BISHAMBHAR PRASAD v. M/s. ARFAT PETROCHEMICALS PVT. LTD. AND ORS.

A xvii) In a similar matter concerning the Bharatpur Industrial Area, an allotment had been made by the Collector to Perfect Potteries. The lease stated that no use other than industrial use would be permissible. However, subsequently, the industrial area was transferred to RIICO and the Corporation granted permission for subdivision and B conversion of the land. The Collector had terminated the lease as a result. The matter was referred to a High-Level Committee of the State of Rajasthan presided over by the Chief Secretary and comprising of the Advocate General, Principal Secretary of Law, Principal Secretary of C Industries, and others. The Committee held that by virtue of the insertion of Rule 12 of the 1959 Rules, the actions taken by RIICO were valid and the Collector’s order of termination was to be set aside. The relevant extracts of the Committee’s decision are as follows: D “DECISION OF THE COMMITEE After due deliberations, Members of the Committee were of the opinion that RIICO Is having undisputed jurisdiction. In the matter of all those industrial areas which were notified/developed by the State Government E and came to be transferred to RIICO vide order dated 18.09.1979 and in view of subsequent amendment in Rajasthan Industrial Area Amendment Rule, 1959 vide notification dated 13.07.1982 by Insertion of rule 12. In view of the above, it was decided by the committee that the order dated 22.08.2019 of Collector F Bharatpur needs to be set aside. For this purpose, RIICO should file a revision petition before the Govt. of Rajasthan in Revenue Department through Pr. Secretary, Revenue for consideration of the matter. The meeting ended with a vote of thanks to the chair. G Sd/- (Hukam Singh Rajpurohit) Secretary to Government & Member Secretary” H x----------------------------x-------------------------------x

BISHAMBHAR PRASAD v. M/s. ARFAT PETROCHEMICALS 277 PVT. LTD. AND ORS. [SURYA KANT, J.]

xviii) There has also been an admission on oath before the A Rajasthan High Court in another similar matter.12 The affidavit submitted before the High Court lays out the following in terms of the State’s position: a) RIICO has been authorized to act in accordance with the 1979 Rules in respect to industrial plots. The Rules themselves have B acquired statutory force by virtue of reference to these Rules in statutory legislations/enactments. Given this, no other authority would be able to interfere in the sphere of activities that are regulated under the 1979 Rules; b) RIICO’s own authority derives from Rules 11A and 12 of the 1959 Rules, by virtue of which the State Government C had vested the responsibility to develop industrial areas upon the Corporation; (c) RIICO, as a public sector undertaking, would not have been able to function in the manner in which it does if express authorization had not been provided. xix) The change of use of the land was permitted under the D Master Plan. As the 1979 Rules were applicable by virtue of the 18.09.1979 Order transferring industrial lands to RIICO, the Corporation’s only obligation was to ensure that the sub-division and alteration of the utilization of the land was in consonance with said Rules read with the Master Plan. Moreover, the State of Rajasthan itself issued a circular on 19.03.2003 allowing conversion of industrial land for other purposes in order to promote economic growth, in light of the recession that had taken hold at the time; xx) The initial agreement for transfer of the lands from JKSL to Respondent No. 1 was signed by the Collector, not because the State Government still had control, but rather because those were the requirements under SICA and the AAIFR scheme. Rule 9(iv) of the 1959 Rules had required a lessee which was declared a “sick company” under SICA, at that time JKSL, to seek permission from the State G Government for transfer of its lease rights to a third entity. The permission was manifested through the District Collector, Kota, under the aegis of the AAIFR scheme. 12 Annex. R-47: D.B. WP (Civil) No. 19102 of 2018, “Ravindra Sharma v. State of Rajasthan & Ors.” – Add. Affidavit on behalf of Respondents, by Mr. Rajendra Singh, Dy. Comm., JDA, Jodhpur. H

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A This was not a fresh lease, but only an extension of the already existing period of the subsisting lease. Hence, this was not an acknowledgement of any kind by Respondent No. 1 that the State of Rajasthan retained control over the land and was merely a procedural requirement that was being fulfilled under the 1959 Rules, due to JKSL’s status as a sick company. Respondent No. 1 has consistently acted in consonance with the approach that RIICO has control over the land and the corresponding power to take further measures in respect of it, such as for conversion of use and sub-division of plots; xxi) The letter dated 12.01.1995 relied upon by Appellants as a proof that the title over the land was retained by the State Government was later overridden by a letter dated 31.03.1995. By virtue of this letter, the files of transferred lands were directed to remain with RIICO; D xxii) The Jan Aavas Yojana scheme under which Respondent No. 1 had applied to the Collector, was purely because it was mandatory to do so under the Scheme itself. In no way does this act as an acceptance that the Collector and the State Government were in charge of the land in LIA, E Kota. In fact, the Collector had sought the opinion of RIICO in the matter, clearly showing the Collector’s own conviction that consent needed to be sought from the Corporation; xxiii) The lack of a show cause notice or an opportunity to Respondent No. 1 to defend itself is fatal to the Appellants’ F case. Swadeshi Cotton Mills v. Union of India13 had made clear the need for principles of natural justice to be followed even for administrative decisions. A process for cancellation was provided already under Rule 24(1) of the 1979 Rules, which had to be adhered to.14 13 G (1981) 1 SCC 664. 14

24. CANCELLATION The Corporation shall have the right to cancel the plot allotment after issuing a 45 days registered AD show cause notice to the allottee by the concerned Sr. DGM / Senior Regional Manager / Regional Manager for breach of any of these rules, condition of allotment letter or terms of lease agreement. The powers of plot cancellation shall vest with the Unit Head for all categories of the land/plot allotments except for the land/ H plots allotted under Rule 3(W).

BISHAMBHAR PRASAD v. M/s. ARFAT PETROCHEMICALS 279 PVT. LTD. AND ORS. [SURYA KANT, J.]

xxiv) The Appellants are making unfounded allegations regarding placement of the Writ Petition filed by respondent No.1 before Division Bench of the High Court. The Chief Justice being Master being Master of the Roster, was competent to enlist any matter before a Single or Division Bench. Challenge to Article 138 of AoA was an issue of paramount public importance, hence the case was rightly placed before a Division Bench. xxv) The arguments regarding the failure of the AAIFR scheme were irrelevant and beside the point. This Court in its earlier order in the context of the petitions filed by the workers unions had already affirmed that SICA would not apply to C Respondent No. 1, given it was not a “sick company”. The land in question had been obtained as part of the AAIFR scheme by way of auction, but that did not mean that the BIFR or AAIFR itself would have jurisdiction over Respondent No. 1. D xxvi) As far as the SLPs filed by the Appellant Unions were concerned, the Supreme Court’s earlier orders on 17.08.2017 and 06.03.2018 dismissing their Review Petitions had put a quietus to that issue. Respondent No. 1 had paid the workers their agreed upon dues under the AAIFR scheme and no E further directions could be issued to it in terms of the rehabilitation plan.

34Copy pinpoint34. Learned Senior Counsels, Mr. Dave & Dr. Singhvi, provided the following rebuttals in their rejoinder, besides reiterating their earlier arguments once again: - F i) The act of the new government, following elections, going into the decisions of the earlier ruling party is legally In show cause notice the allottee would be asked to show cause why the plot allotment should not be cancelled, lease deed of the plot should not be terminated and plot should not be taken in possession, in view of the default committed by the allottee. In the notice it would also be clarified that, the said default shall be condoned only on payment G of interest/retention charges or removal of breach of terms and conditions/ its regularisation. In case of no response or reply to the show cause notice without commitment for deposition of dues, for regularisation of delay / default or removal of breach of terms and conditions by the allottee, allotment of plot should be cancelled terminating the lease-deed of plot. … H

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A acceptable. Respondent No. 1 had failed to prove the alleged mala fide intent behind the cancellation of the supplementary lease deed and the quashing of the approval for sub-division and conversion of the usage of land; ii) There is no fetter on the power provided under Article 138 B of the AoA of RIICO to issue directions to the Corporation. In terms of the requirement for reasons to be provided, Justice Chinnappa Reddy’s opinion in Sachidananda Pandey v. State of West Bengal & Ors.15 outlined that the process, deliberations, and minutes of the meeting preceding a decision would be taken into account when ascertaining the reason for a particular measure to be taken. Contrary to Respondent No. 1’s position, the entire rationale did not have to be laid out in the conveyance of the final verdict; iii) It is only the subsequent government that is competent and capable of looking into the decisions taken by the previous regime. The current government had all the authority and rights to examine earlier decisions, and annul them if irregularities were discovered. The State Government has acted in pursuance of its mandate and obligation in this matter; iv) RIICO is nothing more than a company and the 1979 Rules are framed under its AoA. These Rules are subject to statutory mandates and requirements. The 1979 Rules are nothing more than a set of internal regulations of RIICO and are not comparable to the 1959 Rules that were enacted under the Rajasthan Land Revenue Act, 1956. This Court F in Life Insurance Corporation of India v. Escorts Ltd. & Ors.16 has emphasized the character of such companies and the conduct of their business via the AoA and internal rules made in furtherance of the Articles; v) Rule 11A is the appropriate provision in the 1959 Rules to G govern the usage and utilization of the land. Since the land in question was never transferred to RIICO, RIICO could not have acted under the 1979 Rules at all. The State Government always continued to manage and control the subject land under the 1959 Rules. 15 (1987) 2 SCC 295. H 16 (1986) 1 SCC 264.

BISHAMBHAR PRASAD v. M/s. ARFAT PETROCHEMICALS 281 PVT. LTD. AND ORS. [SURYA KANT, J.]

35Copy pinpoint35. The Appellant Unions have also made the following submissions A in support of the rights of the former employees of JKSL:- i) The unions have challenged the initial transfer lease deed to Respondent No. 1 signed in 2007. This petition has been pending before the HC and its outcome will have a knock- on effect on all other proceedings initiated thereafter. This B includes the SLPs before us; ii) The Appellant Unions had accepted the AAIFR scheme only on the basis that the industrial units at LIA, Kota, would be restarted. The workers had been owed over Rs. 250 Crores in dues, of which they had agreed to take only a C small portion as the rehabilitation plan envisaged the restarting of the units and consequent employment for them. As the plan had abjectly failed and Respondent No. 1 was unsuccessful in restarting production, the labourers were owed the entirety of their dues. D C. ANALYSIS

36Copy pinpoint36. With the assistance of the exhaustive and thorough submissions before us, we may now proceed to examine the controversy before us. C.1. Whether the LIA, Kota has been always under the management and control of the State Government or it was transferred to RIICO pursuant to Government Order dated 18.09.1979?

37Copy pinpoint37. From the recounting of the arguments raised on behalf of all the parties, the first question that arises for our determination is whether the LIA, Kota continued under the uninterrupted administrative control of the State Government, or whether it was transferred to RIICO. To uncover the answer, it is necessary to recapitulate the facts which have already been referred to in extenso. There is broadly no dispute that Government land was allotted to JKSL on a leasehold basis in the year

1958. The said allotment was made by the State Government in furtherance of its industrial policy, read with the power traceable to the Rajasthan Land Revenue Act, 1956. Section 100 of the said Act empowers the State Government to frame rules for regulating the sales of land in industrial and commercial areas, as well as the power to impose other conditions like annual assessment etc. In exercise of that power, the State Government formulated the 1959 Rules. The allotment of land H

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A to JKSL, thus, for all intents and purposes, came to be regulated under the 1956 Act read with the 1959 Rules. As an offshoot of the allotment of land, the State Government and JKSL entered into a bilateral relationship of lessor and lessee, respectively. It may be beneficial to refer to Rule 2 of the 1959 Rules at this stage which provides that the land in industrial area may be allotted on lease hold basis for 99 years “…by the State B Government in the industrialist department….”. Rule 4 contemplates that every such lease may be renewed for further period of 99 years at the option of the lessee.

38Copy pinpoint38. We may now advert to Rule 8 of the 1959 rules, as reproduced in para 6, which mandates that the land given for industrial purposes C shall not be used for any other purpose except constructing factory premises and such other residential quarters as are required for those engaged in that industry. Rule 8 further empowers the State Government to grant permission for establishment of industry other than for which the land was initially allotted.

39Copy pinpoint39. In this context, the stipulations contained in the first lease deed executed by State Government in favour of JKSL in 1967 are relevant. Under this lease, the lessee was obligated to use the allotted land for the prescribed industrial purpose, failing which the land was liable to be reverted “to the lessor”. This leads to the inescapable conclusion that the first formal lease of 1967 was strictly in conformity with provisions of the 1959 Rules.

40Copy pinpoint40. The relationship of lessor and lessee between State of Rajasthan and JKSL continued uninterruptedly till JKSL was declared a ‘sick company’. Respondent No. 1 then stepped into the shoes of JKSL under the orders of AAIFR, and by virtue of the tripartite agreements executed with the labour unions, for the land at LIA, Kota. It is also an admitted fact that neither under the tripartite settlements dated 9.10.2002 and 22.10.2002, nor under the sanctioned rehabilitation scheme dated 23.1.2003, the relationship of lessor and lessee between State, JKSL, or Respondent No.1, as the case may be, was ever disrupted. This jural relationship was further cemented between the State and Respondent G No.1 when 7 fresh lease deeds were executed in favour of Respondent No.1 by the State Government through the Collector, Kota. The details of these 7 leases have been provided in para 20 of this order. It is pertinent to mention that the terms and conditions contained in these fresh lease deed executed on 17.3.2007 were broadly the same as were incorporated while leasing out the subject land originally to JKSL.

BISHAMBHAR PRASAD v. M/s. ARFAT PETROCHEMICALS 283 PVT. LTD. AND ORS. [SURYA KANT, J.]

41Copy pinpoint41. What clearly emerges from this sequence of events is that from 1958 to 2007, and further onwards till the present date, there is no cessation in the relationship of lessor and lessee between the State and Respondent No. 1, or its predecessor JKSL. This contractual relationship duly governed under the 1956 Act read with the 1959 Rules, was never terminated expressly or otherwise and neither was it substituted by a B supplementary conveyance deed.

42Copy pinpoint42. We may now address some of the important intervening circumstances, events and Government Orders and circulars, heavily relied upon by Respondent No. 1. It is a matter of record that Government of Rajasthan issued an order on 18.09.1979 (reproduced in para 9) where under it was decided that “all the industrial areas of Rajasthan shall only C be developed through Rajasthan State Industrial and Mining Development Corporation”. The Government Order further declared that “the industrial areas operated by the Department of Industry shall be handed over to Rajasthan State Industrial and Mining Development Corporation Limited, Jaipur w.e.f. 1.10.1979”. In purported compliance of the above-mentioned D Government Order dated 18.09.1979, the Joint Director, District Industrial Centre, Kota issued an Order on 28.09.1979 (also reproduced in para 9) thereby transferring certain industrial areas to the Corporation including “Large Scale Industrial Area, Kota”.

43Copy pinpoint43. There is an unending debate between the parties with respect E to the scope and import of Government Order dated 18.09.1979 and whether it was given effect to qua the land allotted to JKSL in LIA, Kota. It should be remembered that Respondent No. 1 had not appeared on the scene at the time when the Government Order in question was passed. F

44Copy pinpoint44. Firstly, we propose to analyse the purpose and effect of Government Order dated 18.09.1979. As we have been able to understand, all the industrial areas of Rajasthan were to be transferred to RSIMDC for the purpose of “development” of those areas. The industrial areas were to be handed over only for this specific purpose. In other words, RSIMDC was entrusted with the task of a Local Authority G to carry out development activities in the industrial areas like “(a) construction of roads; (b) supply of electricity; (c) supply of water; (d) sewerage system; (e) all related amenities for the workers employed in industrial areas” etc. etc. H

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45Copy pinpoint45. It is equally relevant here to appreciate that a lessee is liable to pay Development Charges for the allotted industrial land under Rule 3 of 1959 Rules. After subjecting the allottees with the levy of Development Charges, the State Government as a lessor was obligated to provide all amenities in the industrial area on the principle of quid pro quo. Whether such services and amenities are developed by the State Government at its own expense or through an agency hired for that purpose, is completely inconsequential, insofar as the subsistence of the relationship of lessor – lessee is concerned.

46Copy pinpoint46. We say so also for the plain reason that the expression ‘handed over’ contained in the Government Order dated 18.09.1979 does not and cannot be construed as the transfer of ownership of the industrial land from State Government to RSIMDC or RIICO. The word “transfer” used by the Joint Director in his Order of 28.09.1979 has to be read in conjunction with the Government Order dated 18.09.1979 which unequivocally says that handing over of the industrial areas was only for development purposes.

47Copy pinpoint47. It appears to us that ownership or title of an immovable property cannot be transferred save and except by way of an act of legislation or a validly executed instrument of transferring such ownership rights. The omnibus administrative order issued for a purpose specified therein cannot be stretched to construe an implied transfer of ownership. There is no hidden treasure lying underneath Government Order dated 18.09.1979 to infer a non-existent consequence like vesting of lessor’s rights in RIICO in respect of LIA, Kota.

48Copy pinpoint48. Thus, we have no hesitation to hold that a relationship of lessor F - lessee between State Government and JKSL/RIICO continued to subsist and has not been affected in any manner by virtue of Government order dated 18.09.1979.

49Copy pinpoint49. Another strong plank of argumentation advanced on behalf of Respondent No.1 is founded upon Rules 11A and 12 of the 1959 Rules G which came to be inserted by way of amendment in the years 1982 &

1983. We accordingly propose to minutely analyse both the Rules.

50Copy pinpoint50. Rule 11A says that land “shall be allotted” to RIICO and Rajasthan Tourism Development Corporation “for setting up and developing industrial areas” on the terms and conditions prescribed therein. The Rule provides that the land shall be allotted to RIICO on a H

BISHAMBHAR PRASAD v. M/s. ARFAT PETROCHEMICALS 285 PVT. LTD. AND ORS. [SURYA KANT, J.]

leasehold basis and RIICO shall be free to sub-lease the land on agreed terms and conditions. RIICO has been further authorised to levy and recover such lease rent and other charges as may be determined by it, in respect of lands sub-leased by it. The period of sub-leases shall not exceed 99 years. Clause (viii) of Rule 11A noticeably states that the land shall revert to the State Government, free from all encumbrances and without payment of any compensation, in case RIICO or its sub- lessees use it for any purpose other than industrial, or commit breach of any other than condition of the lease or sub-leases. Rule 11A, contemplates allotment of land to RIICO on lease hold basis for a period of 99 years, with further authorization to execute sub-leases strictly for industrial purposes. The State Government has expressly reserved its rights to secure the land back free from all encumbrances if RIICO or its sub-lessees fail to use the allotted land for industrial purposes or commit a breach of any other condition. The expression “shall be” signifies allotment of land to RIICO in the future. Rule 11A is not attracted in respect of the lands which had already been leased out prior to insertion of this rule on 23.12.1983.

51Copy pinpoint51. We have no reason to doubt that Rule 11A, per se, does not advance the cause of Respondent No. 1 for the reason that Respondent No. 1 has merely stepped into the shoes of JKSL and lease deeds were executed in the year 2007 directly by the State Government in favour of Respondent No.1, without resorting to Rule 11A, namely, through RIICO. E Had it been a case of execution of fresh lease deeds in favour of Respondent No. 1 by RIICO in 2007, it could be convincingly argued that such allotment was in furtherance of the authorization conferred on RIICO under Rule 11A. The facts do not bear out such an eventuality.

52Copy pinpoint52. That apart, the plain wording of Rule 11A clearly shows that the Corporation can have merely managerial power over the land that is allocated to it. As laid down very clearly under Rule 11A, the allotment to RIICO is done purely on a leasehold basis, and ownership and title remain unequivocally with the State Government. RIICO acts as nothing but an agent of the State in its efforts to increase industrial production and further economic progress. The State remains the overarching power in this dynamic and RIICO remains subservient to it.

53Copy pinpoint53. As regard to Rule 12 (reproduced in para 11 of this order), it may be seen that the same is compartmentalised in two parts. The first part is a consequence of Rule 11A, namely, if the State Government has H

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A allotted land to RIICO on lease hold basis under Rule 11A, in that case, this segment of Rule 12 empowers RIICO “to make allotment” in accordance with its 1979 rules of “vacant plots” to entrepreneurs in the industrial areas notified by the State Government and transferred to the said Corporation.

54Copy pinpoint54. To be more specific, the first part of Rule 12 authorises RIICO to execute sub-leases in respect of land which has been leased out to it by the State Government under Rule 11A of the 1959 Rules.

55Copy pinpoint55. The second part of Rule 12 says that RIICO “shall also be authorised” to execute lease deeds, realize development charges, lease C rent and other dues from the entrepreneurs to whom plots had already been allotted under the 1959 Rules. In our considered opinion, the second part is an enabling provision whereunder RIICO has been authorised to execute lease deeds or realize development charges/lease rents and other dues from pre-1982 group of allottees. A plain reading of this provision makes it abundantly clear that RIICO would execute lease deeds only in D a case where land had been principally allotted but a formal agreement between a lessor and lessee or lessee and sub-lessee is yet to be executed. If a piece of land had already been allotted and a formal lease deed stood executed between the State and such an allottee, there arises no occasion to execute a second lease deed in respect of the same E leased out land. In that case, only development charges and lease rent etc. are to be recovered by RIICO for the reasons which we have already explained, and which is merely a cost factor towards the development activities to be undertaken by RIICO as per the Government order dated 18.09.1979. The second part of Rule 12 also does not fortify the claim of Respondent No. 1 for the reasons that:- F (a) lease deeds in favour of JKSL had been already executed in the year 1967 before Rule 12 came into force; (b) no part of the land in dispute was ever allotted to RIICO under Rule 11A of the 1959 Rules; G (c) Respondent No. 1 is a substitute of JKSL and that is why fresh lease deeds were executed in favour of Respondent No. 1 only for the remainder of the period of the already subsisting lease; (d) There was no independent lessor – lessee relationship between the State Government and Respondent No. 1 except that H Respondent No. 1 substituted JKSL pursuant to AAIFR order;

BISHAMBHAR PRASAD v. M/s. ARFAT PETROCHEMICALS 287 PVT. LTD. AND ORS. [SURYA KANT, J.]

(e) the non-applicability of second part of Rule 12 was reinforced A when transfer lease deeds were executed in favour of Respondent No.1 in 2007 by the State Government through the Collector and not by RIICO; (f) We are informed that even lease rent has also been deposited by Respondent No. 1 continuously for years post 2007 with the B Tehsildar, Kota, and not with RIICO; and (g) There has been no formal agreement as lessee and sub-lessee between RIICO and Respondent No. 1 with the concurrence of State Government.

56Copy pinpoint56. Another argument raised by Respondent No. 1 was that the C transfer lease deeds were signed pursuant to the requirement of Rule 9(iv) of the 1959 Rules, which necessitates a sign off by the State Government for transfer of land from one company to another, when the entity that possessed the lease is declared a sick company. Rule 9 in its entirety has been reproduced in para 6 of this Order.

57Copy pinpoint57. We are, once again, unmoved by this submission. If the 1959 D Rules were not even applicable to begin with, there would have been no need to comply with Rule 9(iv) at all. Rather, the very fact that compliance with this provision was necessary, is sufficient indication that Respondent No. 1 was fully aware that the State Government had ownership, title, and control of LIA, Kota. E

58Copy pinpoint58. Having held so, there is no alternative but to conclude that the relationship of lessor and lessee between State and Respondent No. 1 has been validly subsisting at all times and RIICO was never authorised either by Government order dated 18.09.1979 or under Rules 11A and 12 of the 1959 Rules, to by-pass the State Government and assume the self-styled role of the lessor in respect of LIA, Kota. Since, the 1967 and 2007 lease deeds in favour of JKSL and Respondent No. 1, respectively, were executed by the State Government in terms of Rule 2 of the 1959 Rules, RIICO had no authority whatsoever to permit Respondent No. 1 to change the land use or allow for the sub-division of plot without the prior approval of the State Government, which is the sole competent authority to accord such permission in exercise of its power under Rule 8 of the 1959 Rules. The contrary view taken by the High Court is plainly erroneous in law and is based on a misconstruction of the provisions of 1959 Rules read with the binding bilateral contracts between the parties. H

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59Copy pinpoint59. Not that we are dependent in any manner upon the understanding of the Government Order dated 18.09.1979 or Rules 8, 9, 11A and 12 of the 1959 Rules, by the State Government or RIICO. Irrespective of their inconsistent stand taken before different forums with respect to the status of RIICO qua LIA, Kota, we have drawn our conclusion primarily on the basis of plain reading of the said Government B Order and the 1959 Rules. We, however, hasten to add that the correspondence/circulars issued by the State Government and RIICO subsequently, which we have reproduced and discussed in paragraphs 12 to 15 of this judgment, unambiguously fortify our construction of both the Government Order and the 1959 Rules, referred to above. C C-2. Whether the 1979 Rules of RIICO are statutory in nature?

60Copy pinpoint60. The question regarding whether the 1979 Rules formulated by RIICO are of statutory character, is more or less rendered academic as the fate of these appeals does not hinge upon this issue in view of our D holding in Part C-I. Nevertheless, since the High Court has opined on this issue, we propose to answer the question so that there remains no uncertainty in the minds of State authorities, RIICO or the leaseholders.

61Copy pinpoint61. It must be noticed at the outset that RIICO is not a statutory body. The Company was brought into being under the Companies Act, E 1956 by the State of Rajasthan, which holds 100% shares in it. The distinction between companies that are brought into being “by” an Act, and those created “under” an Act, is that a company incorporated under the Companies Act is not a creation of the said Act but it has come into existence in accordance with the provisions of the Companies Act.

62Copy pinpoint62. This was fleshed out further in S.S. Dhanoa v. Municipal Corporation, Delhi & Ors.17which held: “9. Corporation, in its widest sense, may mean any association of individuals entitled to act as an individual. But that certainly is not the sense in which it is used here. Corporation established G by or under an Act of Legislature can only mean a body corporate which owes its existence, and not merely its corporate status, to the Act. For example, a Municipality, a Zilla Parishad or a Gram Panchayat owes its existence and status to an Act of Legislature. On the other hand, an 17 H 1981 (3) SCC 431.

BISHAMBHAR PRASAD v. M/s. ARFAT PETROCHEMICALS 289 PVT. LTD. AND ORS. [SURYA KANT, J.]

association of persons constituting themselves into a Company A under the Companies Act or a Society under the Societies Registration Act owes its existence not to the Act of Legislature but to acts of parties though, it may owe its status as a body corporate to an Act of Legislature.”

63Copy pinpoint63. The importance of this difference in our context was summarized concisely in Executive Committee of Vaish Degree College v. Lakshmi Narain18: “10…In other words the position seems to be that the institution concerned must owe its very existence to a statute which would be the fountainhead of its powers. The question in such case to be asked is, if there is no statute, would the institution have any legal existence. If the answer is in the negative, then undoubtedly it is a statutory body, but if the institution has a separate existence of its own without any reference to the statute concerned but is merely governed by the statutory provisions it cannot be said to be a statutory body…” D

64Copy pinpoint64. What we have, very clearly, is a company incorporated “under” the Companies Act, 1956. RIICO does not owe its existence to a statute, but is rather created under the Companies Act and is subject to its provisions. It is only governed by the provisions of the Companies Act and not created by it. The 1979 Rules, which learned Senior Counsel E Mr. Rohatgi had argued contained a “statutory flavour” were issued pursuant to Article 93 of RIICO’s AoA. It is difficult to see how the status of “statutory rules” may be accorded to regulations that are brought into existence under the Articles of a non-statutory company.

65Copy pinpoint65. Respondents have cited M.G. Pandke & Ors. v. Municipal F Council, Hinganghat, Dist. Wardha & Ors.19 to make their case regarding the 1979 Rules being statutory in nature. In that case, the State of Maharashtra had come out with the “Secondary School Code” via executive directions. The State then promulgated the Maharashtra Secondary Education Boards Act, 1965, and the associated Maharashtra G Secondary Education Boards Regulations, 1966. Within the latter, a reference had been made to the Secondary School Code and it was mandated that schools comply with the Code under Regulation 19(7)(xvi). When a conflict between the Secondary School Code and the bylaws of 18 1976 (2) SCC 58. 19 1993 Supp (1) SCC 708. H

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A the Respondent Municipal Council arose, this Court had to determine the legal status of the Code and proceeded to conclude as follows: “12. Learned Counsel for the appellants has raised the following contentions in support of his case:

1. Regulation 19(7)(xvi) of Maharashtra Regulations which B is a statutory regulation makes it obligatory for the Municipal Council to follow the provisions of the Code. The Code itself may be non-statutory but the mandate to follow the Code flows from Regulations 19(7)(xvi) of the Maharashtra Regulations which is mandatory. The field having been occupied by the C Code under the statutory-mandate, no bye-law to the contrary could be framed by the Municipal Council. …

13. When the Code was enforced in the year 1963, the Act and Regulations were holding the field in Vidarbha Division. D Under the Act and the Regulations the age of superannuation being 60 years, the Code, while fixing 58 years as the age of superannuation for rest of Maharashtra, permitted the Vidarbha teachers to superannuate on attaining the age of 60 years. The Maharashtra Act which came into force on E January 1, 1966 repealed the Act and the regulations. In Baboolal’s case (AIR 1974 Bom 219) the High Court referred to the repealing and saving section of the Maharashtra Act and came to the conclusion that there was no provision thereunder to save the regulations. Assuming that the Regulations under the Act stood repealed, the Code which was framed by the Maharashtra Government continued to hold the field. It is not disputed by the learned Counsel for the appellants that the Code by itself is not statutory and is in the nature of executive instructions. But he strongly relies on Regulation 19(7)(xvi) of Maharashtra Regulations and contends that the said Regulation makes it obligatory for the Municipal Council Hinganghat to follow the provisions, of the Code. It is for the State Government to frame the Code in whatever’ manner it likes but once the Code is in operation its provisions have to be followed by the Municipal Council Hinganghat under the mandate of Regulation 19(7)(xvi) of H Maharashtra Regulations. We see considerable force in the

BISHAMBHAR PRASAD v. M/s. ARFAT PETROCHEMICALS 291 PVT. LTD. AND ORS. [SURYA KANT, J.]

argument of the learned Counsel. The Code has been framed with the purpose of bringing security of service, uniformity, efficiency and discipline in the working of non-Government High Schools. It has to be applied uniformly to the schools run by various Municipal Councils in the State. It is no doubt correct that the Municipal Councils have the power to frame bye-laws under the Maharashtra Municipalities Act, 1965 but if the field is already occupied under the mandate of statutory Maharashtra Regulations, the Municipal Council cannot frame bye-laws to the contrary rendering the mandate of the Maharashtra Regulations Nugatory. We are of the view that the Municipal Council Hinganghat has out stepped its jurisdiction in framing bye-law 4 of the bye-laws. We, therefore, direct that the conditions of service of the appellants shall be governed by the Code as enforced by Regulation 19(7)(xvi) of the Maharashtra Regulations. Bye-law 4 of the bye-laws shall not be applicable to the appellants.” D

66Copy pinpoint66. We fail to see how this decision assists Respondent No. 1. There was a reference made to the Secondary School Code in the Maharashtra Regulations but at no point of time was there an indication that the Code was designated as “statutory”. In fact, the legal force of the Code was bestowed upon it by the reference in Regulation 19(7)(xvi) of the Maharashtra Regulations, which were statutory in nature. E

67Copy pinpoint67. This cannot, in any way, be extrapolated to affirm the proposition that references in legislations and statutory rules, infuses a “statutory flavour” to regulations that are not of such character. In the present case, Rule 12 of the 1959 Rules merely states that lands allotted to RIICO will be further dealt with by the Corporation as per its 1979 F Rules. At best, this imposes an obligation upon RIICO to abide by its own guidelines, which it had issued under Article 93 of its AoA. The obligation for RIICO to abide by the 1979 Rules stems from its own AoA under which those Rules came into being. By no stretch, does this make the 1979 Rules statutory in nature, as was accepted even in M.G. G Pandke (Supra).

68Copy pinpoint68. Thus, it is clear to us that no statutory force underpins the 1979 Rules and there is no question of them prevailing over or governing the subject area. H

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A C.3 Whether failure to observe Principles of Natural Justice by the State Government vitiated its decision to annul the permissions/approvals granted by RIICO in favour of Respondent No.1?

69Copy pinpoint69. Respondent No. 1, while vehemently objecting to the usage of B Article 138 of RIICO’s AoA to issue directions to the Corporation for cancellation of the supplementary lease deeds and attendant approvals/ permissions, has equated such directions by the State Government to a “farman” whereby any semblance of procedure and due process are abandoned to its own prejudice. It was asserted that the method of undertaking these measures had to be followed and an opportunity of hearing needed to be provided to Respondent No. 1. This was further elaborated upon by emphasizing on the failure to provide Respondent No. 1 with a show cause notice, and blatant non-adherence to Principles of Natural Justice.

70Copy pinpoint70. Both sides have raised contentions on the need for reasons behind the cancellation to be specified in the order itself or not. Learned Senior Counsel, Mr. Dave, had cited the judgement in Sachidananda Pandey (Supra) to argue that the consideration of whether reasons were provided would include the internal deliberations within the State Government, and not be confined merely to the order itself. The exact passage relied upon by him read as follows: “27. Dr. Singhvi cited before us the well-known decisions of this Court… to urge that even an administrative decision must be arrived at after taking into account all relevant considerations and eschewing irrelevant considerations and that the reasons for an order must find a place in the order itself and those reasons cannot be supplemented later by fresh reasons in the shape of an affidavit or otherwise. The submission was that neither the Cabinet memorandum of January 7, 1981 nor the Cabinet Memorandum of September 9, 1981 revealed that relevant considerations had been taken into account. What was not said in either of the Cabinet Memoranda, it was said, could not later be supplemented by considerations which were never present to the mind of the decision making authority. We do not agree with the submission of Dr. Singhvi. The proposition that a decision must be arrived at after taking into account all relevant

BISHAMBHAR PRASAD v. M/s. ARFAT PETROCHEMICALS 293 PVT. LTD. AND ORS. [SURYA KANT, J.]

considerations, eschewing all irrelevant considerations cannot for a moment be doubted. We have already pointed out that relevant considerations were not ignored and, indeed, were taken into account by the Government of West Bengal. It is not one of those cases where the evidence is first gathered and a decision is later arrived at one fine morning and the decision is incorporated in a reasoned order. This is a case where discussions have necessarily to stretch over a long period of time. Several factors have to be independently and separately weighed and considered. This is a case where the decision and the reasons for the decisions can only be gathered by looking at the entire course of events and circumstances stretching over the period from the initiation of the proposal to the taking of the final decision. It is important to note that unlike Mohinder Singh Gill’s case where that Court was dealing with a Statutory Order made by a statutory functionary who could not therefore, be allowed to supplement the grounds of this order by later explanations, the present is a case where neither a statutory functions nor a statutory functionary is involved but the transaction bears a commercial though public character which can only be settled after protracted discussion, clarification and consultation with all interested persons. The principle of Mohinder Singh Gill’s case has no application to the factual situation here.”

71Copy pinpoint71. We have no qualms with the logic employed by this Court in Sachidananda Pandey (Supra). However, this citation may not be helpful to the appellants in the present instance. The extracted passage refers to “consultation with all interested persons” and the earlier part of the judgment give the complete details regarding how representations and objections had been sent with regard to the construction of a hotel in the area in question, especially in the context of its impact on the ecology and migratory birds. It was in this factual background, coupled with the fact that the deliberations had been going on for around 2 years, that the Court was satisfied that relevant considerations had been appropriately accounted for. In our scenario, on the other hand, the deliberations by the Cabinet Committee which proceeded for around 7-8 months, do not indicate that Respondent No. 1 was ever heard or involved in the process.

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72Copy pinpoint72. The importance of Principles of Natural Justice, among which we are concerned with audi alterem partem in this case, have been deliberated upon by this Court numerous times in the past. As far back as in Union of India v. P.K. Roy20 the Court held: “12…But the extent and application of the doctrine of natural B justice cannot be imprisoned within the strait-jacket of a rigid formula. The application of the doctrine depends upon the nature of the jurisdiction conferred on the administrative authority, upon the character of the rights of the persons affected, the scheme and policy of the statute and other relevant circumstances disclosed in the particular case…” C

73Copy pinpoint73. Further, in A.K. Kraipak v. Union of India21 the nature of an administrative power and the obligations reposed upon the State to function in a just and fair manner was explained: “13. The dividing line between an administrative power and D a quasi-judicial power is quite thin and is being gradually obliterated. For determining whether a power is an administrative power or a quasi-judicial power one has to look to the nature of the power conferred, the person or persons on whom it is conferred, the framework of the law conferring that power, the consequences ensuing from the exercise of that power and the manner in which that power is expected to be exercised. Under our Constitution the rule of law pervades over the entire field of administration. Every organ of the State under our Constitution is regulated and controlled by the rule of law. In a welfare State like ours it is inevitable that the jurisdiction of the administrative bodies is increasing at a rapid rate. The concept of rule of law would lose its vitality if the instrumentalities of the State are not charged with the duty of discharging their functions in a fair and just manner. The requirement of acting judicially in essence is nothing but a requirement to act justly and fairly and not arbitrarily or capriciously. The procedures which are considered inherent in the exercise of a judicial power are merely to facilitate if not ensure a just and fair decision. In recent years the concept of quasi-judicial power has been 20 (1968) 2 SCR 186. 21 (1969) 2 SCC 262. H

BISHAMBHAR PRASAD v. M/s. ARFAT PETROCHEMICALS 295 PVT. LTD. AND ORS. [SURYA KANT, J.]

undergoing a radical change. What was considered as an administrative power some years back is now being considered as a quasi-judicial power…”

74Copy pinpoint74. In this context, it may be true that the Principles of Natural Justice entailed giving Respondent No. 1 an opportunity to defend its rights. However, the most decisive and crucial factor is whether any legally vested ‘right’ ever accrued in favour of Respondent No. 1, which the State Government could not have despoiled behind its back. It has already been held by us categorically that RIICO had no authority whatsoever to accord permission for conversion and sub-division of the industrial land allotted to Respondent No. 1. We have further opined that the State Government has always retained its authority as lessor and was the only competent authority to grant such permissions to Respondent No. 1 within the framework of the 1959 Rules. The irresistible conclusion would be that the self-styled power exercised by RIICO, was without any sanction in law; it lacked inherent competence and RIICO acted beyond its jurisdiction in respect of LIA, Kota. The permissions accorded by RIICO in favour of Respondent No. 1 did not confer any rights whatsoever, much less any enforceable right in the eyes of law. RIICO usurped the powers vested in the State Government and passed palpably illegal orders in favour of Respondent No.1. The agreements between RIICO and Respondent No. 1 are nothing but brutum fulmen. E

75Copy pinpoint75. On the face of these findings, the question that arises is whether Respondent No. 1, which actively participated in RIICO’s decision making process and secured benefits without any authority in law, can be permitted to complain of a deprivation of the opportunity of being heard. We are of the considered opinion that the principle of audi altrempartem should not be an empty formality nor a compulsory ritual that must always be performed. The principal issue that arose for consideration before the Cabinet Committee pertained to the legitimacy of the power assumed by RIICO in respect of LIA, Kota, and not whether the permissions granted to Respondent No. 1 suffered from any propriety or legality. It is true that the issue was raked up with a political flavour, but eventually the final resolution centred around the RIICO’s lack of authority. We do not think that Respondent No. 1 could render any assistance to the Cabinet Committee in the formation of their views. In any case, we have carried out an in-depth analysis of the entire gamut of documents and statutory rules, and have come to a firm conclusion that it was the State Government H

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A alone which was competent to accord necessary permissions to Respondent No. 1 under the 1959 Rules, and not RIICO in purported exercise of its powers under the 1979 Rules. Our holding is not confined to the decisions taken in favour of Respondent No. 1 alone, and shall encompass all other similarly placed lease-holders, with no discretion to the State Government to blow hot and cold and/or to take ad hoc decisions B on a pick and choose basis. The only exception can be in a case where land has been expressly leased out to RIICO under Rule 11A of 1959 Rules and RIICO has further sub-leased the same land as per the scheme envisaged under clause (viii) of the said Rule.

76Copy pinpoint76. We may at this stage refer to the observations made by this C Court in S.L. Kapoor v. Jagmohan & Ors.22 where the non-observance of Principles of Natural Justice was not condoned, but nonetheless forgone, on the following basis: “17. Linked with this question is the question whether the failure to observe natural justice does at all matter if the observance of natural justice would have made no difference, the admitted or indisputable facts speaking for themselves. Where on the admitted or indisputable facts only one conclusion is possible and under the law only one penalty is permissible, the Court may not issue its writ to compel the observance of natural justice, not because it approves the non- observance of natural justice but because Courts do not issue futile writs. But it will be a pernicious principle to apply in other situations where conclusions are controversial, however, slightly, and penalties are discretionary.”

77Copy pinpoint77. Further affirmation on this point is found in K. Balasubramanian (Ex. Capt.) v. State of Tamil Nadu23: “9…This High Court, has in our opinion rightly held that the directions contained in orders dated November 16, 1976, and June 15, 1977, were invalid being contrary to the provisions G contained in Rule 35 of the General Rules. Since the said orders were invalid, the petitioners would not claim any right on the basis of the said orders and, there was, therefore, no 22 (1980) 4 SCC 379. 23 (1991) 2 SCC 708. H

BISHAMBHAR PRASAD v. M/s. ARFAT PETROCHEMICALS 297 PVT. LTD. AND ORS. [SURYA KANT, J.]

question of affording them an opportunity of a hearing before passing the order dated March 3, 1980…”

78Copy pinpoint78. These decisions fortify our conclusion that steps taken which are themselves vitiated, cannot form the basis for principles of natural justice to be applied. The supplementary lease deeds were signed by RIICO without any authority to do so. It similarly lacked the capacity to grant the permission for conversion of use for the land to commercial, and the allowance to sub-divide the plot. Thus, no legally vested right of Respondent No. 1 has been infringed and it has no legitimate ground to seek an opportunity to be heard in a matter strictly between RIICO and State Government. C C. 4 Whether the State Government could have exercised its powers under Article 138 of the AoA of RIICO to direct cancellation?

79Copy pinpoint79. It has already been noted that RIICO is a 100% Government owned company incorporated under the Companies Act, 1956. RIICO, D in deference to the statutory requirements of the Companies Act, has formulated its own Articles of Association (AoA). Article 138 of these Articles reads as follows: “138. Directions and instruction of the Governor. Notwithstanding anything contained in any of these articles, the E State Government may from time to time, issue such directions or instructions as he may consider necessary in regard to the affairs of the conduct of the business of the Company or Directors thereof and in like manner may vary and annul any such direction or instruction. The Directors shall duly comply with and give F immediate effect to director instruction so issued.”

80Copy pinpoint80. It is a matter of common knowledge that clauses of this nature are invariably inserted in AoAs of most Public Sector Undertakings and/ or Corporations owned and controlled by the State. The State Government being the sole investor, its overriding powers have been acceded to by G RIICO through Article 138 of its AoA. It is pertinent to note that Article 138 opens with a non obstante clause and, thus, the power given to State Government to issue directions under this provision cannot be curtailed and is not subject to any other provision within the Articles. It is categorically provided in Article 138 that the State Government may issue “such directions or instructions……in regard to the affairs of the H

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A conduct of the business of the Company or Directors thereof…”. Article 138 also empowers the State Government to “vary and annul any such direction or instruction”. The Directors are obligated to comply with the Government directions/instructions.

81Copy pinpoint81. In the present case, the State Government has directed RIICO B to recall its permission for conversion of the usage of land, sub-division of plots and supplementary lease deeds executed in favour of Respondent No. 1. All these actions of RIICO pertained to its business affairs. Since RIICO took these decisions exceeding its powers and in a completely unauthorised and illegal manner, the State Government, in our considered opinion, was well within its rights to invoke Article 138 of AoA and nullify the unauthorised and unlawful decisions taken by RIICO. The very objective behind reposing power in the State Government under Article 138 of the AoA is to enable it to undo and annul the decisions taken by RIICO in the conduct of its business affairs, which the State Government may find is derogating from public interest or in conflict with its own policy. The State Government is entitled to resort to Article 138 where it finds that the business affairs have been conducted by RIICO detrimental to the State’s interest as a Principal stake holder. C. 5 Whether the Rules of Business were not followed?

82Copy pinpoint82. Respondent No. 1 has heavily relied upon the Rules of Business E to urge that failure to comply with the procedure provided therein would lead to invalidation of the government decision. This Court’s earlier pronouncement in MRF (Supra) was cited in support of this contention. The relevant extract of the judgment addressing this aspect of the matter is to the following effect: F “67… In the case on hand, we are required to examine the contentions of the appellants on this issue with reference to the Business Rules framed by Governor of Goa under Article 166(3) of the Constitution of India.

68. Rule 7(2) of the Business Rules of the Government of Goa G states, that, no proposal which requires previous concurrence of Finance Department under the said Rule, but in which Finance Department has not concurred, may not be proceeded with, unless the Council of Ministers has taken a decision to that effect. The wordings of this Rule are different from the provisions of Rule 9 of the Business Rules of Maharashtra H

BISHAMBHAR PRASAD v. M/s. ARFAT PETROCHEMICALS 299 PVT. LTD. AND ORS. [SURYA KANT, J.]

and have to be read in context with the provisions of Rule 3 A of the Business Rules of Government of Goa which states that the business of the Government shall be transacted in accordance with the Business Rules. Under Rule 7(2) thereof, the concurrence of the Finance Department is a condition precedent. B

69. Likewise Rule 6 of the Business Rules states, that, the Council of Minister shall be collectively responsible for all executive orders passed by any Department in the name of the Governor or contract made in exercise of the power conferred on the Governor or any other officer subordinate to him in accordance with the Rules, whether such orders or C contracts are authorized by an individual minister on a matter pertaining to the Department under his charge or as the result of discussion at a meeting of the Council of Minister or otherwise. This Rule requires that an executive order issued from any department in the name of the Governor of the State D should be known to the Council of Ministers so as to fulfil the collective responsibility of the Council of Ministers.

70. Further Rule 7 of the Business Rules requires that no Department shall without the concurrence of the Finance Department issue any order which may involve any abandonment of revenue or involve expenditure for which no provisions have been made in the Appropriation Act or involve any grant of land or assignment of revenue or concession, grant, lease or licence in respect of minerals or forest rights or rights to water, power or any easement or privilege or otherwise have a financial implications whether involving expenditure or not. 71.From a combined reading of the provisions of Rules 7, 3 and 6 of the Business Rules of the Government of Goa the conclusion would be irresistible that any proposal which is likely to be converted into a decision of the State Government G involving expenditure or abandonment of revenue for which there is no provision made in the Appropriation Act or an issue which involves concession or otherwise has a financial implication on the State is required to be processed only after H

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A the concurrence of the Finance Department and cannot be finalized merely at the level of the Minister in charge…”

83Copy pinpoint83. Learned Senior Counsel, Mr. Nadkarni, has emphasized on Schedule I of the Rules of Business, under which the matters related to RIICO would be addressed by the Industries Department. By extension, B the Minister for Industries would be the nodal authority responsible for finalizing decisions that impact RIICO’s functioning. Since the Minister for Industries was not included in the Cabinet Committee and was not involved while taking the final decision, his absence vitiates the decision taken on 03.08.2019.

84Copy pinpoint84. The relevant portions of the Rules of Business relief upon by Respondent No.1 are as follows: “PART-II ALLOCATION AND DISPOSAL OF BUSINESS …

D 4. The Business of the Government shall be transacted in the Secretariat Departments specified in the First Schedule and shall be classified and distributed between those departments as laid down therein. …

E 7. The Council shall be collectively responsible for all advice tendered to the Governor and also for all executive orders issued in the name of the Governor in accordance with these Rules, whether such advice is tendered or such orders are authorised by an individual minister on a matter appertaining to his portfolio or as a result of discussion at a meeting of the Council or a sub- F committee thereof or howsoever otherwise.

9. Without prejudice to the provisions of Rule 7, the minister-in- charge or the minister of State-in-charge of a department, shall be primarily responsible for the disposal of the business pertaining to that Department.” G

85Copy pinpoint85. We are, however, unable to agree with the contentions placed by Respondent No. 1. It appears to us that the Rules of Business have been substantially complied with. The entire Cabinet was called on 29.12.2018 to consider various decisions taken by RIICO during the previous regime. Among these were the supplementary leases and H

BISHAMBHAR PRASAD v. M/s. ARFAT PETROCHEMICALS 301 PVT. LTD. AND ORS. [SURYA KANT, J.]

connected permissions to Respondent No. 1 by RIICO. The Cabinet, A which included the Minister for Industries, then proceeded to constitute three sub-committees to investigate these alleged irregularities, along with an inter-departmental committee. The Minister for Industries is not expected to look into each individual matter pertaining to RIICO as this would render the entire working of government unviable. The intention behind Article 166(3) under which the Rules of Business are framed, have been succinctly set out by this Court in Gulabrao Keshavrao Patil & Ors. v. State of Gujarat 24: “7…Article 166(1) and (2) expressly envisage authentication of all the executive action and shall be expressed to be taken in the name of the Governor and shall be authenticated in such manner specified in the rules made by the Governor. Under Article 166(3), the Governor is authorised to make the rules for the more convenient transaction of the business of the Government of the State, and for the allocation among Ministers of the said business insofar as it is not a business with respect to which the Governor is by or under the Constitution required to act in his discretion...”

86Copy pinpoint86. Another decision in Lalaram and Ors. vs. Jaipur Development Authority and Ors.25also laid down the following: “104…Thus, Article 166(3) mandates the making of the Rules E of Business for more convenient transactions of the affairs of the Government. Clause (1) stipulates the mode of expression of an executive action taken in conformity therewith and Clause (2) ordains the manner of authentication of the consequential orders and instruments. Having regard to the role assigned to the Council of Ministers with the Chief Minister at the summit, the Rules of Business framed Under Article 166(3) meant for convenient transaction of the affairs of the Government, by allocation thereof among the Ministers, secures their collective participation in the administration of the governance of the State. This scheme of executive functioning, assuredly thus, is in assonance with the constitutional edict with regard thereto, modelling the steel frame of the State machinery.” 24 (1996) 2 SCC 26. 25 (2016) 11 SCC 31. H

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87Copy pinpoint87. The purpose behind Article 166(3) is to form regulations for the convenient administration of government. The Minister of Industries was not, at any point, missing from the overall decision to review the actions taken by RIICO and to take necessary steps thereafter. The cabinet sub-committee was merely acting on behalf of the entire Council of Ministers, when carrying out the exhaustive fact-finding enquiries. B

88Copy pinpoint88. We must not overlook the overall objective of ensuring that governance is carried out in a convenient and efficient manner. Rule 7 of the Rules of Business embodies this spirit as well, in that it advocates for collective governance by the Council of Ministers in terms of recommendations made to the Governor. The Council was collectively involved in the decision to have sub-committees set up to revisit different decisions taken by the prior government, including with respect to actions by RIICO.

89Copy pinpoint89. The judgment in MRF (Supra) formulated its final conclusion on the basis of a construction of the Rules of Business of Goa and only after interpreting the Rules, was the mandatory nature of the sign off from the Finance Department distilled. In our case, the sign off from the Minister for Industries is clear from the authorization granted on 01.01.2019 to the sub-committee to look into the decisions of the prior government and RIICO. Therefore, the spirit behind the Rules of Business E stand complied with in the present case.

90Copy pinpoint90. We hasten to emphasize once more that it was a collective decision of the Council of Ministers to constitute the Committees to look into irregularities of various kinds. The specific committee that was authorized to investigate RIICO and its alleged misuse of non-existent F powers in favour of Respondent No. 1, was a creation of the entire Council, including the Minister for Industries. The sub-committee’s actions in this context were completely validated and backed by the Minister and the rest of the Council. It is, thus, difficult to hold that Rules of Business have not been followed by the State Government in the course of its decision making process. G C.6 Does the Doctrine of Legitimate Expectations and Promissory Estoppel apply in favour of Respondent No. 1?

91Copy pinpoint91. An additional point in this regard is the inapplicability of principles of estoppel and legitimate expectations. In line with our analysis on why the principles of natural justice will not be of relevance, these defences, H

BISHAMBHAR PRASAD v. M/s. ARFAT PETROCHEMICALS 303 PVT. LTD. AND ORS. [SURYA KANT, J.]

similarly, cannot be raised by Respondent No. 1 on the strength of illegal A actions or orders passed by RIICO. Moreover, there is no governmental action or order in favour of Respondent No.1 which can give rise to any legitimate expectations. The execution of the supplementary lease deed by RIICO in favour of Respondent No. 1, along with the attendant permissions in its favour for converting the usage of the land and sub- B division, are actions taken between them. This Court has clearly laid out the contours of legitimate expectations on numerous occasions, along with commenting on the scenarios where they are inapplicable. In Bannari Amman Sugars Ltd. vs. Commercial Tax Officer and Ors.26 it was opined that: “8…It is generally agreed that ‘legitimate expectation’ gives the applicant sufficient locus standi for judicial review and that the doctrine of legitimate expectation to be confined mostly to right of a fair hearing before a decision which results in negativing a promise or withdrawing an undertaking is taken. The doctrine does not give scope to claim relief straightway from the administrative authorities as no crystallized right as such is involved. The protection of such legitimate expectation does not require the fulfilment of the expectation where an overriding public interest requires otherwise. In other words, where a person’s legitimate expectation is not fulfilled by taking a particular decision then decision maker should justify the denial of such expectation by showing some overriding public interest.”

92Copy pinpoint92. In Food Corporation of India v. Kamdhenu Cattle Feed Industries27, this Court also noted that legitimate expectations may not themselves give rise to defensible rights, but merely act as a bulwark against arbitrator decision making that does not take into account these interests. The Court outlined: “8. The mere reasonable or legitimate expectation of a citizen, in such a situation, may not by itself he distinct enforceable right, but failure to consider and give due weight to it may render the decision arbitrary, and this is how the requirement of due consideration of a legitimate expectation forms part of

26 (2005) 1 SCC 625. 27 (1993) 1 SCC 71. H

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A the principle of non-arbitrariness, a necessary concomitant of the rule of law. Every legitimate expectation is a relevant factor requiring due consideration in a fair decision making process. Whether the expectation of the claimant is reasonable or legitimate in the context is a question of fact in each case. Whenever the question arises, it is to be determined not according to the claimant’s perception but in larger public interest wherein other more important considerations may outweigh what would otherwise have been the legitimate expectation of the claimant. A bona fide decision of the public authority reached in this manner would satisfy the requirement of non-arbitrariness and withstand judicial scrutiny. The doctrine of legitimate expectation gets assimilated in the rule of law and operates in our legal system in this manner and to this extent.”

93Copy pinpoint93. From this encapsulation of the law, it is clear to us that no legitimate expectation could have arisen in favour of Respondent No. 1. There was no implicit or explicit representation made by the State Government in favour of its request for conversion of the land, nor for sub-division of plots. RIICO, in completely untenable fashion, took over the role of the lessor without there being any right to do so, and issued the requisite permissions. Evidently, such approvals had no legs to stand on as they were devoid of any force of law. The lessor of LIA, Kota, was the State Government. When the entity purporting to exercise the powers of a lessor, RIICO in this case, does so without having the requisite legal status to act in this manner, Respondent No. 1 as the beneficiary of these wrongful actions, cannot seek any legitimate expectation or promissory estoppel in its favour.

94Copy pinpoint94. Furthermore, this Court in Food Corporation of India (Supra) had noted that other overriding public interests could outweigh the consideration of legitimate expectations in favour of a private party. Thus, even if we were to consider Respondent No. 1’s arguments at their highest, the objectives of a private entity such as Respondent No. 1 could not outweigh the larger public interest behind the industrial development of the land. Respondent No. 1 cannot be permitted to act in defiance of the 1959 Rules, which are applicable to the land and which mandate the utilization of the land for industrial purposes, subject to the variations as may be permitted by the State Government. H

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95Copy pinpoint95. On the very same logic, there can be no promissory estoppel A working against the Appellants. In this regard, the view taken by this Court in Motilal Padampat (Supra) is worthy of reproduction: “24… But it is necessary to point out that since the doctrine of promissory estoppel is an equitable doctrine, it must yield when the equity so requires. If it can be shown by the Government B that having regard to the facts as they have transpired, it would be inequitable to hold the Government to the promise made by it, the Court would not raise an equity in favour of the promise and enforce the promise against the Government. The doctrine of promissory estoppel would be displaced in such a case because, on the facts, equity would not require that the Government should be held bound by the promise made by it. When the Government is able to show that in view of the facts as have transpired, public interest would be prejudiced if the Government were required to carry out the promise, the Court would have to balance the public interest in the Government carrying out a promise made to a citizen which has induced the citizen to act upon it and after this position and the public interest likely to suffer if the promise were required to be carried out by the Government and determine which way the equity lies. It would not be enough for the Government just to say that public interest requires that the Government should not be compelled to carry out the promise or that the public interest would suffer if the Government were required to honour it…”

96Copy pinpoint96. Hence, supervening public interest, as we have already elaborated upon above, acts as a veto against the invocation of promissory estoppel. On these grounds as well, Respondent No. 1 cannot claim any right to the continuation of the supplementary lease deeds.

97Copy pinpoint97. Our conclusion, incontrovertibly, is that Respondent No. 1 cannot lay claim to any legitimate expectation or promissory estoppel. The supplementary lease deeds and corresponding permissions were executed with/by RIICO which had no authority and power to do so. This, combined with the overriding public interest in having the land in LIA, Kota utilized for industrial purposes for the economic progression of the state or any revised purpose, as may be permitted by the State Government in public interest, leaves us in no doubt that Respondent H

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A No. 1 has no further valid defences against the cancellation of the supplementary lease deeds. C.7 Whether the Appellant Unions are entitled to relief?

98Copy pinpoint98. The one issue that remains for our consideration is with regard to the Appellant Unions. We are receptive and sensitive to the interests B of the workers in this regard, especially given that a significant part of the AAIFR scheme remains unimplemented. We have been informed by learned counsels appearing for the Appellant Unions that an earlier petition challenging the transfer lease deeds of 2007, whereby the land was handed over to Respondent No. 1, is still pending before the Rajasthan C High Court. This proceeding would, naturally, have a knock-on effect with regard to everything that happens subsequently, if the High Court were to ascertain that the transfer leases were invalid.

99Copy pinpoint99. Regardless, we do not have the requisite material before us to comment on this point, and it would be inappropriate for us to do so in D any case, especially when the matter is sub-judice before the High Court. Thus, the High Court will consider the workers’ petition on its own merits, uninfluenced by anything that we have held in this judgment in the context of the dispute between the State Government, RIICO and Respondent No. 1. In the same breath, we also abstain from commenting on the other petitions filed by individual workers before various forums. These E proceedings may continue and be decided eventually in accordance with law.

100Copy pinpoint100. We note that despite the passage of 21 years since the tripartite agreements were signed between JKSL, Respondent No. 1 and the workers unions in 2002, and 16 years since the transfer lease deeds were signed in 2007, the LIA, Kota has remained dormant. The objective of restarting industrial production in the area, as envisaged by the AAIFR rehabilitation plan and required by virtue of the settlements of 2002, remains out of reach. The damage this causes to the former employees of JKSL, as well as the industrial and economic growth of the State, cannot be underestimated. While we are not in a position to direct or order the implementation of the AAIFR plan, we recall the earlier orders of this Court which had dismissed the workers unions’ SLP, and the subsequent Review Petitions on 17.08.2017 and 06.03.2018, but with a note that the rehabilitation plan should be implemented.

BISHAMBHAR PRASAD v. M/s. ARFAT PETROCHEMICALS 307 PVT. LTD. AND ORS. [SURYA KANT, J.]

101Copy pinpoint101. Given that the earlier orders of the Supreme Court have A already held that Respondent No. 1 is not a sick industrial company and that judgment has become final with the dismissal of the Review Petitions, there is no point reverting to SICA any longer. However, we re-emphasize the importance of finding a viable solution to this complex issue.

102Copy pinpoint102. We reiterate the earlier observations made by this Court B regarding implementation of the AAIFR scheme. The objective of the original transfer lease deeds of 2007 that were signed for the purpose of using the land for industrial development should be carried out, subject to altering the usage of the land under the 1959 Rules.

103Copy pinpoint103. However, at the same time, our sympathy for the Appellant C Unions cannot translate into any concrete relief in the context of the dues they seek. We are not appropriately positioned to consider their prayers in this context. Instead, we grant liberty to the Appellant Unions to approach the appropriate government and other forums as permitted by law, to seek their respective dues. We clarify once again that we have expressed no opinion on the merits of this segment of the controversy. D. CONCLUSION

104Copy pinpoint104. Our final analysis is that the supplementary leases signed between Respondent No. 1 and RIICO are unsustainable. RIICO did not possess the authority to enter into these agreements, as the land in LIA, Kota remained under the ownership and control of the State Government uninterruptedly from the first lease signed with JKSL, till the present date. Respondent No. 1 was also cognizant of this fact as evinced by it entering into the 7 transfer lease deeds with the Collector, Kota, in 2007, after it stepped into the shoes of JKSL. F

105Copy pinpoint105. The leases with JKSL were executed under the 1959 Rules which remained applicable and there was no authority ever vested in RIICO to have issued the permissions for conversion and sub-division of plots in the LIA, Kota, and for signing the supplementary lease deeds with Respondent No. 1. There is no legal infirmity in the action of the G Appellants in setting aside the decisions taken by RIICO or in directing to cancel the supplementary leases of 2018. Hence, we uphold the cancellation of the supplementary deeds and quashing of the approvals for conversion of land and sub-division of plots. H

p. 308 Copy page pinpoint

106Copy pinpoint106. This shall, however, not preclude Respondent No. 1 from reapproaching the State Government and seeking conversion of the usage of land and attendant approvals under the 1959 Rules. The State Government shall be at liberty to consider such a proposal in public interest and in accordance with the 1959 Rules.

107Copy pinpoint107. With regard to the Appellant Unions, we do not consider it expedient for us to enter into the demands made by the labour unions for the dues of JKSL’s employees. We express no views on the content of the prayers by the Appellant Unions, and leave it open for them to seek their remedies under law from the Appropriate Government, and judicial forums.

108Copy pinpoint108. We may summarize our overall conclusions in the following points:- A. There has been an uninterrupted and subsisting relationship of lessor and lessee between the State Government and either JKSL or Respondent No. 1, in the context of LIA, Kota. From the first lease deed executed in 1967, till date, the State Government has maintained the position of lessor; B. The lease with JKSL, and all leases thereafter with JKSL and/or Respondent No. 1, have been signed under the 1959 E Rules. The terms of the lease are clearly in compliance with the 1959 Rules; C. The land in LIA, Kota was never transferred to RIICO under the Government Order dated 18.09.1979. The State F Government has always maintained title and ownership of the area; D. The land was also never allotted to RIICO on a leasehold basis under Rule 11A of the 1959 Rules. Thus, RIICO was never expressly given any leasehold rights, and had no G authority to further sub-lease the land, along with other corresponding powers, under Rule 12 of the 1959 Rules; E. In any case, Rule 11A of the 1959 Rules is of no importance, as there had to be an express allotment of the land to RIICO on a leasehold basis after the coming into force of Rules H

BISHAMBHAR PRASAD v. M/s. ARFAT PETROCHEMICALS 309 PVT. LTD. AND ORS. [SURYA KANT, J.]

11A and 12. No such express allocation was ever made in A favour of RIICO; F. The 1979 Rules are not statutory in nature. The reference to the 1979 Rules in Rule 12 of the 1959 Rules, does not accord any statutory recognition to the former; B G. There was no violation of the Principles of Natural Justice in this case. The entire basis for granting permission for conversion of the land, and subdivision of the plots, was on an incorrect assumption of power by RIICO under the 1979 Rules, to act as the lessor of LIA, Kota. RIICO was never given any leasehold rights over the land. When the basis C for a benefit received by a party is itself invalid, there is no question of giving the party a chance to be heard; H. The State Government was competent to issue directions under Article 138 of the AoA of RIICO, to cancel the supplementary lease deeds and attendant permissions. This D fell squarely within the ambit of Article 138 of the Articles of Association; I. There was no violation of the Rajasthan Rules of Business as the sub-committee which recommended the cancellation of the permissions/approvals to Respondent No. 1, was acting for and on behalf of the entire Council of Ministers. Hence, the Rules of Business were complied with; J. There was no legitimate expectation nor promissory estoppel that could operate to the benefit of Respondent No. 1, as, once again, no such defences could be raised on the back of RIICO’s own erroneous utilization of powers that vest only with the rightful lessor of LIA, Kota, which is the State Government. Further, public interest overrides both these doctrines, and cannot come to the aid of a private party, when the larger interests of society are involved; G

K. The Appellant Unions and workers are at liberty to approach the Appropriate Government and various judicial forums to pursue their remedies in accordance with law.

p. 310 Copy page pinpoint

109Copy pinpoint109. The Appeals by the State of Rajasthan and RIICO are accordingly allowed; the impugned judgment dated 20.07.2021 passed by the High Court of Judicature for Rajasthan at Jaipur, is set aside. Consequently, the Writ Petition filed by Respondent No.1 before the High Court is dismissed save and except the liberty granted in Para 106 of this judgment. B

110Copy pinpoint110. Pending interlocutory applications, if any, also stand disposed of.

Bibhuti Bhushan Bose Appeals disposed of. C (Assisted by : Shubhanshu Das, LCRA)