It is solemn duty of State to adopt procedure of allotment of license which is fair play in action, says Apex Court

Read Judgment: Anant Raj Ltd. (formerly M/s. Anant Raj Industries Ltd.) vs. State of Haryana & Ors. 

Pankaj Bajpai

New Delhi, November 5, 2021:The Supreme Court has opined that the principle of First Come First Serve basis adopted by the State of Haryana for grant of license of its own land, for development of a group housing colony under the Final Development Plan of Gurgaon Manesar Urban Complex for 2025, is neither rational nor in public interest and is in violation of Article 14 of the Constitution of India. 

A Division Bench of Justice Ajay Rastogi and Justice Abhay S.Oka observed that the method of selection has to be such so that all the eligible applicants get a fair opportunity of competition and it is the bounden duty of the State and its instrumentalities of their action to be conformed with Article 14 of the Constitution of which non-arbitrariness is a significant facet.

A public authority possesses powers only to use them for public good, and this imposes a solemn duty on the State to act impartially and to adopt a procedure of allotment of license which is fair play in action, added the Bench. 

The observation came in reference to an appeal challenging the judgment of High Court taking note of the Scheme of Haryana Development and Regulation of Urban Areas Act, 1975 r/w Haryana Development and Regulation of Urban Areas Rules, 1976, whereby it was held that the policy adopted by the State authorities for the grant of license on the principle of First Come First Serve basis, was unfair & unreasonable and it led to an unholy race amongst the applicants in achieving their goal of obtaining grant of license. 

Therefore, holding the methodology to be against public policy, the High Court cancelled the grant of license to the impleaded Anant Raj Ltd (appellant) with a direction to the State Government to consider the grant of license after framing a transparent and fair policy. 

After considering the arguments, the Top Court found that neither the public notice dated October 1, 2010 nor the Final Development Plan dated May 24, 2011 which came to be circulated by the Respondents (State Authority) at a later stage on July 5, 2012, prescribes that the method of allotment of license shall be made on First Come First Serve basis and from where this practice had been adopted by the Respondent is alien to the Scheme of the 1975 Act or the 1976 Rules framed thereunder. 

“When we call the term “established practice”, it always refers to a regular, consistent, predictable and certain conduct, process or activity of the decision making authority and being the State functionary, its character is supposed to be based on the requirement of higher degree of fairness in administrative action to be tested on the anvil of Article 14 of the Constitution. The very foundation on which the process was initiated, inviting applications pursuant to the public notice dated 4th October, 2010, on the principle of First Come First Serve basis is completely silent/missing from records and how that becomes an established practice in entertaining applications for grant of allotment of license under the policy of the State Government dated 19th December, 2006”, observed the Court. 

The Division Bench therefore noted that there is a fundamental flaw in the policy of the State of First Come First Serve basis as it involves an element of pure chance or accident and it indeed has inherent inbuilt implications. 

The Apex Court therefore dismissed the appeal and made it clear that once the policy of 2017 has been introduced by the Respondents, it is open to consider all pending applications for grant of licence under the policy of 2017 in accordance with law.