Citation: AIR 1987 SC 1109

Date Of Judgement: 11^th February, 1987

Bench: O. Chinnappa Reddy (J), V. Khalid (J)

Facts:

• In 1979, a tourism conference was held. It was resolved at the conference that lands in good location in the States, should be allocated for construction of hotels so as to promote tourism.
• In 1980, Taj group of hotels came up with a proposal to construct a 5-star hotel if any of the three specified chowringhee area by them, was made available. But the chowringhee area had some pending litigation. It was borne in mind that the I.T.D.C was interested in the Hastings house property and the Taj Group was not. So, in September 1980, the Government of West Bengal, thought of giving the four acres out of eight acres of begumbari area, which was only used for fodder and grass cultivation for elephants. The eight acres also had old buildings, structure, animal husbandry etc, which were a part of the Zoo. The eight acres known as begumbari land, was east to the Alipore zoo and the west of it had 49 acres of land, upon which the Alipore Zoo was built.
• On February 1981, the cabinet agreed to the proposal and the cleared the way for negotiations with the Taj hotels. The public undertaking committee appointed by the West Bengal legislative assembly submitted a report in which it was stated that the construction of a 5-star hotel might affect the migration of birds and breeding potential of the animals because of immense air and sound pollution. Also, the reallocation of the staff quarters, animal husbandry, morgue, etc which were on the eight acres of begumbari land.
• In march 1980, the Taj Group of hotels submitted a proposal to the government illuminating about the benefits flowing out of the construction. Two alternative financial agreements were suggested. The first alternative was the payment of annual rent on the basis of the valuation of the land and the second alternative was based on nett sales. Nett sales are sales after deducting all taxes, levies, and service charges. The Metropolitan Development Department expressed the preference for the second alternative. The government also asked the Taj group to submit a finance projection based on the second alternative.
• WEBCON a West Bengal Consultancy undertaking was asked to examine the proposal of the Taj Group of hotels, on request of committee of secretaries. On July 1981, a comprehensive report was submitted indicating the second financial alternative of nett sales as the best.
• The Managing committee of the Zoo presented a resolution against the proposal of construction of hotel. It was stated that the construction on the vicinity of the Zoo will be detrimental to the animals and also to the migration of birds which was the prominent attraction of the Zoo. It was further pointed out that the proposed area is already used for growing grass, as animal morgue, husbandry and these are essential services which cannot be shifted in the near premises of the Zoo as there is a risk of spreading of the infections to other animals.
• The Minister of Metropolitan Development Department informed the Chief Minister about the resolution of Managing committee. The Chief Minister endorsed a note to the Managing committee that if any further facilities are required by the Zoo the government will provide it. Thus, the Managing committee withdrew their objections on the assurance of being provided adjacent land and matching grants for purpose of shifting of departments of the Zoo.
• Director of the Zoo also addressed a note to Secretary of Animal husbandry and veterinary department stating its objections towards the construction of the hotel. The Director of the zoo contented that the Zoo cannot operate a single day without the essential services viz hospital, morgue, dumping ground, etc and also pointed out that clause 11 of the Alipore Zoological Garden (Management) Rules, 1957 clearly stipulates that the Managing Committee shall have custody and disposal of the property and funds of the Gardens and shall be responsible for proper maintenance. As a result, the Secretary of Animal husbandry and veterinary department wrote that it was not consulted before putting forward the proposal to the cabinet and thus, the practical issues were not taken into consideration.
• Meanwhile, the negotiations with the Taj group fastened. WEBCON submitted further reports on the modifications by the Taj group and a detailed report was presented for cabinet discussion on September 1981. It was put forth that the overall environmental beautification was State’s responsibility and would cost Rs. 2 crore and that it would be beneficial for public at large. WEBCON also cited that the projected profitability would be much more and would create direct & indirect activities.
• On 7 January 1982, a joint meeting of establishment and finance sub-committees was held, where it was decided that the four acres land may be relinquished, subject to requirements of the zoo until new facilities are constructed on adjacent land. The Managing committee endorsed this view and communicated the same to the government on January 11, 1982. On January 15, 1982, the Government of West Bengal wrote to the Land Acquisition Officer, with copies to the Taj Group of Hotels, directing the Land Acquisition Officer to give possession of the land to the Taj Group.
• Thus, the appellants filed a suit in the court to restrain the Zoo authorities from handing over four acres of land to the government and against the resolution passed on 7 and 11 January.

Trials Court’s Decision

The learned Single Judge dismissed the writ petition because of the pendency of the matter, valuable time was lost. Petitioners as well as the government have suffered sufficient loss. The Single Judge also pointed out further that as the petitioners obtained the interim order, they were not interested in an early hearing of this matter and until a few months back no step was taken to have this matter heard. If a stay was granted, similar situation will follow.

High Court’s Decision

The division bench observed that the appellants before them have impugned the State Government’s decision to grant aforesaid four acres of land out of Begumbari Compound to Taj group, mainly on the ground that the same was unreasonable and arbitrary. Also, that the State Government did not apply its mind to relevant facts before disposing of the said valuable lands in discharge of the public interest. The Division Bench held that the decision taken was neither unreasonable nor arbitrary and that taking away of four acres of land from the Zoo was not detrimental to public interest. The Division Bench upheld the judgment of the learned Trial Judge and dismissed the appeal.

Judgement

The Hon’ble Supreme court after adverting to all the relevant facts, put forth by the parties, held that the Respondents were not arbitrary and unreasonable in not holding a public auction for the sale of the land as, only Taj group came forth with the proposal of construction of a five star hotel. The lease was the culmination after a long, elaborate and open procedure with nothing to hide which therefore cannot justifiably be subject to adverse criticism. Thus, the approach of the Taj Group in the case has been creditably fair. Therefore, the court upheld the decision rendered by the learned Single Judge and the Division Bench of the High Court and, dismissed the appeal by the appellants.

Key points discussed in the case

• Whether the government of West Bengal was arbitrary and unreasonable in allotting land for construction of a five-star hotel and not inviting tenders for the same?

No

The Hon’ble Supreme court referred the case of R.D. Shetty v. International Airport Authority[1], wherein the court observed that the activities of the Government had a public element and if it entered into any contract, it must do so fairly without discrimination and without unfair procedure. Whenever the Government dealt with the public, whether by way of giving jobs or entering into contracts or issuing quotas or licences or granting other forms of larges, the Government could not act arbitrarily at its sweet-will but must act in conformity with standards or norms without being arbitrary, irrational or irrelevant. If the Government departed from such standard or norm in any particular case or cases its action was liable to be struck down unless it could be shown that the departure was not arbitrary but was based on some valid principle which was not irrational, unreasonable or discriminatory.

Therefore, on consideration of all the facts and circumstances of the case, the court was satisfied that the Government of West Bengal acted perfectly bona fide in granting the lease of Begumbari land to the Taj Group of Hotels for the construction of a Five-Star hotel in Calcutta. The Government of West Bengal did not fail to take into account any relevant consideration.

Thus, direct negotiation with these who came forward with proposals to construct Five Star Hotels was without doubt the most reasonable and rational way of proceeding in the matter rather than inviting tenders or holding public auction. There was nothing discriminatory in the procedure adopted since no other leading hotelier showed any inclination to come forward. It was sale of a Government property. Therefore, public auction was necessarily ruled out. Only Taj Group of Hotels came forward with an offer to start the hotel.

• Whether the Government has considered the principles of Natural Justice in allotting of the land, and the question of the migratory birds while leasing the land to the Taj Group of Hotels?

Yes

The principles of Natural Justice inculcate rules necessary for determining the righteous action of the Government. It’s two main components are rule against bias and right to fair hearing. The court righteously noted that the principles of Natural Justice has been observed and that those who are most interested in the Zoological Garden were heard in the matter before the decision was taken. The proposal to lease the Begumbari land was public knowledge. The interested parties in the matter like the Managing Committee of the Zoological Garden and the Director of the Zoo did have their say in the matter. The Public Undertakings Committee in its report discussed the matter and invited the Government’s attention to various factors. The matter was further discussed on the floor of the Legislative Assembly. Therefore, it was impossible to agree that there was any failure to observe principles of Natural Justice.

It was also well noted that the Government was alive to the considerations put forward by the committees and interested well beings. For instance, the report by public undertaking committee was given importance as it mentioned that the construction of a five star hotel nearby would diminish the breeding potential of the animals in the zoo and would be detrimental to the migrating birds. The resolution by the Managing committee of the Zoo put forth that the construction would take away the fodder cultivation land and therefore, would likely shift the facilities on that land to the premises of the Zoo. The Chief Minister of West Bengal assured them that if any further facilities are required it will be provided by the government. Also, the lease was the culmination of a long, elaborate and open procedure with nothing to hide which therefore cannot justifiably be subject to adverse criticism.

Furthermore, the Government of West Bengal & the Taj group borne in mind the flight of the migratory birds and that’s why the structure of the construction was not to be above 75 feet despite being some skyscrapers already built in the area. It was done to keep free the route of the flight of the birds. It was also agreed to subdue lights in the hotel, keeping surroundings of the hotel and the flora well maintained, in the interest of the birds.

All of it reflected quite crystal clear that the Taj group had given all the assurances necessary to preserve the Zoo and its inmates. It was also agreed that an operation theatre, morgue, veterinary department and the like would be constructed a new bearing the cost of Rs. 30 lakhs, which the Taj group were entitled to be reimbursed under clause 25 of the lease, but voluntarily gave up.

The court was also told that already 30000 plants were getting ready to adorn the surrounding area of the construction.

Thus, there was no doubt that the government did not take any beforehand consideration of principles of Natural Justice, ecology and the migratory birds.

[1] AIR 1979 SC 16.