1. On 21-9-1959 the 2nd petitioner obtained an industrial licence from the Government of India for the manufacture of laminated and coiled springs for automobiles and railways. On 25-9-1962 he applied to the Government of Andhra Pradesh for assigning 80 acres of land near Uppal for establishing a factory with a view capacity to manufacture 1800 tons per year and capable of employing about 200 persons. On 29-10-1962 the Government of Andhra Pradesh directed the District Collector of Hyderabad to take the necessary steps to assign the land to the 2nd petitioner and by G. O. S. O. 468, D/- 20-3-1963 the land was directed to be handed over to the 2nd petitioner. In accordance with this direction the land was handed over to the 2nd petitioner by the Deputy Director of Industries and Commerce on 26-4-1963. On 14-2-1964 the Government issued a formal order, G. O. Ms. No. 212, allotting 73 acres 36 cents to the 2nd petitioner and directed the Director of Industries to obtain an agreement on the standard form from the allottee. On 18-6-1964 the first petitioner Company known as M/s. Torison Products Limited was formed and the 2nd petitioner requested the Government of transfer the land to the 1st petitioner instead of to him. The Government agreed to this course by its letter D/- 7-9-1964 and on 31-8-1965 the Government and the 1st petitioner entered in so far as it is relevant is as follows:-
'Whereas upon the application of the Company the Government have agreed to allot 73 acres 36 cents of land situated at Uppal Hyderabad East Taluk as per G. O. Ms. 212, Industries Department, D/- 14-2-1964.
Now these persons witnesseth and it is hereby agreed as follows:-
(1) That the Company shall pay to the Government of Andhra Pradesh hereinafter called the Government the market value of the land as determined by the Government.
2) ... ... ... ...
(3) The terms upon which the said land shall be held by the Company are:
(a) That the company will use the said land for the aforesaid purpose of putting up a factory or factories, housing colonies for staff and workers or any other such building as may be required in connection therewith and for purpose of expanded activities of the company and for no other purpose:
(b) that the company will within about two years of being put in possession of the said land erect and lay out such buildings, factories, as aforesaid and will maintain the same on its own expense;
(e) that if the Company commits a breach of any of the convenants herein obtained, it shall be lawful for the Government to reenter upon the said land and take possession thereof and also any buildings standing thereon and thereupon the transfer made in favour of the company shall become null and of no effect and all rights of the company in the said land and in any buildings standing thereon shall at once cease and determine;
(4) That the company shall abide by any other conditions as may be imposed in course of time by the Government.'
On 5-11-1965 the 1st petitioner Company requested the Government to agree the hypothecation of the land in favour of the United bank of India for raising a medium term loan of Rs. 20,000 for setting up the contemplated industry. The Government consented to the hypothecation by their letter of 25-11-1965. The company is said to have hypothecated the entire extent of land and raised the necessary loan. In pursuance of the allotment the Company has also erected a factory and constructed several buildings. I am told that the production capacity of the factory is 1500 tons per year.
2. On 12-3-1966 the Minister for Finance and Industries, Government of Andhra Pradesh discussed with representatives of certain industrial undertakings including the 1st petitioner Company the question of proper utilisation of Government land allotted to the various concerns. After discussion they arrived at certain decisions which are mentioned in letter No. 7880/H3/65, D/- 7-4-1966 addressed by the Director of Industries to the various concerns. These decisions are as follows:-
'1. Those concerns who have not taken effective steps to establish the industry should surrender the plots allotted to them so that the land could be utilised usefully by other concerns who are in a position to start construction work immediately.
2. Each concern should examine on its own thoroughly the exact requirements of land and furnish full information and date to the Director of Industries and Commerce to enable the latter to have a correct appreciation of the present and future requirement of land.
3. It was felt that the requirements of land for future expansion should be estimated on the possible expansions that would be taken up in the next two or three years.
4. On receipt of information and data from the concerns the position of the exact requirements of land would be once again reviewed by a committee consisting of officials and a few representative industrialists. This committee will give an opportunity to each concern to be heard.
5. In cases where it was found by the committee that the land allotted was in excess of the requirements the concern would have to surrender excess land to the Department. The Government consider it essential to put the development land to optimum case at the earliest as it would be uneconomical that large extent of land should lie unutilised for long spells.
6. The residential quarters for only key staff will be allowed to be planned in the plot allotted for putting up residential quarters for workers and staff (Sic) will be provided in suitable areas earmarked by the Department for the housing colony catering to needs of several industries at one place.'
By his letter dated 7-4-1966 the Director of Industries requested the various concerns to submit to him the information and data necessary for the purpose of assessing the requirements of land. On 14-5-1966 the Company replied to the Government stating that they wished to expand their factory by one hundred per cent and they also wished to start new projects like a rolling mill and the manufactures of shock absorbers etc. The committee, which the Government promised would be formed to review the exact requirements of each concern (decision No. 4 taken at the meeting on 12-3-1966) it is now admitted, was never formed and therefore the question of the committee giving an opportunity to each concern never arose.
3. Nothing further seems to have happened till 17-12-66 when the Director of Industries suddenly made up his mind to resume a major portion of the land allotted to the petitioners. The communication No. 442/D11/(1)/66 dated 17-12-1966 from the Director of Industries to the Company reads as follows:
You were allotted an area measuring 73-36 acres of land at Uppal Block II for the establishment of a factory for the manufacture of leaf springs required for automobiles and Railways. The possession of land was given to you on 26-4-1963.
This department has taken up the review of utilisation of land by various industrialists in the Industrial Development Areas. According to the layout plan furnished by you and after physical verification of the utilisation of land by our departmental officers, it was noticed that you were able to utilise to date only 5 acres of land as against 73-36 acres allotted to you.
In your letter 3rd cited, you have stated that you wish to expand your factory by 100% and that you also wish to take up a few other new projects viz., Shock Absorbers etc., besides a rolling mill. I wish to say in this connection that the item shock absorbers is on the banned list and, therefore, the question of obtaining a licence for its establishment may not arise in the foreseeable future.
In view of the existing utilisation of land and possible need for expansion in future as also one or two new projects we have decided to allot to you finally 22 acres and resume and balance of land. I enclose herewith a plan showing the area now allotted to you and request you to restrict your construction work to this area of 22 acres as shown in the plan.
I might also inform you that Government have fixed the price of Uppal land at Rupees 1200 per acre. The development charges will be Rs, 2500 per acre.
You are requested to remit the cost of land for 22 acres in the State Bank of Hyderabad, Hyderabad under the following head of account;.....................................................'
4. It will be noticed that the letter does not say that the company has committed breach of any particular term of the agreement but wants to make it appear that the previous allotment which was made by G. O. Ms. No. 212 was only provisional and that the allotment of 22 acres now decided to be made is the final allotment. The letter does not also state that the petitioners have failed to erect the factories or buildings which they undertook to erect but says that they have not utilised the entire extent of land, but only a fraction of it. It does not also appear from the letter that the Government has taken any decision in the matter and issued any G. O. It may be remembered that the agreement was between the Company and the Government of Andhra Pradesh and not between the Company and, the Director of Industries and the right of resumption can be exercised by the Government and none else. The decision to resume appears to be that of the Director of Industries and not of the Government and if so it is clearly unauthorised unless the Director can be said to have been lawfully authorised to act for the Government in the matter of resuming the land.
5. By their letter date 7-1-1967 the 1st petitioner Company objected to the resumption of any portion of the land already allotted to them stating that their expansion activities as well as their intended provision for housing canteen. Medical Centre for staff and recreation facilities will be hampered if any portion of the land is resumed. The company remitted a sum of Rs. 88,680 being the cost of land of the entire extent of AC. 73-76 cents at the rate of Rs. 1200 per acre. The Director of Industries replied to this letter on 23-1-67 stating that the Company need have remitted the price of only 22 acres which was allotted to them. Further correspondence followed between the Company and the Director of Industries. Only one letter needs to be mentioned out of this correspondence. It is a letter dated 5-4-1967 from the Director of Industries to the Company in which it is stated that 'the order resuming 22 acres of land was issued by us under the provisions of Clause (e) of the agreement reproduced above.' Clause (e) which has been reproduced earlier enables the Government to enter upon the land and take possession if the Company commits breach of any of the convenants. It is worthwhile nothing that beyond mentioning that the company has utilised about 5 acres of land the letter does not mention any particular breach of convenient committed by the Company.
6. Meanwhile out of the land of 73 acres allotted to the petitioner company the Director of Industries purported to allot an extent of Ac. 6-88 cents to the 3rd respondent, M/s Jeevan Foods, Bombay. In pursuance of the allotment so made the 3rd respondent appears to have taken possession of the land and there is some correspondence between the 1st petitioner Company and the 3rd respondent the 1st petitioner refusing to recognise the allotment and treating the 3rd respondent as a tresspasser and the 3rd respondent asserting that the Government had validly allotted the land to them. Notwithstanding the protests of the 1st petitioner Company the 3rd respondent has proceeded with the work of erecting a factory and it is stated that the work is now halfway through and that the 3rd respondent has expended a considerable amount of money.
7. In this application the petitioners seek a writ or direction in the nature of Mandamus (1) restraining the Director of Industries and the Government from giving effect to their letter dated 17-12-1966 purporting to resume the land of the extent of 51 acres, (2) to prevent them from giving effect to their order allotting AC. 6-88 cents to the 3rd respondent and (3) to direct then to forbear from assigning any other portion of the property.
8. In support of the writ petition the learned counsel for the petitioners has raised before me the following principal contentions:-
'(1) Clause (e) of the agreement dated 31-8-1965 is offensive of Article 31(1) of the Constitution of India, and therefore void. The action of the respondents in pursuance of this clause is without legal authority.
(2) No notice was given to the petitioners to the proposed action of the respondents and no opportunity was given to them to put forward their case before a decision was taken. The decision of the respondents to resume the land offends the principle of natural justice that no man is to be deprived of his property without having an opportunity of being heard.
(3) The action of the respondents is illegal since no breach of any particular convenient is alleged.
(4) There is in fact no breach of convenient.
(5) The Director of Industries is incompetent to take any action since under the agreement the Government alone is authorised to resume the land.'
9. Article 31(1) of the Constitution reads as follows:-
'No person shall be deprived of his property save by authority of law.'
The argument of the learned counsel for the petitioners is that the land having been assigned to the petitioners. it has become their property and the Government cannot take away the whole or even a part of it save by authority of law. He contends that a clause which provides for re-entry upon the land by Government offends the right guaranteed under Article 31(1) and must be declared void. He points out that even if a person agrees to convenants or conditions which enrich upon his fundamental rights he cannot be bound by such convenants or conditions since there can be no waiver of fundamental rights. Mr. Narasaraju, learned counsel for the 3rd respondent and the learned Advocate appearing for the Government counter this argument and contend that under Article 129 of the Constitution of India, except where regulated by statute the executive of the state has full freedom of contract, and is under no disability to impose suitable conditions when it makes a grant of the property of the State. They assert that no question of a fundamental right to property arises at all in a case where the claim to the property itself is derived form a contract and that very contract limits the extent of the grant.
10. It is difficult to agree with the contention of the petitioners Art. 31(1) of the Constitution does not have the effect of extending or expanding the content of the right under a grant or a contract beyond the limits of the terms of that grant or contract. The petitioners do not possess any 'property' in the land apart from what is granted under the agreement and the extent of the 'property' possessed by the petitioners is as declared and conditioned by the terms of the agreement. The petitioners have no 'property' in the land dissociated from the terms of the grant and if one of the terms is sought to be enforced it cannot be said that there is any deprivation of property. A somewhat similar situation arose in Achutan v. State of Kerala, : AIR1959SC490 One C. K. Achyuthan held a contract for the supply of milk and other articles of diet to certain hospitals for one year. The contract was cancelled after giving a month's notice under Clause 20 of the conditions of contract. One of the points raised before the Supreme Court in an application under Article 32 of the Constitution was that the petitioner's rights under Articles 19(1)(g) and 31 had been violated. Hidayatullah, J., observed at page 467 (of SCJ) = (at page 492 of AIR):
'Similarly a contract which is held from Government stands on no different footing from a contract held from a private party. The breach of the contract, if any may entitle the person aggrieved to sue for damages or in appropriate cases even specific performance, but he cannot complain that there has been deprivation of the right to practise any profession or to carry on any occupation trade or business, such as is contemplated by Article 19(1)(g). Nor has it been shown how Article 31 of the Constitution may be invoked to prevent cancellation of a contract in exercise of powers conferred by one of the terms of the contract itself.'
11. The learned counsel has relied upon the decision in G. Kistareddy v. Commissioner of City Police, AIR 1952 Hyd 36, Mohindar Singh v. State of Pepsu, AIR 1955 Pepsu 60 and Mrs. C. N. Lloyd v. District Council United Khasi and Jaintia Hills, AIR 1960 Assam 131. In the first two cases the learned Judges were concerned with barefaced executive high handedness in striving to disturb the possession of the petitioners while in the last case the learned Judges were really dealing with the scope of Article 226, None of the cases is of any help. I have no hesitation to hold that there is no infringement of Art. 31(1) of the Constitution of India.
12. There is greater substance in the second point. The learned counsel for the petitioners has referred me to the oft-quoted statement of Erle C. J. ,in Coopar v. Wandsworth Board of Works, (1863-14 CBNS 180) that no man is to be deprived of his property without an opportunity of being heard and invites my attention to the fact that the House of Lords in Ridge v. Baldwin, (1964 AC 40) and the Privy Council in Suryappa v. Fernandes (1967-2 All ER 152) have both endorsed the statement of Erle C. J. It is the contention of the petitioners that the obligation of giving notice before taking away another's property attaches itself to every action of the Government whether the Government claims its right to interfere with another man's property under statute, contract or otherwise. In fairness to Mr. Narasaraju who appears for the third respondent and Mr. Narasimharao who appears for the Industries Department I must say that neither of them disputes the right of the petitioners to an opportunity to being heard both of them prefer to argue that he petitioners have had ample opportunity given to them. Nor can the learned counsel take any other stand since the Government itself at one stage has recognised the necessity of such an opportunity being given as is clear from decision No. 4 taken by the Minister at the meeting on 12-3-1966.
13. There is a decision of the Privy Council, to which I would like to refer which has not been cited before me by either side but to which a reference is made by Lord Reid in his leading speech in 1904 AC 40. It is the case a Smith v. The Queen 1878-3 AC 614 (PC). In that case there was a Crown lease of land in Queensland. Under the statute the Governor was entitled to forfeit a lease if it had been proved to the satisfaction of the Commissioner that the lessee had abandoned or ceased to reside on the land. The Commissioner who asked the lessee to show cause why the lease should not be forfeited did not disclose to the lessee the case against him so that he had no opportunity to meet it. Basing its case on the forfeiture by the Governor, the Government sued to recover possession of the land from the lessee. The Queensland Courts decreed the suit but the privy Council non-suited the Government. The privy Council while holding that the Commissioner was not bound by any rules of procedure considered that he enquiry must be 'conducted according to the requirements of substantial justice.' They quoted with approval the observations of Erle C. J. in Cooper's case (1863-14 CBNS 180).
'It has been said that the principle of no man will be deprived of his property without an opportunity of being heard is limited to a judicial proceeding. I do not quite agree to that. The law, I think has been applied to many exercises of power, which in common understanding would be not at all more judicial proceedings than would be the act of a District Board in ordering the house to be pulled down.'
In the particular case the Privy Council thought that though the Commissioner acted with perfect good faith he had not given a hearing to the defendant in the sense in which Judges used the word.
14. In this connection I may also usefully refer to the observations of Lord Parker C. J., in a very recent judgment in In re, H. K. (An Infant), 1967-2 WLR 962.
'.... .... .... .... I doubt whether it can be said that the immigration authorities are acting in a judicial or quasi-judicial capacity as those terms are generally understood. But at the same time I myself think that even if an immigration officer is not in a judicial or quasi-judicial capacity, he must at any rate give the immigrant an opportunity of satisfying him of the matters in this sub-section, and for that purpose let the immigrant know what his immediate impression is so that the immigrant can disabuse him. That is not as I see it a question of acting or being required to act judicially, but of being required to act fairly. Good administration and an honest or bona fide decision must, as it seems to me require not merely impartially, nor merely bringing one's mind to bear on the problem, but acting fairly and to the limited extent that the circumstances of any particular case allow, and within the legislative framework under which the administrator is working, only to the limited extent to the so-called rules of natural justice apply, which in a case such as this is merely a duty to act fairly'
Referring to the observations of Lord Radcliffe in the well-known case of Nakkuda Ali v. K. F. De S. Jayaratne, 1951 AC 66, Lord Parker C. J., further observed:-
'I very much doubt, however whether it was intended to say any more than that there is no duty to invoke judicial process unless there is a duty to act judicially. I do not understand him to be saying that if there is no duty to act judicially, then there is no duty even to be fair. '
The question therefore in the present case is whether the respondents have acted fairly in the sense that they gave the petitioners an opportunity to be heard.
15. It is the contention of Sri Narasaraju and Sri G. V. L. Narasimharao, learned counsel for the respondents that the conference held on 12-3-1966 and the subsequent correspondence that passed between the parties reveal that the petitioners have been given ample opportunity before the Director of Industries issued his letter of 17-12-1966. It is unnecessary to refer to the correspondence that passed between the parties subsequent to 17-12-1966 in which the petitioners protest against the action of the Director of Industries and the Director of Industries asserts his right since that cannot throw any light on the question whether the petitioners have been given reasonable opportunity before the Director took action by his letter dated 17-12-1966. The events that took place prior to 17-12-1966 alone have to be considered. I have already referred to the meeting between the Minister and the representatives of Industry that took place on 13-2-66 and the decisions taken by the Minister at that meeting. According to decision No. 2 each concern is to furnish full information and data to the Director of Industries so as 'to enable the latter to have a correct appreciation of the present and future requirements of land. The mere furnishing of information in pursuance of decision No. 2 is obviously not thought to be sufficient opportunity.
A review by a duty constituted committee of experts after fully hearing the concern is thought to be necessary and that is the reasonable opportunity to which, the Minister thought, very fairly in my opinion, the concerns are entitled. Accordingly decision No. 4 provides that after receipt of information form the concerned assignee of the land a committee consisting of officials and representatives of industries should review the requirements of each of the assignees after giving him an opportunity to be heard. The Government would have been well advised to stick to the decision taken by the Minister to constitute a committee and to give an opportunity to those concerned to be heard. Unfortunately no committee has been constituted and no opportunity has been given as contemplated by the Minister's decision. Instead the Director of Industries for reasons which are not apparent has bypassed the Minister's decision, and has taken upon himself the task of deciding whether any portion of the land allotted to the petitioners has to be resumed.
This he has done without giving an opportunity to the petitioners to be heard, merely on the basis of the information furnished in answer to his letter of 7-4-1966, which is a communication recalling to the attention of the petitioners, the Minister's decision and asking them for information in pursuance of decision No. 2. The petitioners having been required to furnish information in pursuance of the Minister's decision, very naturally expect to be given the opportunity promised to them by the Minister's decision No. 4 and virtually reiterated by the Director of Industries in his communication of 7-4-1966. The petitioners are therefore well justified in complaining that the promised opportunity considered necessary by the Minister himself, has not been given to them. Not only has the promised opportunity at all has been given by the Director of Industries. Even if for some good reasons the committee cannot be constituted, there is nothing to prevent the Director of Industries himself giving the petitioners an opportunity to be heard, though I do not for a moment say that an opportunity given by the Director can be a substitute for the very fair opportunity of a hearing and review by a committee of experts provided by the Minister's decision. But even that substitute opportunity has been denied to the petitioners. The Director, after receiving the Information furnished on 14-5-1966 has chosen not to communicate with the petitioners till 17-12-1966 when he issued the impugned letter. It is clear from the facts that the petitioners have had no opportunity of being heard. The second point raised by the petitioners is therefore well founded.
16. In view of my conclusion on point No. 2 it is unnecessary to go into the other questions, some of which, I think can be satisfactorily answered only after adduction of evidence. But having heard arguments it is just as well that I briefly state my conclusions on those questions also. The 3rd and 4th points may be disposed of together. The letter of 17-12-1996 states that the petitioners have been able to utilise only 5 acres of land as against Ac. 73-36 cents allotted to them and that taking into consideration the existing utilisation of land and the possible need for expansion in future as also one or two new projects it has been decided to allot finally 22 acres and resume the balance of land.' This letter read as if the previous allotment is only provisional and that the final allotment is being made by this letter. This is obviously incorrect since neither G. O. Ms. No. 212 nor the agreement of 31-8-1965 state that the allotment made thereby is provisional. In fact until 17-12-1966 there is nothing, no whisper anywhere, to indicate that the allotment is provisional. From the letter dated 17-12-1966 the basis of the decision to resume appears to be that since the earlier allotment is only provisional, land not likely to be utilised may be resumed.
There is no reference in the letter to the breach of any convenient. It is not stated that the petitioners have not created the factory or the buildings which they undertook to erect under that agreement. The original application for allotment of land shows that the petitioners wanted to erect a factory capable of producing 1800 tons and they have in fact erected a factory capable of producing 1500 tons per annum. At the time when the land was assigned the Government and its officers must have known that such a large block of land is not necessary for the immediate requirement of the petitioners which was only the erection of the 1800 tons factory. Presumably they allotted the land to provide for future expansion of the industrial activity of the petitioners. Future expansion cannot certainly mean that the expansion must be within two years of the agreement. If the petitioners have erected the factory and buildings which they said they would have erect and which it is not denied they have done they can hardly be blamed for economising space and utilising the minimum extent of land thereby giving themselves greater scope for their expansion projects. It is difficult to see what convenient the petitioners have breached and that probably is the reason why the Director of Industries is unable to allege or specify any breach of convenient in his letter on 17-12.1966. I would hold points 3 and 4 also in favour of the petitioners.
17. The fifth point may now be considered. The grant is made by the Government and under the agreement it is the Government that has a right to resume the land for breach of convenient. The question is whether the Director of Industries can exercise this power on behalf of the Government. The respondents rely upon G. O. Ms. No. 1414 Industries dated 30-12-1965 by which it is said that the powers of the Government in regard to these matters had been delegated to the Director of Industries. By G. O. Ms. No. 1414 the Government delegated the powers shown in column 4 of the statements attached to the order to the Director of Industries. Entry No. 16 of the Director of Industries and Commerce is empowered to allot plots to applicants on industrial development area.' It is difficult to construe this delegation of power as including the power to re-enter upon land which has already been granted prior to the date of the order. However, I do not want to express any final opinion on this matter as it has not been fully argued.
18. The result of the above discussion is that point No. 1 has to be found against the petitioners while points 2, 3 and 4 have to be found in their favour, The petitioners have asked for three reliefs:-
(1) To restrain the respondents from giving effect to the letter dated 17-12-1966 by which the respondents purport to resume the land of an extent of 51 acres.
(2) To restrain the respondents from giving effect to the order purporting to allot 6 acres 88 cents to the 3rd respondent; and
(3) To prevent the respondents from assigning any other portion of the property allotted to the petitioners by G. O. Ms. No. 212 dated 14-2-1964 and which is the subject matter of the agreement dated 31-8-1965.
Having regard to my findings the first and the third reliefs have to be granted. Ordinarily the second relief also must follow the other reliefs as a natural corollary. However, there is some difficulty as a result of the intervention of rights of third parties. The Government has allotted 6 acres 88 cents to the 3rd respondent and the 3rd respondent in pursuance of the grant has now expended considerable sums of money and erected large structures as can be seem from the photographs produced before me. So far as this piece of land of the extent of 6 acres 88 cents is concerned the question ultimately boils down to one of competing rights between the petitioners and the 3rd respondent. It is neither proper not desirable that I should launch into any discussion of the rival titles and rights and express any opinion on them. The safer course is to refuse the second relief and leave the parties to agitate their rights, if so advised, in an ordinary civil Court. The result therefore is a writ will issue restraining the first and the 2nd respondent from giving effect to the letter No. 442/D11 (1)/66 dated 17-12-1966 and from assigning any portion of the land covered by the agreement dated 31-8-1965 (other than the land of 6 acres 88 cents allotted to the 3rd respondent) to any other person. The petitioners are entitled to get their costs from the first and the second respondents. Advocate's fee Rs. 250.
19. Order accordingly.