J S LUTHRA ACADEMY vs. THE STATE OF JAMMU AND KASHMIR

1 [Reportable] IN THE SUPREME COURT OF INDIA CIVIL APPELLATE JURISDICTION CIVIL APPEAL NOS. 7184­7185 OF 2013 J.S. Luthra Academy & Another                  ........Appellants Versus State of Jammu and Kashmir & Others .......Respondents J U D G M E N T MOHAN M. SHANTANAGOUDAR, J. The judgment of the Division Bench of the High Court of Jammu and Kashmir at Jammu in L.P.A. (OW) No. 38/2008 and L.P.A. (OW) No. 39/2008 dated 01.04.2009 is the subject matter of these appeals. 2. The   brief   facts   leading   to   these   appeals   are   that   the Appellant­J.S.   Luthra   Academy   (hereinafter   referred   to   as   the Signature Not Verified ‘Academy’), an educational institution, initially was situated on a Digitally signed by VISHAL ANAND Date: 2018.10.30 16:37:21 IST Reason: Wakf property in Jammu. Vide order dated 27.12.1995 of the 2 authority constituted under the J&K Wakf Act, 1978, the said educational institution was ordered to be evicted from the Wakf property. Against the said order, the Academy approached the Jammu & Kashmir Special Tribunal, and an interim order of stay on eviction was granted by the tribunal on 09.01.1996. During the interregnum, the Academy made representations to the State Government requesting for allotment of a piece of land at any place mentioned in the representations for shifting and running the   school.   The   concerned   minister   in   the   meeting   dated 14.1.1998 considered the question of allotment of land in favour of   the   Academy.   Subsequently,   a   note   was   prepared   by   the Managing Director of the J & K Housing Board on 25.1.1999, proposing that the Board had 4 kanals of land in Sector 2 of Channi Himmat, Jammu earmarked for schools which could be considered for allotment to the Appellant at Rs. 8,00,000/­ per kanal. In a subsequent meeting on 29.4.1999 after completion of formalities,   four   kanals   in   Sector   2   of   Channi   Himmat   were alloted to the Academy at Rs. 8,00,000/­ per kanal on lease for 40 years and the Academy was directed to deposit 50% of the said   amount,   the   remaining   amount   to   be   deposited subsequently.   In   a   meeting   dated   28.6.2000,   a   decision   was 3 taken by the J & K Housing Board in pursuance of the orders of the Chief Minister, that two kanals of land would be allotted to the Academy at the rate of Rs. 8,00,000/­ per kanal and the other two kanals free of cost. Further, in a Cabinet meeting dated 18.8.2000,   it   was   decided   that   the   Jammu   Development Authority was to be compensated for the free allocation of land in the   form   of   allotment   of   alternate   land   to   the   Authority.   The allotment of land to the Academy was sanctioned by the Principal Secretary, Government of J&K, vide letter dated 24.8.2000. The Academy finally paid a total of Rs.16,00,000/­ for two kanals of land and obtained two more kanals free of cost. A lease deed was executed, and possession was handed over on 12.12.2001. The Academy constructed the school building thereon and the school is   being   run   on   this   premises,   having   shifted   from   the   wakf property. 3. The residents of Channi Himmat vide Writ Petition No. 1093 of 2002 questioned the allotment made in favour of the Academy, on the ground that the piece of land was meant for a playground but the same was allotted to the Academy in violation of the original scheme and plan of the Channi Himmat Housing Colony. 4 One Mr. Naresh Kumar, a proprietor of the United Public School situated at Channi Himmat, filed a writ petition being O.W.P. No. 10/2003,   questioning   the   allotment   made   in   favour   of   the Academy on the ground that the property ought to have been auctioned by the Government, so that he could have also applied for   the   allotment   of   the   plot,   which   he   required   for   the upgradation of his school to the higher secondary level. Both the writ petitions were clubbed, heard and decided together by the learned   Single   Judge   of   the   High   Court   and   were   dismissed. However, the Division Bench by the impugned judgment set aside the order of the Single Judge and allowed the writ petitions and consequently   quashed   the   allotment   made   in   favour   of   the Academy with the following observations: “The board is directed to hold public auction of the land for the purpose of leasing the same out on the same   terms   and   conditions   it   had   leased   it   to   the private respondent, except that the  premium thereof shall be fixed at the highest price to be obtained at such auction to be held by inviting people interested in setting up of a secondary school on the plot of land in question by publishing at least two advertisements in newspapers   widely   circulated   in   Jammu   and   also published therefrom. The Board is directed to fix the minimum bid price at Rs.16.00 lacs plus the cost of construction ascertained in the manner as above. In the event the bid to be had at the public auction does not exceed the minimum reserved bid price, the Board 5 shall   execute   a   fresh   lease   in   favour   of   the   private respondent upon obtaining payment of Rs.16.00 lacs from him. In the event the bid price to be had at the auction exceeds the minimum reserved bid price and the same is not given by the private respondent, the Board   shall   give   an   opportunity   to   the   private respondent   to   meet   the   same   and,   if   he   meets   the same,   to   execute   the   lease   in   favour   of   the   private respondent upon accepting the amount of such bid, less the cost of construction ascertained in the manner as   above,   as   premium.   In   the   event   the   private respondent fails to match the bid price, the Board shall grant the lease in favour of the highest bidder and from the   amount   so   to   be   received,   first   pay   the   cost   of construction ascertained in the manner as above to the private respondent.” 4. The   contesting   respondents   herein,   i.e.,   the   original   writ petitioners who were before the learned Single Judge and the Division Bench, have chosen to remain absent before this Court despite service of notice on them. Heard the learned counsel for the Academy, the State and the Housing Board. Learned counsel for   the   Academy   taking   us   through   the   material   on   record submitted that the allotment of the site was done following due procedure. The Academy was asked to vacate the wakf property, where it was running the school earlier, since the wakf wanted the property for its personal purposes. As the school was catering to the needs of hundreds of students and as it was being run successfully, the Managing Committee of the Academy did not 6 want to close the academy, inasmuch as the closure would have been detrimental to the interests of the students. The Cabinet being competent to allot the land had duly considered the matter and had taken the decision on 18.8.2000 to allot the land to the Appellant keeping in mind the plight of the students and urgency of the matter inasmuch as the school had to be shifted at an early   date.   The   sum   and   substance   of   the   argument   of   the Academy, the State and the Housing Board is that the allotment was made keeping in mind the public interest at large and the personal   interest   of   any   personality   involved   in   running   the Academy was not given any importance at all. 5. Learned   Advocate   for   the   State   of   Jammu   and   Kashmir submitted that the allotment of 2 Kanals of land to the Appellant free of cost was a policy decision of the Government inasmuch as such allotment was in the nature of an exchange for eviction of the Appellant, who was running a school on the Wakf  land in the main   city   area.     The   object   was   twofold,   firstly ,   to   ensure continuity   of   the   school/public   purpose,   and   secondly ,   to expeditiously   evict   the   appellant   from   the   wakf   land   and consequently,   free   such   land   from   prolonged   litigation.     He 7 further submitted that neither was there any violation of any policy  for   allotment  of   land   to  educational   institutions   in  the State of Jammu and Kashmir at the relevant time, nor was there any loss caused to the State qua the 2 Kanals of land (out of total 4 Kanals of land) that was allotted to the Appellant.  Under such facts and circumstances of the case, he argued that the judgment of this Court in the case of  Institute of Law Chandigarh v. Neeraj (2015) 1 SCC 720 wherein the allotment of land to an Sharma,  educational institution without inviting competitive bidding was cancelled is distinguishable on two counts:  a) At para 32 of the judgment, the Development authority was found not to have adhered to the applicable policy, i.e. the allotment of land to Educational Institutions (Schools), etc. on lease hold basis in Chandigarh Scheme, 1996 for allotment of land.  b) At Para 17 of the judgment it is recorded that the audit department of the UT Chandigarh Administration   found   that   the   allotment caused a loss of Rs.139 crores to the public exchequer.   Lastly , he submitted that the allotted land was earmarked for schools and playfields in the Master Plan and hence, there was no violation of the Master Plan in allotment of land to the Appellant.  8 6. This Court in a series of cases including   Centre for Public Interest Litigation v. Union of India,   2012   3  SCC  1  (popularly known as the “2G case”), in  Natural Resources Allocation, In Re. Special Reference  No. of 1/2012, (2012) 10 SCC 1,  Manohar Lal Sharma v. Principal Secy.,  (2014) 9 SCC 516,  Bharti Airtel Limited v. Union Of India , (2015) 12 SCC 1, and  Goa Foundation v. Sesa Sterlite Ltd ., (2018) 4 SCC 218 has formulated the guidelines for allocation of natural resources by the State. In  Bharti Airtel Ltd. v. Union of India , (2015) 12 SCC 1, this Court summed up the principles governing the allocation of natural resources by the State laid down in  Centre for Public Interest Litigation v. Union of , (2012) 3 SCC 1 (“the 2G case”) as follows: India “41. The   licensor/Union   of   India   does   not   have   the freedom   to   act   whimsically.   As   pointed   out   by   this Court   in 2G   Case [Centre   for   Public   Interest Litigation v. Union   of   India,   (2012)  3   SCC   1]  in   the above­extracted paragraph, the authority of the Union is fettered by two constitutional limitations:  firstly, that any decision of the State to grant access to natural   resources,   which   belong   to   the   people,   must ensure   that   the   people   are   adequately   compensated and, secondly, the  process  by which  such  access is granted must be just, non­arbitrary and transparent, vis­à­vis private parties seeking such access. ”   9 (emphasis supplied)        Referring   to   the   observations   in   the   2G   case,   the   Court   also highlighted that the State is bound to act in consonance with the principles of equality and public trust and ensure that no action is taken which may be detrimental to public interest, and that it must   always   adopt   a   rational   method   for   disposal   of   public property, and   ensure   that   a   non­discriminatory   method   is   adopted for distribution and alienation, which would necessarily result in national/public interest .   The principles governing the distribution of natural resources by the State were also discussed in the decision of the constitutional bench of this Court in  Natural Resources Allocation, In Re, Special Reference No. 1 of 2012 , (2012) 10 SCC 1. In para 149 thereof, the Court observed as follows: “149. Regard being had to the aforesaid precepts, we have   opined   that   auction   as   a   mode   cannot   be conferred   the   status   of   a   constitutional   principle. Alienation   of   natural  resources   is   a  policy   decision, and   the   means   adopted   for   the   same   are   thus, executive prerogatives. However, when such a policy decision is not backed by a social or welfare purpose, and   precious   and   scarce   natural   resources   are alienated for commercial pursuits of profit maximising private entrepreneurs, adoption of means other than 10 those that are competitive and maximise revenue may be arbitrary and face the wrath of Article 14 of the Constitution.” This decision emphasised that the ultimate goal to be served was that of the public good, and all methods of distribution of natural resources that ultimately served the public good would be valid, as reflected in the following observations: “120. …There is no constitutional imperative in the matter   of   economic   policies—Article   14   does   not predefine   any   economic   policy   as   a   constitutional mandate. Even the mandate of Article 39( b ) imposes no restrictions on the means adopted to subserve the public good and uses the broad term “distribution”, suggesting that the methodology of distribution is not fixed.   Economic   logic   establishes   that alienation/allocation   of   natural   resources   to   the highest bidder may not necessarily be the only way to subserve the common good, and at times, may run counter   to   public   good.   Hence,   it   needs   little emphasis   that   disposal   of   all   natural   resources through   auctions   is   clearly   not   a   constitutional mandate.” It would be useful to note at this juncture that in this decision, the   Court   assessed   the   position   of   law   developed   through   a catena of decisions, including   & Ors.  Netai Bag v. State of W.B. & Ors. , (2000) 8 SCC 262,  5 M&T Consultants v. S.Y. Nawab , (2003) 8 SCC 100, and  Villianur Iyarkkai Padukappu Maiyam v.  Union of 11 India , (2009) 7 SCC 561, wherein it has been held that non­ floating of tenders or holding of auction by itself is not sufficient to hold that the  exercise  of  power  was  arbitrary.  It would  be useful to reproduce the following observations from   Netai Bag (supra), which were also  relied upon by the  Court in   Natural Resources Allocation, In Re  (supra) to highlight that the ultimate test is only that of fairness of the decision­making process and compliance with Article 14 of the Constitution:   “19.   …   There   cannot   be   any   dispute   with   the proposition that generally when any State land is intended   to   be   transferred   or   the   State   largesse decided to be conferred, resort should be had to public   auction   or   transfer   by   way   of   inviting tenders   from   the   people.   That   would   be   a   sure method   of   guaranteeing   compliance   with   the mandate   of   Article   14   of   the   Constitution.   Non­ floating of tenders or not holding of public auction would not in all cases be deemed to be the result of the exercise of the executive power in an arbitrary manner. Making an exception to the general rule could   be   justified   by   the   State   executive,   if challenged   in   appropriate   proceedings.   The constitutional   courts   cannot   be   expected   to presume   the   alleged   irregularities,   illegalities   or unconstitutionality nor can the courts substitute their opinion for the bona fide opinion of the State executive. The courts are not concerned with the ultimate decision but only with the fairness of the decision­making process.” 12 The above principles were also reiterated in  Manohar Lal Sharma (supra), wherein this Court observed at para 110: “It is not the domain of the Court to evaluate the advantages  of   competitive   bidding  vis­à­vis  other methods   of   distribution/disposal   of   natural resources. However, if the allocation of subject coal blocks   is   inconsistent   with   Article   14   of   the Constitution   and   the   procedure   that   has   been followed in such allocation is found to be unfair, unreasonable,   discriminatory,   non­transparent, capricious or suffers from favouritism or nepotism and violative of the mandate of Article 14 of the Constitution,   the   consequences   of   such unconstitutional or illegal allocation must follow.” In   Ajar Enterprises (P) Ltd.  v.  Satyanarayan Somani , (2018) 12 SCC 756, this Court affirmed the above principles in the following terms: “49.   …Where   a   public   authority   exercises   an executive prerogative, it must nonetheless act in a manner which would subserve public interest and facilitate   the   distribution   of   scarce   natural resources in a manner that would achieve public good.   Where   a   public   authority   implements   a policy,   which   is   backed   by   a   constitutionally recognised social purpose intended to achieve the welfare of the community, the considerations which would govern would be different from those when it alienates   natural   resources   for   commercial exploitation. When a public body is actuated by a constitutional purpose embodied  in the  Directive 13 Principles, the considerations which weigh with it in determining the mode of alienation should be such as would achieve the underlying object.”  The   position   of   law   developed   through   these   decisions   was summed   up   in   the   following   manner   by   this   Court   in   Goa Foundation v. Sesa Sterlite Ltd. , (2018) 4 SCC 218, after adverting to the various decisions referred to above: “80.1. It   is   not   obligatory,   constitutionally   or otherwise,   that   a   natural   resource   (other   than spectrum)   must   be   disposed   of   or   alienated   or allocated   only   through   an   auction   or   through competitive bidding; 80.2. Where the distribution, allocation, alienation or disposal of a natural resource is to a private party   for   a   commercial   pursuit   of   maximising profits,   then   an   auction   is   a   more   preferable method of such allotment; 80.3. A decision to not auction a natural resource is liable to challenge and subject to restricted and limited   judicial   review   under   Article   14   of   the Constitution; 80.4.  A decision to not auction a natural resource and   sacrifice   maximisation   of   revenues   might   be justifiable if the decision is taken, inter alia, for the social good or the public good or the common good ; 80.5.  Unless the alienation or disposal of a natural resource   is   for   the   common   good   or   a   social   or welfare purpose, it cannot be dissipated in favour of a private entrepreneur   virtually free of cost or for a 14 consideration   not   commensurate   with   its   worth without  attracting Article 14 and Article 39(b) of the Constitution. ”      (emphasis supplied) From the above decisions, the following principles may be culled out: (i) Generally,   when   any   land   is   intended   to   be transferred by the state, or any state largesse is to be conferred, resort should be had to public auction   or   transfer   by   way   of   inviting   tenders from the people. The state must ensure that it receives adequate compensation for the allotted resource. However, non­floating of tender or non­ conducting   of   public   auction   would   not   be deemed in all cases to be an arbitrary exercise of executive   power.   The   ultimate   decision   of   the executive must be the result of a fair decision­ making process. (ii) The   allocation   must   be   guided   by   the consideration of the common good as per Article 39(b), and must not be violative of Article 14. This does   not   necessarily   entail   auction   of   the resource; however, allocation of natural resources to   private   persons   for   commercial   exploitation solely for private benefit,  with no social or welfare purpose ,   attracts   higher   judicial   scrutiny   and may be held to be violative of Article 14 if done by non­competitive   and   non­revenue   maximizing means. 15 Keeping in mind the aforementioned principles formulated by   this   Court   in   the   aforementioned   judgments,   we   have considered the entire material on record. It must be determined as to whether the allocation made in favour of the Academy fell foul of the above principles. In the instant case, the allocation has evidently been done to a private educational institution by non­revenue maximizing means. Assuming that the Academy is engaged   in   commercial   activities   while   engaging   in   its   main activity of imparting education to students, two questions remain to be seen: first, whether there was any social or welfare purpose underlying the allocation, i.e., if the furtherance of the public good was the ultimate goal of the allocation so as to justify the non­auctioning of the land, and second, if the allocation is bad for lack of adequate compensation. 7. As   far   as   the   underlying   objective   of   the   allocation   is concerned, in our considered opinion, the Division Bench of the High Court was not justified in rejecting the submission of the Academy that the allocation of land was done keeping in mind the   plight   of   the   students   of   the   school.   One   of   the   reasons assigned by the Division Bench in rejecting this contention was 16 that there was no discussion about the plight of the students in the   correspondence   between   the   Appellant­Academy   and   the Government. However, a mere lack of explicit statements to that effect does not imply that the action was not motivated by welfare considerations, inasmuch as the displacement and uprooting of several hundreds of students from their school was the obvious underlying concern in the representation  made by the Appellant and   the   order   passed   by   the   State   Government.   It   would   be appropriate at this stage to quote the following observation made by this court in   Shrilekha Vidyarathi vs. State of U.P.,   (1991) 1 SCC 212: “36. The meaning and true import of arbitrariness is more easily visualized than precisely stated or defined. The question, whether an impugned act is arbitrary or not, is ultimately to be answered on the facts and in the circumstances of a given case. An obvious test to apply is to see whether there is any   discernible   principle   emerging   from   the impugned act and if so, does it satisfy the test of reasonableness.   Where   a   mode   is   prescribed   for doing   an   act   and   there   is   no   impediment   in following  that  procedure,  performance   of  the   act otherwise and in a manner which does not disclose any discernible principle which is reasonable, may itself attract the vice of arbitrariness.”  (emphasis supplied) 17   As a corollary of the above, it is evident that an executive action would not be arbitrary merely because the action is not explicitly stated to have been taken for a particular reason or based   on   a   particular   principle   which   in   itself   is   reasonable; rather, it would be open to the Court to see whether such a reasonable   principle   is   discernible   from   the   facts   and circumstances of the case. Just like the Court has the power to look   into   the   underlying   purpose   of   an   executive   action   to determine whether it is motivated by extraneous   reasons while examining it for arbitrariness, so also the Court may determine whether there is a germane objective being served through the execution of the action, by examining the surrounding facts and circumstances   in   which   the   executive   action   was   effected. Though   the   Appellant   is   a   private   educational   institution,   it cannot be said that the action of the government was not backed by a welfare purpose merely because it is not stated in so many words in the correspondence between the Academy and the State Government that the alternative land sought for allotment was to protect the interests of children studying at the school. This is because   the   same   is   clearly   discernible   from   the   facts   and circumstances of the case. It has been stated that the Appellant 18 was evicted from the wakf land not because of any wilful default or unauthorized use, but because the wakf required the land for its own use. In such circumstances, having no other alternative, the   Appellant   approached   the   government   for   allotment   of suitable  land for  running the school. It seems  that the  State Government also preferred to peacefully settle the issue of getting the   school   vacated   from  the   wakf   property,   at   an   early   date, without disturbing the education of the students and peace in the locality. 8. Articles 38 and 39 of the Constitution of India provide that the State must strive to promote the welfare of the people of the State by protecting all their economic, social and political rights. These   rights   may   cover   means   of   livelihood,   health   and   the general well­being of all sections of the people in the society, of which education is an important aspect.  9. Imparting basic education is a constitutional obligation on the State as well as societies running educational institutions. Children are the future of our nation. Education is a basic tool for individuals to lead an economically productive life and is one of the most vital elements for the preservation of the democratic 19 system   of   government.   The   Constitution   of   India   bestows considerable attention to the field of education. It recognizes the need for regulating the various facets of activity of education and also   the   need   for   not   only   establishing   and   administering educational institutions but also providing financial support for educational institutions run by private societies. (See:  Secretary, Mahatama Gandhi Mission v. Bhartiya Kamgar Sena , (2017) 4 SCC 449, paras 33­36 and 39).  Thus,   in   our   considered   opinion,   the   State   Government proceeded to allot the land in favour of the Appellant keeping in mind the public interest in the education of hundreds of children as well as considering the urgency of the matter and it cannot be said   that   the   action   was   not   backed   by   a   social   or   welfare purpose. It is worth emphasizing that the test of Article 14 must be applied from the perspective of substantive rather than formal equality, and must be mindful of the effect of the action or rule that is being tested. While under ordinary circumstances, the usual practice of allocation of sites on the basis of advertisements or auction was being followed, the instant situation warranted a deviation from the standard procedure to prevent prejudicing the 20 future of  the  children studying at  the  Academy. In our  view, taking a holistic view of the matter, the action taken by the State Government did not suffer from the vice of arbitrariness insofar as it was backed by a welfare purpose. 10. In   addition,   we   do   not   find   any   reason   to   reject   the contention   of   the   State   Government   that   the   allotment   of   4 Kanals of land to the Appellant was in the nature of an exchange, inasmuch as the State Government wanted to evict the Appellant who was running a school at Wakf land situated in the main city area. Such a decision seems to have been taken by the State Government to avoid any unrest in the locality or city.  In such circumstances, we do not find any arbitrariness in the decision taken by the State in allotting 4 Kanals of property. On the other hand, we are of the opinion that the action of the State was fair, reasonable,   transparent,   unbiased,   without   favourtism   and nepotism. 11. We   now   turn   to   the   second   question,   regarding   the adequacy of compensation recovered by the State. In this respect, 21 we note the following observations made by Khehar J. in his concurring opinion in  Natural Resources Allocation, In Re  (supra): “200.   I   would,   therefore,   conclude   by   stating that no   part   of   the   natural   resource   can   be dissipated   as   a   matter   of   largesse,   charity, donation   or   endowment,   for   private   exploitation. Each bit of natural resource expended must bring back a reciprocal consideration. The consideration may be in the nature of earning revenue or may be to “best subserve the common good”. It may well be the   amalgam   of   the   two.   There   cannot   be   a dissipation of material resources free of cost or at a consideration lower than their actual worth. One set of citizens cannot prosper at the cost of another set   of   citizens,   for   that   would   not   be   fair   or reasonable.”      (emphasis supplied) Thus, the impugned transaction must be probed to determine whether it leads to an adequate consideration being received by the State. 12. In our view, the action of the authorities can be assailed to the extent that the allotment of two kanals free of cost was bad in law.   It is evident that the consideration paid by the Appellant was   only   with   respect   to   two   kanals   and   the   remaining   two 22 kanals of land were allotted for free to the Appellant. It is not in dispute that Rs. 8,00,000/­ per kanal was the average auction sale   price   which   was   fetched   around   the   time   of   allotment. Keeping   this   figure   in   mind,   the   State   Government   fixed   the allotment price at Rs. 8,00,000/­ per kanal.  It is clear that there was no arbitrariness in fixing the price at Rs. 8,00,000/­ per kanal.  However, we are unable to accept the contention that the allotment of 2 Kanals of land for free was justified.  This is all the more significant in light of the absence of any material on record to show that the school was being run purely for charitable and educational purposes. In this regard it would be pertinent to refer to the observations of this Hon’ble Court in the matter of  Union of India and another v. Jain Sabha, New Delhi and another , (1997) 1 SCC 164 wherein the following observations are made: 

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The aforementioned observations suggest that while in the case of a non profit­oriented educational institution serving the public interest, public property can be allotted to it at a concessional price or for free by imposing stringent conditions for the use of the land, it is questionable whether the same can be done for profit­oriented institutions.      13. Thus, in our considered opinion, there is a loss to the public exchequer to the extent of Rs.16,00,000/­ for two kanals as on the date of allotment. However, having regard to the fact that the 24 Appellant­Academy has been running on the allotted site since many years, after constructing a new building, the transfer may be saved by giving the transferee an opportunity to make good the shortfall in the consideration. In this context, it is relevant to note certain observations made by this Court in the case of  ITC Limited vs. State of U.P. , (2011) 7 SCC 493 : “107.1 If the transferee had acted bona fide and was   blameless,   it   may   be   possible   to   save   the transfer   but   that   again   would   depend   upon   the answer to the further question as to whether public interest   has   suffered   or   will   suffer   as   a consequence of the violation of the regulations: (i) If public interest has neither suffered, nor is likely to suffer, on account of the violation, then the transfer may be allowed to stand as then the violation   will   be   a   mere   technical   procedural irregularity without adverse effects. (ii)  On the other hand, if the violation of the regulations leaves or is likely to leave an everlasting adverse effect or impact on public interest  (as for example   when   it   results   in   environmental degradation   or   results   in   a   loss   which   is   not reimbursable), public interest should prevail and the transfer should be rescinded or cancelled. (iii)  But where the consequence of the violation is merely a short­recovery of the consideration, the transfer may be saved by giving the transferee an opportunity   to   make   good   the   shortfall   in consideration. 107.2     The   aforesaid   exercise   may   seem   to   be cumbersome, but is absolutely necessary to protect 25 the   sanctity   of   contracts   and   transfers.   If   the Government or its instrumentalities are seen to be frequently   resiling   from   duly   concluded   solemn transfers,   the   confidence   of   the   public   and international community in the functioning of the Government will be shaken. To save the credibility of   the   Government   and   its   instrumentalities,   an effort should always be made to save the concluded transactions/transfers wherever possible, provided (i) that it will not prejudice the public interest, or cause loss to public exchequer or lead to public mischief, and (ii) that the transferee is blameless and   had   no  part  to  play   in   the   violation  of   the regulation. 107.3   If the concluded transfer cannot be saved and   has   to   be   cancelled,   the   innocent   and blameless transferee should be reimbursed all the payments   made   by   him   and   all   expenditure incurred   by   him   in   regard   to   the   transfer   with appropriate   interest.   If   some   other   relief   can   be granted   on   grounds   of   equity   without   harming public interest and public exchequer, grant of such equitable relief should also be considered.”                                                 (emphasis supplied) 14. On an examination of the facts and circumstances of the case in the light of the above observations, it is evident that it is appropriate to give the Appellant the opportunity to make good the shortfall in consideration, as the loss to the public exchequer caused by the free allocation cannot be said to have had an everlasting effect or impact on public interest.  Moreover, we do not find any high­handedness on the part of the Appellant in seeking the allotment in its favour, as it acted in a bona fide 26 manner.   This would also be in consonance with the principle stated by us in the beginning of the judgment that the public must be adequately compensated for the alienation of natural resources by the State. 15. Therefore, the Appellant should pay consideration for two kanals of land received gratuitously, at the rate of Rs. 8,00,000/­ per kanal, which was the average auction price prevailing at the time of allocation. The Appellant is also liable to pay interest at the rate of 6% per annum from the date of the allotment till the date   of   payment.   The   payment   should   be   made   within   three months from this date. 16. In view of the above, the appeals are allowed, the impugned judgment passed by the Division Bench dated 01.04.2009 is set aside   and   the   judgment   of   the   learned   Single   Judge   dated 25.04.2008 passed in O.W.P No. 1093 of 2002 and O.W.P No.10 of 2003 is restored, with the aforementioned modification.  ……………………………………..J.        (N.V. RAMANA)        ……………………........................J.                 (MOHAN M. SHANTANAGOUDAR) New Delhi, October 30, 2018 27