Summary
The State allotted about 3 acres of government land to a charitable trust in 2001 on payment of market value, subject to conditions including use only for the allotted purpose and resumption on breach; a trustee later executed a GPA concealing the allotment and a residential colony was carved out and plots sold. Reversing the High Court, which had treated the transaction as a sale and held the conditions void under Section 10 of the Transfer of Property Act, the Court held that it was a conditional allotment under a statutory scheme (the Telangana Alienation of State Lands and Land Revenue Rules, 1975, G.O.Ms. No.635 and Board Standing Order 24), that the trust knew and admitted the conditions, that those Rules are not eclipsed by Section 10, and that cutting the colony was a fraud on the statute.
Issues
- Whether the alienation of government land by the District Collector's order dated 08.02.2001 on payment of market value was a sale or an allotment under a statutory scheme.
- Whether any condition was imposed on the alienation and whether the allottee trust was aware of it.
- Whether conditions on the use of land allotted by the State under the 1975 Rules and the Board Standing Orders are void under Section 10 of the Transfer of Property Act, 1882.
Provisions considered
- Section 10, Transfer of Property Act, 1882Renders void a condition absolutely restraining a transferee from alienating the property. Held inapplicable: where the State allots land to a public trust for a public purpose it is not in the position of a classical inter vivos transferor, and the statutory Rules and Standing Orders operate in a distinct space not eclipsed by Section 10. (¶¶ 11, 13, 23)
- Rules 5 and 6 (framed under Sections 25 and 172 of the Telangana Land Revenue Act), Telangana Alienation of State Lands and Land Revenue Rules, 1975Every grant of alienation of State land for a religious, educational or other public purpose is subject to conditions that the land be used only for the stated purpose and that the Government may resume it on breach without compensation or refund; the 2001 allotment was made under these Rules. (¶¶ 2, 17, 18)
- Standing Order 24, condition 6, Andhra Pradesh Board Standing OrdersPrescribes the same conditions of use and resumption for grants of State land; the trust accepted these conditions and violated them by carving a colony. (¶¶ 4, 17, 25)
- Whole, G.O.Ms. No.635, Revenue Department, dated 02.07.1990Empowers the Commissioner of Land Revenue and District Collectors to alienate government land to institutions and individuals on payment of market value; the trust's application was processed under it and the allotment order expressly referred to it. (¶¶ 3, 5, 17, 20)
Held
- The 2001 alienation on payment of market value, made under the 1975 Rules, G.O.Ms. No.635 and Board Standing Order 24 and expressly subject to three conditions with resumption on deviation, was not a sale but an allotment under a statutory scheme; the High Court erred in making out a case of sale, which was not even the trust's pleaded case in its writ petition. (¶¶ 15, 16, 17, 18, 21)
- Although the allotment order named no specific purpose, land allotted to a charitable trust can be used only for charitable purposes; the trust's own reply to the State in 2011 and its writ petition admitted the three conditions and claimed to have followed them scrupulously, so its argument that no purpose was specified was false to its knowledge. (¶¶ 16, 19, 20)
- When the Government decides to sell its land it can neither select a buyer nor fix a price unless the decision is backed by a social, economic or welfare policy; the State cannot distribute largesse and must normally obtain the maximum value of its resources when passing them to private entities (Ramana Dayaram Shetty; Natural Resources Allocation, In Re; Manohar Lal Sharma). (¶ 22)
- Where the State allots land to a public trust for a public purpose, public interest is supreme and the State cannot be put in the position of a classical inter vivos party; the 1975 Rules and the Board of Revenue Standing Orders operate in a completely distinct space and are not eclipsed by Section 10 of the Transfer of Property Act. (¶ 23)
- A GPA executed by the trustee in 2011 without disclosing that he was a trustee of the allottee trust, or the allotment and its conditions, reflected the allottee's mala fides; carving a colony on the land, sub-dividing it into plots and selling some to third parties in violation of the conditions of grant was a fraud on the statute. (¶¶ 24, 25)
Result
Appeal allowed; judgments of the learned Single Judge dated 24.06.2014 and of the Division Bench dated 05.07.2022 set aside; pending applications disposed of.