http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 1 of 13  

CASE NO.: Appeal (civil)  2000 of 2008

PETITIONER: Bhikhubhai Vithlabhai Patel & Ors

RESPONDENT: State of Gujarat & Anr

DATE OF JUDGMENT: 14/03/2008

BENCH: S.H. KAPADIA & B. SUDERSHAN REDDY

JUDGMENT: J U D G M E N T  

CIVIL APPEAL NO. 2000 OF 2008 (Arising out of SLP(C) No.   9905 of 2007)

B.SUDERSHAN REDDY,J.

1.      Leave granted.

2.      This appeal by special leave is directed against the common  judgment and order dated 10-15th November, 2006 of the Gujarat  High Court at Ahmedabad in LPA No. 1453 of 2005 and Miscellaneous  Civil application \026 for Review No. 3165 of 2006 dated 14th February,  2007; whereby the High Court dismissed the cross-objections filed by  the appellants in LPA No. 1453 of 2005.  Essentially grievance in this  appeal pertains to the dismissal of cross objections preferred by the  appellants.

3.      The Gujarat Town Planning and Urban Development Act, 1976  (for short \021the said Act\022) came into force with effect from February 1st,  1978.  The State Government in exercise of its power conferred under  the provisions of the Act constituted Surat Urban Development  Authority (SUDA) which prepared a draft development plan whereby  the lands belonging to the appellants were proposed for designating  the use of the lands for residential purposes.  The State Government  having considered the draft development plan submitted by SUDA  sanctioned the plan in the modified form on January 31, 1986 whereby  the appellants\022 lands in question were reserved for \023education complex  of South Gujarat University\024. The final development plan was  accordingly brought into force with effect from March 31, 1986.   Neither the Area Development Authority nor the Authority for whose  purpose land has been designated in the final Development Plan  initiated any steps to acquire  the lands of the appellants.  The  appellants having waited for a period of 10 years from the date of  coming into force of the final development plan got served a notice on  the Authority concerned requiring  it to acquire the land within six  months from the date of the service of such notice.  However, no steps  were taken by any of the authorities proposing to acquire the lands.   Instead SUDA  in purported exercise of its power under Section 21 of  the Act sought to revise the development plan by reserving the lands  in question once again for education complex of South Gujarat  University.

4.      The appellants challenged re-reservation of the lands for South  Gujarat University on various grounds which ultimately culminated in  the judgment of this court in Bhavnagar University vs. Palitana  Sugar Mill (P) Ltd. and others   .  This court in clear and categorical

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 2 of 13  

terms laid down that Section 21 of the Act may impose statutory  obligations on the part of the State and the appropriate authority to  revise the development plan but under the grab of exercising the  power to revise the development plan \023the substantial  right conferred  upon the owner of the land or the person interested therein\024 cannot be  taken away. It is observed :  

\023 Para 38.  Section 21 does not envisage that  despite the fact that in terms of sub-section   (2) of section 20, the designation of land shall  lapse, the same, only because a draft revised  plan is made, would automatically give rise to  revival thereof.  Section 20 does not manifest  a legislative intent to curtail or take away the  right acquired by a landowner under Section  22 of getting the land defreezed\005\005\005\024      

5.      The revised development plan submitted by SUDA was awaiting  the sanction of the State Government.  The State Government in  exercise of powers conferred by the proviso  to sub-clause (ii) of  clause (a) of Section 17(1) of the Act proposed modifications in the  draft revised development plan submitted by SUDA and proposed to  designate the land under Section 12(2)(o) for \023educational use\024.  The  appellants challenged the action on the part of State Government in  issuing notification dated July 22, 2004 on various grounds.  During  the pendency of the Writ Petition the State Government came out with  final notification dated September 28, 2004 designating the land in  question for educational use under Section 12(2)(o) of the Act.  The  appellants sought the leave of the court to challenge the said  notification also.  The final notification was set aside on the ground  that there was  no material before the Government on the basis of  which the decision to designate the lands for educational purposes  could have been arrived at.  The matter was remitted for fresh  consideration in the light of the observations and the directions issued  by the High Court.

6.      We have heard Shri Ashok H. Desai  and  Shri T.R. Andhyarujina,  learned senior counsel appearing for the appellants, Shri  R. P. Bhatt,  learned senior counsel    for the State Government and Shri Prashant  G. Desai, learned counsel for SUDA.  The contention of the learned  counsel for the appellants was that  on a true interpretation of the  provisions of the said Act it was not open to the Government to  designate the land in question as education zone and secondly  assuming that there is such a power, the exercise of the said power by  the preliminary Notification dated 22nd July, 2004 and final Notification  dated 28th September, 2004 is not legal and bona fide particularly in  the light of the fact that the earlier reservation for a similar though not  identical purpose, namely, education complex of South Gujarat  University was struck down by the Supreme Court in Bhavnagar  University (supra).

7.      The submission on behalf of the State Government was that the  preliminary notification issued by the Government with a proposal to  use the land for educational purpose under section 12(2)(o) of the Act  is in conformity with the powers and the objects sought to be served.  The power of the State Government under Section 17(1)(a) is very  wide. It is entitled  either to sanction the draft development plan as  submitted by the Authority or return the draft development plan for  modification or make substantial modifications in the draft  development plan  by itself after inviting suggestions and objections.   The Notification dated 22nd July, 2004 merely invited suggestions and  objections on the proposed use of the land for educational purposes.   It was further submitted that under Section 12(2)(o) of the Act the  State Government can make proposals for public or other purposes  which have not been mentioned in sub-clause (a) to (n) of Section

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 3 of 13  

12(2).  Therefore the State Government  can propose reservations for  public purpose or can make designation of land for any purposes not  mentioned in sub-clause (a) to (n). It was submitted that the  provisions of Section 17(2), 20(1) and 20(2) are not applicable in the  appellants\022 case since these  provisions relate to the lands kept for  reservation for the purpose of Area Development authority or any  other Authority for whose purpose the land is reserved.  This is not a  case of reservation affecting the rights of the appellants in any manner  who are still entitled to develop the land in accordance with the  earmarked use/proposals.

8.      Learned counsel for Surat Urban Development Authority while   adopting the submissions made by the counsel for the State  Government contended that the State Government and Urban  Development Authority has power to create separate zone under  section 12(2)(o) of the Act.

9.      We shall deal with the second contention, namely, whether the  exercise of power by the State Government is  legal and bona fide?   This issue is required to be considered in the background of the  relevant facts which are evident from the record. 10.     The Urban Development Authority designated the present lands  as part of the residential zone in the development plan and submitted  the same on 30th April, 1981 for sanction to the State Government.  The State Government by issuing notification under the proviso to sub- clause (ii) of clause (a) of sub-section (1) of Section 17 deleted the  same from residential zone and the lands were sought to be reserved  for education complex of \023South Gujarat University\024.  The said plan  was sanctioned under Section 17 of the Act on 3rd March, 1986.  The  appellants after expiry of period of 10 years gave notice under sub- section (1) of Section 20 calling upon the authority to acquire the land.  Nothing happened in the matter.        11.     In the meanwhile, SUDA prepared and published the draft  revised development plan in respect of the lands under Section 13 of  the Act  once again reserving the land for education complex of South  Gujarat University.  Notice regarding publication of the draft revised  development plan  calling suggestions on the proposed draft revised  development plan was published in the Gazette on 29.2.1996.  This  was done in purported exercise of the power under Section 21 of the  Act whereunder the development authority is under statutory  obligation to revise the development plan at least once in 10 years  from the date on which the final development plan comes into force.  

12.     The appellants filed writ petitions in the High Court of Gujarat  challenging the action re-reserving the land in the draft revised  development plan for the same purpose namely education complex of  South Gujarat University.  The lis ultimately culminated in the  judgment of this Court in Bhavnagar University (supra). This court  held that :

(i)     Section 21 of the Act does not and cannot  mean that substantial right conferred upon the  owner of the land or the person interested  therein shall be taken away.  It is not and  cannot be the intention of the legislature that  what is given by one hand should be taken  away by the other.

(ii)    It is further held that the statutory interdict  of use and enjoyment of the property must be  strictly construed.  It is well settled that when  a statutory authority is required to do a thing  in a particular manner, the same  must be  done in that manner or not at all.  The State

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 4 of 13  

and other authorities while acting under the  said Act are only creature of statute.  They  must act within the four corners thereof.

(iii)   It is further held that inspite of statutory  lapse of designation of the land, the State is  not denuded of its power of eminent domain  under the general law, namely, the Land  Acquisition Act in the event an exigency arises  therefore.

13.     The State Government unmindful of and undaunted by the  judgment of this court proposed to modify the draft revised  development plan already submitted by the authority in purported  exercise of the power conferred by the proviso to sub-clause (ii) of  clause (a) of sub-section  (1) of Section 17 of the Act by designating  the land for educational use under Section 12(2)(o) of the Act.  The  Government having considered the objections issued final notification  dated 28th September, 2004 confirming modifications proposed in the  preliminary notification.        14.     The appellants filed a writ petition in the High Court of Gujarat  challenging the preliminary notification as well as the final notification  on various grounds.           15.     The High Court upon perusal of the records found that there is  absolutely no material on record except the noting of the Minister  concerned suggesting change of use of the land  to education zone.   The suggestion of the Chief Town Planner to place the entire area in  residential zone has been ignored.  The Area Development Authority in  the  first instance has suggested that the land in question be placed in  residential zone.  In the note prepared and placed before the Minister  concerned on 23 April, 2004 it was suggested that the land should no  more be reserved for the purpose of South Gujarat University and  should be placed in appropriate zone.  The note further suggested that  after releasing the lands from reservation, the same should be placed  under residential zone.  On 21.7.2004 the Minister concerned passed  the order which reads as under:  \023..Reservation may be cancelled as suggested.  However, (for the lands which are being de- reserved)  educational zone in terms of Section  12(2)(o) of the Gujarat Town Planning and Urban  Development Act be provided and  notice be  issued  accordingly..\024

16.     It was pursuant to this direction, the preliminary notification  dated 22nd July, 2004 came to be issued by the Government calling for  objections and suggestions against the proposed substantial  modifications of the development plan.   Point for consideration :        17.     Whether the action of the State Government in issuing  preliminary notification and the final notification designating the said  lands for educational use is valid? Whether the action is ultra vires?

18.     Before we address ourselves to the questions for their  determination it would be appropriate to notice Sections 17 and 21  which are as under :   \023Section 17 (1) (a) : On receipt of the draft  development plan under Section 16, the State  Government may, by notification, -

(i)     sanction the draft development plan  and the regulation so received , within

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 5 of 13  

the prescribed period, for the whole of  the area covered by the plan or  separately for any part thereof, either  without modification, or subject to  such modification, as it may consider  proper; or

(ii)    return the draft development plan and  the regulations to the area  development authority or, as the case  may be, to the authorized officer, for  modifying the plan and the  regulations in such manner as it may  direct:

Provided that, where the State Government is  of opinion that substantial modifications in the  draft development plan and regulations are  necessary, the State Government  may,  instead of returning them to the area  development authority, as the case may be,  the authorised officer under this sub-clause,  publish the modifications so considered  necessary in the Official Gazette alongwith a  notice in  the prescribed manner inviting  suggestions or objections from any person with  respect to the proposed modifications within a  period of two months from the date of  publication of such notice; or

(iii)   refuse to accord sanction to the draft  development plan and the regulations  and direct the area development  authority or the authorized officer to  prepare a fresh development plan  under the provisions of this Act.

(b) Where a development plan and regulations  are returned to an area development authority,  or, as the case may be, the authorized officer  under sub-clause (ii) of clause (a), the area  development authority, or, as the case may  be, the authorized officer, shall carry out the  modifications therein as directed by the State  Government and then submit them as so  modified to the State Government for sanction;  and the State Government shall thereupon  sanction them after satisfying itself that the  modification suggested have been duly carried  out therein.

(c) Where the State Government has published  the modification considered necessary in a  draft development plan as required under the  proviso to sub-clause (ii) of clause (a), the  State Government shall, before according  sanction to the draft development plan and the  regulations, take into consideration the  suggestions or objections that may have been  received thereto, and thereafter accord  sanction to the drafts development plan and  the regulations in such modified form as it may  consider fit.

(d) The sanction accorded under ? [clause (a),

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 6 of 13  

clause (b) ] or clause (c) shall be notified by  the State Government in the Official Gazette  and the draft development plan together with  the regulations so sanctioned shall be called  the final development plan.

(e) The final development plan shall come into  force on such date as the State Government  may specify in the notification issued under  clause (d):

Provided that the date so specified shall  not  be earlier than one month from the date of  publication of such notification.           (2)     Where the draft development  plan  submitted by an area development authority,  as the case may be, the authorized officer  contains any proposals for the reservation of  any land for a purpose specified in clause (b)  or  ?[clause (n) or clause (o)] of sub-section  (2) of section 12 and such land does not vest  in the area development authority, the State  Government shall not include the said  reservation in the development plan, unless it  is satisfied that such authority would acquire  the land, whether by agreement or compulsory  acquisition, within ten years from the date on  which the final development plan comes into  force.

(3)     A final development plan which has come  into force shall, subject to the provisions of  this Act, be binding on the area development  authority concerned and on all other  authorities situated in the area of the  development plan.

(4)     After the final development plan comes  into force, the area development authority  concerned may execute any work for  developing, re-developing or improving any  area within the area covered by the plan in  accordance with the proposals contained in the  development plan.       Section  21.    Atleast once in ten years  from the date on which a final development  plan comes into force, the area development  authority shall revise the development plan  after carrying out, if necessary, a fresh survey  and the provisions of sections 9 to 20, shall, so  far as may be, apply to such revision.\024  

19.     A plain reading of Section 17 suggests that on receipt of draft  development plan the State Government may sanction the draft  development plan, for the whole of the area  covered by the plan or  separately for any part thereof; return the draft development plan  for  modifying the plan in such a manner as may direct; but in cases where  the State Government is of opinion that the substantial modifications  in the draft development plan are necessary, it may, instead of  returning them to the authority or the  authorised officer, publish the  modifications so  considered  necessary along with the notice in the  prescribed manner inviting suggestions or objections with respect to  the proposed modifications. It may even refuse to accord sanction to

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 7 of 13  

the draft development plan and direct to prepare a fresh development  plan under the provisions of the Act.   Indeed a very wide power is  conferred upon the State Government in the matter of sanctioning of  the draft development plan. In the instant case we are concerned with  the action of the State Government in making substantial  modifications in the revised draft development plan. Section 21 of the  Act mandates that the same procedure as provided for preparation and  sanction of draft development plan including the one under section 17  would be applicable even in respect of revision of development plan.

20.     The State Government is entitled to publish the modifications  provided it is of opinion that substantial modifications in the draft  development plan are necessary. The expression \023is of opinion\024  that  substantial modifications in the draft development plan are necessary  is of crucial importance. Is there any material available on record  which enabled the State Government to form its opinion that  substantial modifications in the draft development plan were  necessary?  The State Government\022s jurisdiction to make substantial  modifications in the draft development plan is inter-twined with the  formation of its opinion that such substantial modifications are  necessary in the draft development plan.  The State Government  without forming any such opinion cannot publish the modifications  considered necessary along with notice inviting suggestions or  objections.  We have already noticed that as on the day when the  Minister concerned took the decision proposing to designate the land  for educational use the material available on record were :  (a)     the opinion of the Chief Town Planner;  (b)     Note dated 23rd April, 2004 prepared on the basis of the  record providing the entire background of the previous litigation  together with the suggestion that the land should no more be  reserved for the purpose of South Gujarat University and after  releasing the lands  from reservation, the same should be placed  under the residential zone.  21.      It is true the State  Government is not bound by such opinion  and entitled to take its own decision in the matter provided there is  material available on record to form opinion that substantial  modifications in the draft development plan were necessary. Formation  of opinion is a condition precedent for setting the law in motion  proposing substantial modifications in the draft development plan.

22.     Any opinion of the Government to be formed is not subject to  objective test.  The language leaves no room for the relevance of a  judicial examination as to the sufficiency of the grounds on which the  Government acted in forming its opinion. But there must be material  based on which alone the State Government could form its opinion  that it has become necessary to make substantial modification in the  draft development plan.                23.     The power conferred by Section 17(1)(a) (ii) read with proviso is  a conditional power.  It is not an absolute power to be exercised in the  discretion of the State Government.  The condition is formation of  opinion \026 subjective, no doubt \026 that it had become necessary to make  substantial modifications in the draft development plan.  This opinion  may be formed on the basis of material sent along with the draft  development plan or on the basis of relevant information that may be  available with the State Government.  The existence of relevant  material is a pre-condition to the formation of opinion.  The use of  word \023may\024 indicates not only  a discretion but an obligation to  consider that a necessity has arisen to make substantial modifications  in the draft development plan.  It also involves an obligation to  consider which are of the several steps specified in sub-clauses (i), (ii)  and (iii) should be taken.

24.     Proviso opens with the words \023where the State Government is of   opinion that substantial modifications in the draft development plan

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 8 of 13  

and regulations are necessary \005\005..\024  These words are indicative of the  satisfaction being subjective one but there must exist circumstances  stated in the proviso which are conditions precedent for the formation  of the opinion.  Opinion to be formed by the State Government cannot  be on imaginary grounds, wishful thinking, however, laudable that  may be. Such a course is impermissible in law. The formation of the  opinion, though subjective, must be based on the material disclosing  that a necessity had arisen to make substantial modifications in the  draft development plan.           25.     The formation of the opinion by the State Government is with  reference to the necessity that may have had arisen to make  substantial modifications in the draft development plan.  The  expression: \023so considered necessary\024 is again of crucial importance.  The term \023consider\024 means to think over; it connotes  that there  should be active application of the mind.  In other words the term  \023consider\024 postulates consideration of all the relevant aspects of the  matter.  A plain reading of the relevant provision suggests that the  State Government may publish the modifications only after  consideration that such modifications have become necessary.  The  word \023necessary\024 means  indispensable, requisite; indispensably  requisite, useful, incidental or conducive; essential; unavoidable;  impossible to be otherwise; not to be avoided; inevitable.  The word  \023necessary\024 must be construed in the connection in which it is used.  (See-Advanced Law Lexicon, 3rd Edition, 2005; P. Ramanatha Aiyar)   26.     The formation of the opinion by the State Government should  reflect intense application of mind with reference to the material  available on record that it had become necessary to propose  substantial modifications  to the draft development plan.  

27.     In J. Jayalalitha Vs. U.O.I   this Court while construing  the  expression \023as may be necessary\024 employed in Section 3 (1) of the  Prevention of Corruption Act, 1988 which conferred the discretion upon  the State Government  to appoint as many Special Judges as may be  necessary  for such area or areas or for such case  or group of cases   to try the offences punishable under the Act, observed:   \023 The legislature had to leave it to the discretion  of the Government as it would be in a better  position to know the requirement. Further, the  discretion conferred upon the Government is not  absolute. It is in \023The nature of a statutory  obligation or duty. It is the requirement which  would necessitate exercise of power by the  Government. When a necessity would arise and  of what type being uncertain the legislature  could not have laid down any other guideline  except the guidance of \023necessity\024. It is really  for that reason that the legislature while  conferring discretion upon the Government has  provided that the Government shall appoint as  many Special Judges as may be necessary. The  words \023as may be necessary\024 in our opinion is  the guideline according to which the  Government has to exercise its discretion to  achieve the object of speedy trial. The term  \023necessary\024 means what is indispensable,  needful or essential.\024   

28.     In the case in hand, was there any material before the State  Government for its consideration that it had become necessary to  make substantial modifications to the draft development plan?  The  emphatic answer is, none. The record does not reveal that there has  been any consideration by the State Government that necessity had  arisen to make substantial modifications to the draft development

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 9 of 13  

plan.  We are of the view that there has been no formation of the  opinion by the State Government which is a condition precedent for  exercising the power under the proviso to Section 17 (1) (a) (ii) of the  Act.         29.     In     Barium Chemicals Ltd. Vs. Company Law Board   this  Court  pointed out, on consideration of several English and Indian  authorities that the expressions \023is satisfied\024, is of the opinion\024 and  \023has reason to believe\024  are indicative of subjective satisfaction,  though it is true that the nature of the power  has to be determined on  a totality of consideration of all the relevant provisions.  This Court  while construing Section 237 of the Companies Act, 1956 held:  \02364.  The object of s. 237 is to safeguard the  interests of those dealing with a company by  providing for an investigation where the  management is so conducted as to jeopardize  those interests or where a company is floated  for a fraudulent or an unlawful object. Clause (a)  does not create any difficulty as investigation is  instituted either at the wishes of the company  itself expressed through a special resolution or  through an order of the court where a judicial  process intervenes. Clause (b), on the other  hand, leaves directing an investigation to the  subjective opinion of the government or the  Board. Since the legislature enacted s.  637 (i)  (a) it knew that government would entrust to  the Board its power under s.  237 (b). Could the  legislature have left without any restraints or  limitations the entire power of ordering an  investigation to the subjective decision of the  Government or the Board ? There is no doubt  that the formation of opinion by the Central  Government is a purely subjective process.  There can also be no doubt that since the  legislature has provided for the opinion of the  government and not of the court such an opinion  is not subject to a challenge on the ground of  propriety, reasonableness or sufficiency. But the  Authority is required to arrive at such an opinion  from circumstances suggesting what is set out in  sub-clauses (i), (ii) or (iii). If these  circumstances were not to exist, can the  government still say that in its opinion they exist  or can the Government say the same thing  where the circumstances relevant to the clause  do not exist ? The legislature no doubt has used  the expression "circumstances suggesting". But  that expression means that the circumstances  need not be such as would conclusively establish  an intent to defraud or a fraudulent or illegal  purpose. The proof of such an intent or purpose  is still to be adduced through an investigation.  But the expression "circumstances suggesting"  cannot support the construction that even the  existence of circumstances is a matter of  subjective opinion. That expression points out  that there must exist circumstances from which  the Authority forms an opinion that they are  suggestive of the crucial matters set out in the  three sub-clauses. It is hard to contemplate that  the legislature could have left to the subjective  process both the formation of opinion and also  the existence of circumstances on which it is to  be founded. It is also not reasonable to say that

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 10 of 13  

the clause permitted the Authority to say that it  has formed the opinion on circumstances which  in its opinion exist and which in its opinion  suggest an intent to defraud or a fraudulent or  unlawful purpose. It is equally unreasonable to  think that the legislature could have abandoned  even the small safeguard of requiring the  opinion to be founded on existent circumstances  which suggest the things for which an  investigation can be ordered and left the opinion  and even the existence of circumstances from  which it is to be formed to a subjective process.  These analysis finds support in Gower’s Modern  Company Law (2nd Ed.) p. 547 where the  learned author, while dealing with s. 165(b) of  the English Act observes that "the Board of  Trade will always exercise its discretionary  power in the light of specified grounds for an  appointment on their own motion" and that  "they may be trusted not to appoint unless the  circumstances warrant it but they will test the  need on the basis of public and commercial  morality." There must therefore exist  circumstances which in the opinion of the  Authority suggest what has been set out in sub- clauses (i), (ii) or (iii). If it is shown that the  circumstances do not exist or that they are such  that it is impossible for any one to form an  opinion therefrom suggestive of the aforesaid  things, the opinion is challengeable on the  ground of non-application of mind or perversity  or on the ground that it was formed on collateral  grounds and was beyond the scope of the  statute.  

30.     This Court while expressly referring to the expressions such as  \023reason to believe\024, \023in the opinion of\024 observed: \023Therefore, the  words, \023reason to believe\024 or \023in the opinion of\024 do not always lead to  the construction that the process of entertaining \023reason to believe\024   or \023the opinion\024  is an altogether  subjective to process not lending  itself even to a limited scrutiny by the court that such  \023a reason  to  believe\024 or \023opinion\024 was not formed on relevant facts or within the  limits  or as Lord Radcliffe and Lord Reid called the restraints  of the  statute as an alternative safeguard to rules of natural justice where  the function is administrative\024.  31.     In the Income-tax Officer, Calcutta & Ors. Vs. Lakhmani  Mewal Das   this court construed the expressions \023reason to believe\024    employed in Section 147 of the Income-tax Act, 1961 and observed:   the reasons for the formation of the belief must have a rational  connection with or relevant bearing on the formation of the belief.  Rational connection postulates that there must be a direct nexus or  live link between the material coming to the notice of the Income-tax  Officer and the formation of his belief that there has been escapement  of the income of the assessee from assessment in the particular year  because of his failure to disclose fully or truly all material facts.  It is  not any or every material, howsoever vague and indefinite or distant  which would warrant the formation of the belief relating to escapement  of the income of the assessee from assessment.  The reason for the  formation of the belief must be held in good faith and should not be a  mere pretence.  32.     We are of the view that the construction placed on the  expression \023reason to believe\024 will equally be applicable to the  expression \023is of opinion\024 employed  in the proviso  to Section 17 (1)  (a) (ii)  of the Act.  The expression \023is of opinion\024, that substantial  modifications in the draft development plan and regulations, \023are

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 11 of 13  

necessary\024, in our considered opinion, does not confer any unlimited  discretion on the Government.  The discretion, if any, conferred upon  the State Government to make substantial modifications in the draft  development plan is not unfettered.  There is nothing like absolute or  unfettered discretion and at any rate in the case of statutory powers.   The basic principles in this regard are clearly expressed and explained  by Prof. Sir William Wade in Administrative law (Ninth Edn.) in the  chapter entitled \021abuse of discretion\022 and under the general heading  \021the principle of reasonableness\022 which read as under:   

\023The common theme of all the authorities so far  mentioned is that the notion of absolute or  unfettered discretion is rejected.  Statutory power  conferred for public purposes is conferred as it  were upon trust, not absolutely \026 that is to say, it  can validly be used only in the right and proper  way which Parliament when conferring it is  presumed to have intended.  Although the  Crown\022s lawyers have argued in numerous cases  that unrestricted permissive language confers  unfettered discretion, the truth is that, in a  system based on the rule of law, unfettered  governmental discretion is a contradiction in  terms.  The real question is whether the discretion  is wide or narrow, and where the legal line is to  be drawn.  For this purpose everything depends  upon the true intent and meaning of the  empowering Act.   

The powers of public authorities are therefore  essentially different from those of private persons.   A man making his will may, subject to any rights  of his dependents, dispose of his property  just as  he may wish.  He may act out of malice or a spirit  of revenge, but in law this does not affect his  exercise of his power.  In the same way a private  person has an absolute power to allow whom he  likes to use his land, to release a debtor, or,  where the law permits, to evict a tenant,  regardless of his motives.  This is unfettered  discretion.  But a public authority may do none of  these things  it acts reasonably and in good faith  and upon lawful and relevant grounds of public  interest. The whole conception of unfettered  discretion is inappropriate to a public authority,  which possesses powers solely in order that it  may use them for the public good\005 There is  nothing paradoxical in the imposition of such legal  limits.  It would indeed be paradoxical if they  were not imposed.\024    33.     The Court is entitled to examine whether there has been any  material available with the  State Government and the reasons  recorded, if any, in the formation of opinion and whether they have  any rational connection with or relevant bearing on the formation of  the opinion.  The Court is entitled particularly, in the event, when the  formation of the opinion is challenged to determine whether the  formation of opinion is arbitrary, capricious or whimsical. It is always  open to the court to examine the question whether reasons for  formation of opinion have rational connection or relevant bearing to  the formation of such opinion and are not extraneous to the purposes  of the statute.  34.     In the affidavit in reply filed on behalf of the State Government  in the High Court, it was averred what weighed with the State  Government  to exercise  its power under Section 17 (1) (a) (ii) of the

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 12 of 13  

Act was public interest at large.  The State government thought it fit to  classify the lands in question for educational use so that there is a  specific pocket of educational institutional area in the fast developing  city  of Surat where its  population in the last decade, has almost  doubled.  If such educational institutional pockets in the adjoining  land, where there already exists the complex of South Gujarat  University, are not ensured in the development plan of the city like  Surat, then, in that case, land would not be available in future.  This  would resultantly make people to travel long distance from the city  area for educational purpose. Public interest parameter is undoubtedly  a valid consideration that could have been taken into account by the  State Government.  But this aspect of the matter is stated for the first  time in the affidavit in reply and is not born out by the record.  There  is nothing on record suggesting as to what public interest parameter  weighed with the State Government. The question is: was there any  material available on record in support of what has been pleaded  in  the reply affidavit ?  35.     Be that as it may, the impugned preliminary notification itself  does not reflect formation of any opinion by the State Government  that it had become necessary to make substantial modifications in the  draft development plan and, for that reason, instead of returning in  the plan, decided to publish the modifications so considered necessary  in the Official Gazette along with the notice inviting suggestions or  objections with respect to the proposed modifications.  It is very well  settled, public orders publicly made, in exercise of a statutory  authority, cannot be construed in the light of explanations  subsequently given by the decision making authority.  Public orders  made by authorities are meant  to have public effect and must be  construed objectively with reference to the language used in the order  itself. (See \026 Gordhandas Bhanji  and Mohinder Singh Gill & Anr.  Vs. The Chief Election Commissioner, New Delhi  ). 36.     Neither the preliminary notification itself nor the records disclose  the formation of any opinion by the State Government much less any  consideration that any necessity as such had arisen to make  substantial modifications in the draft development plan.  37.     On consideration of the facts and the material available on  record, it is established that the State Government took the action  proposing to make substantial modifications to the plan without  forming of any opinion, which is a condition precedent for the use of  power under proviso to Section 17(1)(a)(ii).  The power, to restrict the  use of land by the owners thereof, is a drastic power.  The designation  or reservation of the land and its use results in severe abridgment of  the right to property. Statutory provisions enabling the State or its  authorities to impose restrictions on the right to use one\022s own land  are required to be construed strictly. The legislature has, it seems to  us, prescribed certain conditions to prevent the abuse of power and to  ensure just exercise of  power. Section 17 and more particularly the  proviso to Section 17 (1) (a) (ii) prescribes some of the conditions  precedent for the exercise of power.  The order proposing to make  substantial modifications, in breach of any one of those conditions, will  undoubtedly be void.  On a successful showing  the order proposing  substantial modifications and designating the land of the appellants for  educational use  under Section 12 (2) (o) of the Act has been made  without the Statement Government applying its mind to the aspect of  necessity or without forming an honest opinion on that aspect, it will,  we have no doubt, be void.  38.     For the view  we have taken to strike down both the notifications   and declare them ultra vires it is unnecessary to go into various other  contentions  urged before us.  39.     The appellants are deprived of their right to use the land for  residential purposes  for over a period of more than a quarter century.   The Authority included the land in the residential zone but the State  Government reserved the land  for the purposes of South Gujarat  University but  the authority for whose benefit  it was required failed to  acquire the land leading to re-reservation  of the land for the very

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 13 of 13  

same purpose which was ultimately struck down by this Court in  Bhavnagar University  (supra). 40.     The present move of the State Government to designate the  land for the educational use under Section 12 (2) (o)  of the Act is  declared ultra vires and void  and this shall put an end to the  controversy  enabling the appellants  to utilize the land for residential  purposes.  The authorities including the State Government shall  accordingly do the needful, without creating any further hurdle in the  matter.  41.     The appeal is, accordingly, allowed with  costs.