STATE OF ANDHRA PRADESH AND OTHERS versus DR. RAO, V.B.J. CHELIKANI AND OTHERS

Summary

The Supreme Court quashed the Andhra Pradesh land allotment policy (GoM Nos. 243 and 244 of 2005) to the extent that it treated MPs, MLAs, All India Services and State officers, Judges of the constitutional courts and journalists as a separate class for allotment of Government land at the basic rate, together with the 2008 allotment orders made under it. It held the classification arbitrary and contrary to substantive equality under Article 14. Constructive res judicata did not bar the challenge in this public interest litigation. The allottee societies were held entitled to refunds with interest.

Issues

1. Whether constructive res judicata, arising from an earlier public interest writ petition that challenged only the 2006 allotment order, barred a later challenge to the underlying policy in GoM Nos. 243 and 244.
2. Whether the State's discretion in distributing public land is subject to Article 14, and what tests apply to such State largesse.
3. Whether classifying legislators, All India Services and other officers, Judges and journalists as 'deserving sections' entitled to Government land at the basic rate satisfies reasonable classification, non-arbitrariness and substantive equality.
4. Whether the Andhra Pradesh (Telangana Area) Land Revenue Act, 1317F and the 1975 alienation rules authorised the allotments.
5. What consequential relief should follow for the allottee cooperative societies and their members.

Provisions considered

• Section 11, Explanations IV and VI, Code of Civil Procedure, 1908Explanation IV (matters that might and ought to have been raised) and Explanation VI (bona fide litigation over a public right binds all interested persons) were examined in their application to public interest litigation. The Court held that constructive res judicata has only limited application to PILs and applies only where the cause of action is identical. (¶¶ 30, 31, 32, 34, 35, 37, 38, 39)
• Article 14, Constitution of IndiaHeld to govern the distribution of State largesse, including land. The policy failed the two-pronged classification test, was manifestly arbitrary, and failed the substantive equality standard because it conferred discounted land on an already privileged group while excluding more deserving and similarly placed citizens. (¶¶ 42, 43, 45, 46, 48, 52, 56, 66, 73, 74, 77, 78, 79, 87, 88, 92)
• Articles 15, 16, 17 and 18, Constitution of IndiaRead with Article 14 as together supporting a substantive conception of equality. The Court explained that classifications on proscribed grounds are permissible only where they serve anti-subordination ends, such as provisions for women, children and backward classes. (¶¶ 69, 70, 71, 72)
• Section 25, Andhra Pradesh (Telangana Area) Land Revenue Act, 1317FQuoted as allowing the Collector to set apart unoccupied land for pasturage, Government purposes or public benefit. Held not to authorise allotment of land in violation of the equality principle in Article 14. (¶ 89)
• Rules 2(b) and 10, Andhra Pradesh (Telangana Area) Alienation of State Lands and Land Revenue Rules, 1975Rule 2(b) defines alienation as placing land at a third person's disposal for a public purpose. Rule 10 permits the Government to sell or alienate land notwithstanding the rules by a reasonable procedure, including public auction. Neither rule supported allotment of land at the basic rate to the favoured categories. (¶¶ 12, 90)

Held

• Res judicata did not apply, because the earlier judgment did not examine the validity of GoM Nos. 243 and 244 and most of the 2008 allotment orders did not then exist. Constructive res judicata has limited application in public interest litigation and applies only where the cause of action is identical. Challenging the policy orders is a cause of action distinct from challenging allotments under them, so the High Court erred in applying the doctrine. (¶¶ 35, 36, 37, 38, 39)
• The Government cannot, like a private person, distribute public resources to whomever it pleases. Its discretion in granting largesse must be confined by rational, relevant and non-discriminatory norms, and Article 14 applies to governmental policy and to contractual and allotment decisions. (¶¶ 41, 42, 43, 44, 45, 46)
• Equality under Article 14 is not exhausted by the intelligible differentia and rational nexus test. The object of the classification must itself be legitimate and not unfair, and arbitrariness is independently a ground of invalidity. Article 14 now carries a substantive content: a policy fails if its object or impact perpetuates inequality, including through indirect discrimination, rather than giving an equal chance of access to the social or economic good. (¶¶ 52, 53, 54, 55, 56, 57, 59, 66, 67, 68, 73, 74)
• Allotting Government land at the basic rate to Judges of constitutional courts, MPs, MLAs, All India Services officers, journalists and similar groups, described as 'deserving sections', favours an already privileged segment at the cost of the marginalised. The policy is capricious, irrational and manifestly arbitrary. The claim that these groups are underprivileged or have made sacrifices was rejected. (¶¶ 75, 76, 77, 78, 79, 81)
• GoM No. 244's protection of IAS, IPS and IFS officers from proportionate reduction of plot sizes showed further unjustified bias. Including journalists alongside the higher echelons of the legislature, executive and judiciary undermines the checks and balances those institutions are meant to provide. The policy was held to be a colourable exercise of power. (¶¶ 80, 85, 86)
• Land is a finite public resource held in trust. Ordinarily public property must be disposed of at the best market price, and a lower price is permissible only to achieve a constitutionally recognised public purpose. Discounted allotment to a privileged few distorts the market, reduces public revenue and erodes public trust. (¶¶ 82, 83, 84, 86)
• The policy failed both the classification test coupled with arbitrariness and the substantive equality standard. The State may still allot resources to the marginalised, or to persons to the extent needed for their public functions or in recognition of excellence, and allotment to public servants can be justified if it satisfies the twin-prong test and substantive equality. (¶¶ 87, 88)
• Section 25 of the Land Revenue Act and Rules 2(b) and 10 of the 1975 Rules do not permit allotment of land in breach of Article 14, so reliance on them was misconceived. (¶¶ 89, 90)

Result

State and society appeals dismissed; writ petitioner's cross-appeal allowed. GoM Nos. 243 and 244 quashed to the extent of the preferential basic-rate class, and the 2008 allotment GoMs (Nos. 419, 420, 422-425 and the GoM of 27.03.2008) quashed. Societies and members to be refunded all payments, including stamp duty, registration fees and certified development charges, with interest not above the RBI rate; their deeds treated as cancelled; State free to deal with the land according to law. Contempt petitions disposed of.