marks could be on various counts. They cannot be put in water tight jackets, but the example has been given only to elaborate our view. It is admitted stand of the official respondents that no comparative table or merit-list was drawn in case of all the applicants, who were interviewed" ... "In the present case, the procedure for allotment was stated to be due assessment of the application/ project report, individual merit and financial capability of the entrepreneur. The project reports submitted by the applicants have not been evaluated. No criteria was adopted to find out as to which project report, submitted by the applicants, was better than the other. Similarly, there is no inter-se determination of financial capability. Some of the successful entrepreneurs had no documents to support their cases. Loans from banks and financial institutions were not tied up. No appraisal of the project reports was done by the financial institutions."


On these facts the High Court concluded as under;

The question, which we have asked ourselves, is whether the procedure adopted by the Committee that ‘allotment of plot will be after due assessment of the application/project report & on basis of individual merits/financial capabilities of entrepreneurs’ satisfies the test of rational and relevant principle, which is non-discriminatory ? It makes us conclude that until and unless each applicant was compared, it vested arbitrary power in the Committee to discriminate and say that candidate ‘A’ is better than candidate ‘B’. Thus, the procedure adopted by the Committee, in no way, can be termed as rational in answering all the requirements of Article 14 of the Constitution of India. In these circumstances, we accept the present writ petitions, quash the allotments made in pursuance of the recommendations of the Committee and direct the respondent Haryana Urban Development Authority to evolve a criteria, which is in accordance with the requirements of law and observations made by us and to re-assess the comparative merit of the applicants.

Have a look at the decision.