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CASE NO.: Special Leave Petition (civil) 14833  of  1999

PETITIONER: NETAI BAG & ORS.

       Vs.

RESPONDENT: THE STATE OF WEST BENGAL & ORS.

DATE OF JUDGMENT:       27/09/2000

BENCH: K.T. Thomas. & R.P. Sethi.

JUDGMENT:

SETHI,J.

Leave granted. L...I...T.......T.......T.......T.......T.......T.......T..J

   Claiming   to  be  the  champions   to  the   cause   of vegetarians,  the Appellant Nos.5 and 6 along with the heirs of  the erstwhile land owners, Appellant Nos.1 to 4  herein, moved  the  High Court by way of a writ petition,  filed  in public  interest  with prayer for the issuance of a writ  in the nature of mandamus commanding the respondents to forbear from  using or utilising the acquired lands for the purposes other  than the one for which the acquisition was made.   It was  further  prayed that directions be issued to give  back the  lands  in question to the erstwhile land owners  or  to sell the land by public auction only for the public purpose. Prayer for the issuance of writ of prohibition was also made for  restraining  the  respondents  to   use  the  land  for slaughter  house  or abattoir by respondent  No.5.   Pending adjudication  of the main petition an injunction was  prayed for  restraining the respondents from using or utilising any part or portion of land in question for any slaughter house/ abattoir  and restraining the respondent No.4 from  allowing respondent No.5 to establish or operate any slaughter house/ abattoir  on  the  land  in   question.   Vide  order  dated 25.5.1988,  the  learned  Single  Judge of  the  High  Court dismissed the writ petition and the appeal filed against the order  of  the  learned Single Judge was  dismissed  by  the Division  Bench of the Calcutta High Court vide the judgment impugned in this appeal.

   The  facts  leading to the filing of the present  appeal are  that  by  notification dated 22nd August,  1961  issued under  the  Land  Acquisition Act, the  Government  of  West Bengal  acquired  land measuring 151.18 acres for  a  public purpose,  namely,  construction  of  Mourigram-Dankuni  Link Project  of South-Eastern Railways.  After completion of the project, the Railways surrendered the surplus land measuring 77.36  acres  to  the  State  Government  on  7.7.1972.   On 12.5.1973,  the State Government handed over the  possession of  74.21  acres of the surplus land to Animal  Husbandry  &

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Veterinary   Services,  now   Animal  Resource   Development Department.    The   West    Bengal   Livestock   Processing Development  Corporation  was  authorised  to  set  up   the Mourigram  Abattoir Project on this land.  In furtherance of the establishment of abattoir, a Memorandum of Understanding was  signed  between  India  and   Australia  by  which  the Australian  Development Assistance Bureau agreed to  provide assistance for the establishment of an abattoir, in the year 1977.   The  consultants  of   the  Australian   Development Assistance   Bureau   prepared   a   detailed   three-volume Feasibility  Report  stating  therein   that  the  Mourigram Project was feasible.  By that time the State Government had established  another  abattoir  project at  Durgapur  which, after   commissioning,  was  running   into   losses.    The appellants  apprehended  that  the   State  Government,   in collusion  with some outsiders, was negotiating to sell  out and to transfer the land in fiduciary manner exclusively for a profit purpose allegedly to defraud and mislead the people of  the State.  The private party referred to was Al-Kabeer, a  Dubai  based concern for the purposes of  establishing  a slaughter   house/abattoir.   Some   correspondence   ensued between  the appellants and the respondents 1 to 4.  It  was contended  that  the respondents were encroaching  upon  the Constitutional  Rights  of the appellants by establishing  a slaughter   house/abattoir  on  the   land  acquired  for  a specified  public purpose.  It was submitted that after  the completion  of the project, the excess land should have been transferred to the land owners or sold in public auction but could  not be utilised for any private purpose  particularly for  the  establishment of a slaughter house/abattoir.   The petitioners  alleged that the establishment of the slaughter house/abattoir  was not in conformity with List III Entry 17 of the Seventh Schedule of the Constitution.  The action was further  alleged to be contrary to List III Entry 17(B)  and violative  of the mandate of Articles 31(2), 48, 48A, 49 and 51  of the Constitution.  The delay in filing Writ  Petition was  sought  to be explained on the ground that  respondents had allegedly kept the deal a guarded secret.

   The  disputed land comprises of an area measuring  46.42 acres,  being  part  of  the unutilised  surplus  land.   It appears  that realising its inability to profitably run  the abattoir  at Durgapur, the State Government was in search of some private party to take over the said abattoir along with the  proposed Project of establishing abattoir at Mourigram. Newspaper  advertisements appears to have been issued by the West  Bengal Livestock Processing Development Corporation in 1986,  inviting  private parties to take over  the  Durgapur Abattoir  which  is  shown to be running in losses  and  for which  the  Comptroller  &   Auditor  General  had  severely criticised  the  aforesaid  Corporation   vide  its   Report submitted  in 1993.  Respondent No.5 is stated to have  been invited  by  the  State Government vide  letter  dated  19th October,  1993 for taking over Durgapur Abattoir.  In  reply Enagro Foods (India) Limited, a sister concern of respondent No.5  intimated  that  "we  are willing  to  take  over  the existing facilities at Durgapur on ’as is where is basis’ at reasonable  terms for subsequent development into an  export oriented  integrated complex".  On 22nd December, 1993  they informed  the Minister concerned that to effectively utilise the State’s agro based materials being livestock, fruits and vegetables,  fresh  water and sea fish in addition  to  milk based  product,  the concern proposed to  create  integrated food  processing  and  preservation  facilities.   For  that purpose,  they  promised that factory would be  complete  in

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accordance  with  the  highest international  standards  and specifications  for  conversion  and   production  of   food products.   They  declared  that the pulp  of  mango  fruits besides  mango  slices and other fruits and vegetables  from Bardhaman, Malda and Murshidabad Districts would be received at  their proposed preliminary and processing centres to  be set  up  in the Districts to ensure direct linkage with  the farmers   and  for  maintaining   steady  supply  to   their processing  unit.   Upon  the suggestion of  the  Secretary, Department    of   Animal     Resource   Development,    the representatives of Enagro Foods inspected the vacant plot of land  at  Mourigram  and found the same to be  suitable  for their  proposed venture.  They desired that the entire  site be  leased  out  to  them on a long term basis  as  per  the standard  terms  of  the concerned Department  of  the  West Bengal  Government  at reasonable terms.  On  14th  January, 1994, the said concern was offered the land at Mourigram and Durgapur upon the following terms:

   "Through  long-term lease for 99 years on realisation of 100% market value only.

   2.   Approximate  market  value at  Mourigram  has  been assessed  at  Rs.1,92,800/- per acre for Danga/  Bastu/Bagan land,  Rs.1,54,240/-  per acre for ’Sali’,  Rs.77,120/-  per acre for ’Doba’, Rs.1000/- per acre for ’Khal’.

   3.  The market value in respect of Durgapur land will be communicated to you shortly.

   4.   If you do not use the land within a reasonable time for  the purpose for which it is given, Govt.  will  reserve the  light  suo moto to determine the lease." The offer  was accepted  by  the  company  on   18th  January,  1994   with intimation  that  the leased property shall be utilised  for development   of   integrated   multipurpose  product   food processing  plants.  The market value of the Durgapur  land, building, plant and machinery was communicated to respondent No.5  on 1.2.1994 which was accepted the same day.  On  25th February,  1994,  the State Government granted  approval  to respondent  No.5  for setting up of Mourigram  and  Durgapur Projects.   On  2nd  March, 1994, the District Land  &  Land Reforms Officer, Howrah was requested to furnish a report as to  whether  the  entire  46.42 acres of land  was  fit  for settlement  for the proposed project and also to furnish the details  of  the land which would be fit for  settlement  by mentioning  specifically the exact extent for each class and area  involved.   A  decision  was taken  on  18.4.1994  for transferring  the  land to the respondent No.5 on long  term basis,  initially  for  a period of 99 years on  payment  of Rs.71,59,820.80.   On  13th June, 1994, respondent No.5  was informed  that  possession of the land would be handed  over after  payment  of  the lease premium.  Respondent  No.5  is stated  to  have made the payment of Rs.87,27,000/- for  the purchase  of  building,  plant  and  machinery  of  Durgapur Slaughter   House  and  on  13th   July,  1994  and  sum  of Rs.71,59,820/- as lease premium for Mourigram Abattoir.  The lease  deed  was executed between the parties on  9th  June, 1995 on terms and conditions which were incorporated in Part II of the Schedule attached to the said lease deed.  Feeling aggrieved,  the appellants are stated to have filed the writ petition  on 13.4.1998 without impleading respondent No.5 as party  thereto.   Respondent  No.5  is shown  to  have  been impleaded  as  party  in the writ petition on  17th  August, 1998.   The  writ petition was dismissed on 25th  September,

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1998  and  appeal  filed  against it met the  same  fate  on 10.5.1999,  vide  the  judgment  impugned  in  this  appeal. Dr.Abhishek  Singhvi,  learned Senior Counsel appearing  for the  appellants has challenged the action of the  respondent solely  on  the  ground of arbitrariness  and  violation  of Article  14 of the Constitution.  He has contended that  the State  largesse in the form of the land, the subject  matter of  the  litigation has been bestowed upon  respondent  No.5 merely  for a song without adhereing to the settled norms of fair  play and equity.  It is contended that the  respondent State, without issuing any advertisement or resorting to the procedure of auction and tender, has secretly leased out the land  which has resulted in huge monetary loss worth  crores of   rupees  to  the   State  exchequer.   Elaborating   the arguments,  it was submitted that the State Executive is not and should not act as free as an individual in selecting the recepient  for  its largesse, as has been allegedly done  in this  case.   The Government cannot lay down  arbitrary  and capricious   standards  for  choice  of  persons   for   the conferment  of  State  benefits.   Referring to  a  host  of documents,  the  learned Senior Counsel submitted  that  the arbitrary  action  of the respondent-State is writ large  in this case.  The respondents are stated to have not satisfied either the High Court or this Court about their bonafides in initiating,  processing  and concluding the lease  agreement with  respondent No.5.  Inviting our attention to the  lease deed,  the  learned Senior Counsel submitted that  the  said document  in  fact  was  a sale deed in  cloak  of  a  lease agreement.   The  consideration  of the sale deed  has  been termed  to  be  "on throw away price".  Conceding  that  the appellants had not made allegations of malafides against any one  of  the  respondents, it is contended that  though  not actual   but  legal  malafides   are  discernible  from  the pleadings  of  the parties and the record produced by  them. Per  contra  Shri  K.K.  Venugopal, Senior Counsel  who  was followed  by Shri Altaf Ahmad, Additional Solicitor  General contended that the writ petition is not a bonafide action of the appellants.  Four of whom are stated to be the erstwhile owners interested only to get back the land legally acquired from  them.   The  petition is stated to be  suffering  from unexplained delay and latches.  The appellants are stated to have  not pleaded or argued the points including the plea of arbitrary  action of the respondents before the High  Court. It  is submitted that in the light of the pleadings and  the record  produced before it, the High Court was justified  in dismissing  the writ petition filed by the appellants.   The proposed  setting  up  of  the industry is  stated  to  have provided  job  opportunities to more than 300 people and  is likely  to  earn  foreign exchange to the  extent  of  Rs.50 crores  per  year.  It is argued that there is no defect  or error  of  law in the decision making process of  the  State Government  by  which  the  land  has  been  leased  out  to respondent  No.5.  It is conceded that though the  documents executed  between the parties is styled as a lease deed, yet in  fact  it  is a sale as the whole of the  then  prevalent market  value  of the land has been paid by  the  respondent No.5.   The  lease deed is stated to have been got  executed for  keeping interests of the State alive in the land  which in  no  way  affects the public interest but  in  effect  is adverse  to the interests of the respondent No.5.  The  deed is   stated  to  have  been   concluded  on  the  basis   of negotiations,  a recognised method of transferring the State property.   The  learned Single Judge formulated  the  three questions  for  his adjudication which read as under:   "(a)@@                     JJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJ

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Whether  the  writ petitioner nos.3 to 6 can as a matter  of right  get  back  the  land  which  was  acquired  from  the predecessor in interest or not;

   (b)  Whether a property which has been vested under  the Acquisition  Act, 1894 can be dealt with and/or used by  the State Government otherwise than public purpose or not;

   (c)  Whether  granting  of lease of a vested land  to  a private  company  for the purpose of industrial  development and for earning foreign exchange is public purpose or not."

   Learned  counsel who appeared in the High Court for writ petitioners 3 to 6 conceded that his clients had no right to ask  for  return  of  the surplus land.   Relying  upon  the judgments  of this Court in [AIR 1977 SC 448] and [1997  (2) SCC  627,  the  learned  Single Judge held  that  "once  the property  has been vested unto the Government under  Section 17  of the Land Acquisition Act, neither the previous  owner nor  their  successors-in-interest can question the  dealing and  disposal of the property by the Government".  Referring to  the decisions of this Court reported in [AIR 1986 SC  72 and AIR 1986 SC 910] and analysing the facts of the case the learned Single Judge held:-

   "There  are  enough  materials placed  before  me  which unmistakably substantiate that Mr.Pal’s client has brought a promise  and/or hope that at least 400 employed youths would be provided in this industry.  This industry will also bring foreign  exchange  to the public exchequer nearly  worth  40 crores  per annum.  It is now accepted position that one  of the  prime  economic  policies of this country  is  to  earn foreign  exchange as much as possible.  So, in my view, when the  State utilizes a land in furtherance of development  of industry and/or earning foreign exchange the same is nothing short of public purpose, notwithstanding a statement made in clause  16 of the lease deed.  The statements made in clause 16  of  the  lease  at  best  operate  as  admission.   This admission  however  is displaced by the above fact to  prove the  fact  of  public purpose.  My view has  been  expressed accepting the decision of case reported in AIR 1978 Pat.136. Moreover,  here the State Government instead of leaving  the land  being  unutilised has gainfully utilized  by  granting long   lease   to  Mr.Pal’s  client   with  a   premium   of Rs.71,59,820.80  which has gone to the State exchequer." The construction  of  a  slaughter house was also held to  be  a public  purpose.  In appeal, while upholding the judgment of the  learned Single Judge, the Division Bench dealt with the submissions  of  the appellants to the effect that the  land should   have  been  sold  by   public  auction,  if   after acquisition  it was not used for any other public purpose by the  Government.   The Division Bench held that the  surplus land in question need not have been sold in auction when the State  had  declared to utilise the land by leasing out  the same  for  99 years in favour of Respondent No.5.   Agreeing with  the learned Single Judge, it was held by the  Division Bench in appeal, that:

   "We  are, however, of the opinion that this court is not at  all required to be satisfied whether a surplus land  has been  utilised  for a public purpose.  After acquisition  of the land in accordance with the procedure established by law a  surplus  land  has  vested in the  State  free  from  all encumbrances.   Article  298 empowers the State to carry  on any trade or business and make contracts for any purpose."

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   Finding   that   no   allegations    of   malafide   and discrimination  had been pleaded in the petition, the  State Government  was held competent to enter into contracts  with private persons for disposal of the property irrespective of the  purpose of such acquisition or disposition subject only to  the condition of compliance with the relevant provisions of  the Constitution.  The appellants were held to be having no  locus standi to question the agreement executed  between the respondent-State and the respondent No.5.

   As  noticed earlier, Dr.Abhishek Singhvi, learned Senior Counsel  appearing for the appellants has not challenged the@@          JJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJ legality  or constitutionality of the lease agreement or the@@ JJJJJJJJJJJJ action of the respondent-State on the grounds alleged in the writ petition.  He has conceded that the erstwhile owners of the  land had no right to ask for the return of the land  to them.   Similarly, the Vegetarian Congress, petitioner  No.5 was  not justified in seeking the relief of restraining  the respondents  from  utilising  the land for the  purposes  of abattoir  at Mourigram.  The sole point urged before us  was with  respect  to  the alleged arbitrariness  of  the  State Government.   To appreciate the only submission made  before us  we scanned the writ petition, the counter affidavit  and the  accompanying documents and found that no basis for such a  plea  was  laid in the writ petition  and  the  arguments addressed  before  the Division Bench were not referable  to any  pleadings.   It  is  contended that as  the  issue  had specifically  been  pleaded  in the appeal before  the  High Court  and  has been urged in the grounds of appeal in  this Court,   a   decision   on    the   point   was   warranted, notwithstanding the absence of sufficient pleadings.  We are not   impressed   with  such  an  argument.    Whether   any advertisement  was issued or not, or whether public  auction or  floating  of tenders should have been dispensed with  or not,  are  such matters which require pleadings in order  to enable  the  State  Government to explain or  justify  their action  in the circumstances of the case.  The appeal before the Division Bench of the High Court and in this Court being in  continuation of the original proceedings in the form  of writ  petition, cannot enlarge the scope of inquiry at  this belated  stage.   In the absence of specific allegations  of the  malafides  attributed  to any of  the  respondents,  it cannot be said that mere violation of some alleged statutory provisions  are safeguards as spelt out by this Court, would render  the  State action to be arbitrary in all cases.   To buttress   his  arguments,  the   learned  counsel  for  the appellants  submitted  that as the land was  transferred  to respondent  No.5  for  a  song  and  at  throw  away  price, resulting  in corresponding loss to the State exchequer,  it reflected  the  legal malafides and the arbitrary action  of the  respondents.   The  argument  has to  be  noted  to  be rejected  inasmuch  as  nowhere in their writ  petition  the appellants  had  alleged  that the land had been sold  at  a throw  away  price.  Referring to the lease agreement it  is contended  that  as  in fact transaction is sale  under  the cloak  of  lease,  the  legal   malafides  are  writ   large exhibiting  the  arbitration  action   of  the  respondents. Learned  counsel appearing for the respondents have  brought to   our  notice  that  in   fact  the  value  charged  from respondents  No.5  was the market value of the land and  not lease  money  as  urged.   In this regard,  in  the  counter

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affidavit  filed  on behalf of the respondent No.1  in  this Court it is stated:

   "In  order that the proper and correct lease premium and lease  rent  were  arrived  at a valuation of  the  land  in question  was  caused  to  be   made  by  the  Special  Land Acquisition  Officer.   By  the  memo  no.49(c)  dated  12th January,  1994  of the District Magistrate, Howrah,  a  copy whereof  is  annexed hereto and marked "Annexure R1/8",  the valuation  Report (in L.V.  Case No.46/93) was forwarded  to the  Secretary,  ARD  Department of the Government  of  West Bengal Officer.  A photocopy of the said valuation report is annexed  hereto  and marked "Annexure R1/9".  From the  memo dated 12.1.94 it would be seen that a part of the land which was  ultimately leased out to the respondent No.5 was  under water and hence demarcation could be done only in respect of 30  acres  of the land.  On the basis of the said  valuation the  selami,  i.e.,  lease  premium, annual  rent  and  cess payable  by the respondent no.5 for the lease to be  granted were  calculated as per the circulars issued by the Land and Land   Reforms  Department  of   the  State  Government  for determination  of  land revenue and Board of  Revenue,  West Bengal  respectively, copies whereof are annexed hereto  and marked Annexure R1/10.  copy of the documents evidencing the manner in which the value of the lands at both Mourigram and Durgapur were arrived at and the lease premium, annual rent, cess  etc.,  arrived is annexed hereto and  marked  Annexure R1/11.   The  lease  premium so arrived at was of a  sum  of Rs.71,59,820.80 on the basis of the market value of the land then  prevailing.   The ground rent arrived at was  RS.418/- per  annum and cess Rs.296/- per annum without granting  any concessions whatsoever.

   From  the  above-mentioned valuation report of the  Land Acquisition Officer, the manner in which the market value of the  said  land which was to be given on lease basis to  the respondent  no.5  for  setting  up  of  the  above-mentioned project  and the documents relied upon for the said purpose, which  included  five  numbers of executed  lease  deeds  as available  in the Sub-Registry Office at Howrah for the year 1992  and applying appreciation percentage thereon, as  well as  the  order of the Collector dated 29th April, 1993 in  a land  acquisition  case were taken into account.   The  same clearly shows that, contrary to what had been alleged in the Special  Leave  Petition,  the lease in  question  has  been granted  taking  into  consideration  the  market  price  of subject land on the relevant date."

   The public purpose, which the State had in mind has been spelt out in its affidavit as under:

   "In  finalising  the lease terms and conditions and  the proposal of the respondent no.5, the fact that setting up of the  said industry in the low lying land at Mourigram  would not  only provide employment to more than 300 persons (which estimate  was  provided  even  by  Shedden  Meating   Group, Australia in its feasibility study report carried out in the year  1983  as aforesaid) and indirect employment  to  large number   of  persons  in  West   Bengal  were   taken   into consideration.   It  was also taken into consideration  that setting  up  an  industry  in  such  a  semi-rural  area  in Mourigram,   a  Gram  Panchayat   area  under  Duillya  Gram Panchayat   of   Zilla  Parishad   Howrah  would   help   in industrialisation  of  the  said area and  consequently  the

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State of West Bengal.  The fact that the proposed unit would be  an  export  oriented which would earn  valuable  foreign exchange  of more than Rs.50 crores under export  obligation in  terms  of  the EPGC Scheme of the  Government  of  India where-under  machinery  and  equipment for  setting  up  the Project  would be imported, as represented by the respondent no.5  during the course of negotiation, was also taken  into account."

   Learned  counsel  for the appellant has not referred  to any  statutory provision mandating the State to adhere to  a specified  procedure  in  the  matter  of  transfer  of  its property  either by way of sale or by lease.  In the absence of  a statutory restriction imposed upon the State, it is to be  seen  whether  the  impugned action  is  against  public interest  or  actuated  by extraneous considerations  or  is opposed to fair play or the State is shown to have conferred undue benefits upon undeserving party.

   It  has  been consistently held by this Court that in  a democracy  governed  by  the  rule  of  law,  the  Executive@@            JJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJ Government  or  any  of its officers cannot  be  allowed  to@@ JJJJJJJJJJJJJJJJJJJJJJJJJJJ possess   arbitrary  powers  over   the  interests  of   the individual.   Every action of the Executive Government  must be  in  conformity  with  reason and  should  be  free  from arbitrariness.   The  Government cannot be equated  with  an individual  in the matter of selection of the recepient  for its  largesse.   Dealing with the limits on the exercise  of Executive  authority  in relation to rule of  administrative justice,  Mr.Justice  Frankfurther  in Vitarell  v.   Seaton [(1959) 359 US 535:  3 L Ed 2d 1012] said:

   "An  executive  agency  must be rigorously held  to  the standards  by which it professes its action to be judged.... Accordingly,  if  dismissal  from employment is based  on  a defined   procedure,  even  though   generous   beyond   the requirements  that bind such agency, that procedure must  be scrupulously  observed.  ...This judicially evolved rule  of administrative  law is now firmly established and, if I  may add,  rightly so.  He that takes the procedural sword  shall perish with the sword."

   This  Rule of Administrative law, was accepted as  valid and  applicable in India by this Court in A.S.  Ahluwalia v. The State of Punjab & Ors.  [1975 (3) SCR 82], Sukhdev Singh & Ors.  v.  Bhagatram Sardar Singh Raghuvanshi & Anr.  [1975 (3) SCR 619] and Ramana Dayaram Shetty v.  The International Airport Authority of India & Ors.  [AIR 1979 SC 1628].

   Though the State cannot escape its liability to show its actions  to be fair, reasonable and in accordance with  law,@@          JJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJ yet  wherever  challenge  is thrown to any of  such  action,@@ JJJJJJJJJJJJJ initial  burden  of  showing the prima  facie  existence  of violation  of the mandate of the Constitution lies upon  the person  approaching the Court.  We have found in this  case, that the appellants have miserably failed to place on record or  to  point  out  to any alleged  constitutional  vice  or illegality.   Neither  the High Court nor this  Court  would have  ventured  to make a rowing inquiry particularly  in  a writ  petition filed at the instance of the erstwhile owners

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of the land, whose main object appeared to get the land back by  any  means as, admittedly, with the passage of time  and development  of  the  area,  the   value  of  the  land  had appreciated  manifold.   It may be noticed that in the  year 1961  the erstwhile owners were paid about Rs.5.5 lakhs  and the  State  Government  assessed  the market  value  of  the property which was paid by respondent No.5 at Rs.71,59,820/- The  appellants have themselves stated that the value of the land  round about the time, when it was leased to respondent No.5  was  about Rs.11 crores.  There cannot be any  dispute with  the proposition that generally when any State land  is intended  to be transferred or the State largesse decided to be  conferred,  resort  should be had to public  auction  or transfer  by way of inviting tenders from the people.   That would  be  a sure method of guaranteeing the  compliance  of mandate  of Article 14 of the Constitution.  Non-floating of tenders  or  not holding of public auction would not in  all cases  be  deemed  to be the result of the exercise  of  the executive power in an arbitrary manner.  Making an exception to  the  general  rule  could  be  justified  by  the  State executive,  if challenged in appropriated proceedings.   The Constitutional  Courts  cannot  be expected to  presume  the alleged  irregularities, illegalities or unconstitutionality nor the courts can substitute their opinion for the bonafide opinion  of  the  State  executive.    The  courts  are  not concerned  with  the  ultimate decision but  only  with  the fairness of the decision making process.

   The Government is entitled to make pragmatic adjustments and  policy  decision which may be necessary or  called  for under  the  prevalent  peculiar  circumstances.   The  court cannot strike down a policy decision taken by the Government merely  because  it feels that another decision  would  have been  fairer  or  wiser or more scientific or  logical.   In State  of  M.P.  & Ors.  vs.  Nandlal Jaiswal & Ors.   [1986 (4)  SCC  566] it was held that the policy decision  can  be interfered  with by the court only if such decision is shown to  be  patently arbitrary, discriminatory or malafide.   In the  matter  of different modes, under the rule  of  general application made under the M.P.  Excise Act, the Court found that  the  four  different modes, namely,  tender,  auction, fixed  licence fee or such other manner were alternative  to one  another  and any one of them could be resorted to.   In Sachidanand  Pandey & Anr.  v.  State of West Bengal &  Ors. [1987 (2) SCC 295], it was held that as regards the question of  propriety  of private negotiation with an individual  or corporation,  it should be borne in mind that State owned or public  owned  property  is  not to be  dealt  with  at  the absolute  discretion of the executive.  Certain precepts and principles  have  to be observed, public interest being  the paramount consideration.  One of the methods of securing the public  interest when it is considered necessary to  dispose of the property is to sell the property by public auction or by  inviting tenders.  But such a rule is not an  invariable rule.   There  may be situations where there are  compelling reasons  necessitating departure from the rule.  As and when a  departure is made from the general rule, it must be shown that  such  an  action was rational and  not  suggestive  of discrimination.   In that case on facts the Court found that on the commercial and financial aspect, the lease granted in favour  of a group of hoteliers, not arbitrary as the method of  "nett  sales"  was held to be fairly  well-known  method adopted  in  similar situations.  To the same effect is  the judgment  in G.D.  Zalani & Anr.  v.  Union of India &  Ors. [1995  Supp.  (2) SCC 512].  In Kasturi Lal Lakshmi Reddy v.

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The  State  of Jammu & Kashmir & Anr.  [AIR 1980  SC  1992], this  Court, after referring to various judgments, including the judgment in Ramana Dayaram Shetty’s case, held:

   "It is imperative in a democracy governed by the rule of law  that governmental action must be kept within the limits of  law and if there is any transgression, the Court must be ready  to  condemn  it.   It  is  a  matter  of   historical experience  that there is a tendency in every government  to assume  more and more powers and since it is not an uncommon phenomenon  in some countries that the legislative check  is getting  diluted, it is left to the Court as the only  other reviewing   authority   under  the    Constitution   to   be increasingly  vigilant to ensure observance with the rule of law  and in this task, the court must not flinch or  falter. It  may  be  pointed  out that this  ground  of  invalidity, namely,  that  the  governmental action is  unreasonable  or lacking in the quality of public interest, is different from that  of mala fides though it may, in a given case,  furnish evidence of mala fides." In M.P.  Oil Extraction & Anr.  vs. State of M.P.  & others [1997 (7) SCC 592] this Court held:

   "Although  to ensure fair play and transparency in State action, distribution of largesse by inviting open tenders or by public auction is desirable, it cannot be held that in no case  distribution  of  such   largesse  by  negotiation  is permissible.   In  the  instant case, as a  policy  decision protective measure by entering into agreements with selected industrial  units  for  assured  supply   of  sal  trees  at concessional  rate  has been taken by the  Government.   The rate  of  royalty  has  also been  fixed  on  some  accepted principle of pricing formula as will be indicated hereafter. Hence,  distribution  or  allotment  of  sal  seeds  at  the determined  royalty  to  the  respondents  and  other  units covered  by the agreements cannot be assailed.  It is to  be appreciated  that in case, distribution by public auction or by  open tender may not achieve the purpose of the policy of protective  measure  by  way  of  supply  of  sal  seeds  at concessional rate of royalty to the industrial units covered by  the agreements on being selected on valid and  objective considerations."

   It was further held that principle of reasonableness and non- arbitrariness in governmental action is the core of our entire Constitutional scheme and structure.  On the facts of that  case, the action of the State Government in granting a contract  by  way of negotiation was held not  arbitrary  or irrational.

   In the backdrop of the legal position noticed herein, it has  to  be  seen, in the instant case, as  to  whether  the action  of  the  respondent No.1 was illegal,  arbitrary  or malafide.   To  justify  their action of  entering  into  an agreement  of  lease by negotiation, even in the absence  of pleadings  on  behalf  of  the  appellants,  the  State  has submitted  that the entire transaction of granting the lease to  the  respondent No.5 for an integrated  food  processing unit  with an abattoir in a semi-rural area, which was a low lying land, despite their best efforts, the state Government were  unable to set up any project.  The lease was given  to respondent  No.5  upon  consideration of all the  facts  and circumstances  with the object of setting up an industry  in the  State  of  West  Bengal which was  likely  to  generate employment  to  more  than  300  persons  and  earn  foreign exchange  worth  more than Rs.50 crores.   The  negotiations

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were  resorted to ensure the disposal of the slaughter house at Durgapur which was proved to have been running in losses. The  respondent-State  had  failed  to  get  any  buyer  for Durgapur  Project  despite  Newspaper  advertisements.   The Government  had  decided  to  make a package  deal  for  the purposes   of   transferring  the   Durgapur   Project   and establishment of Mourigram Project.  Earlier a memorandum of understanding  had  been  arrived at between  Government  of India  and Australia which ultimately did not mature in  the shape  of  an  abattoir.    Due  to  financial  constraints, continuous  loss suffered at Durgapur and lack of  technical expertise,  the  respondent-State  could   not  venture   to undertake  the  Mourigram  Project  for  setting  up  of  an abattoir.   Having  failed  in  all its  efforts,  the  then Minister-in-charge  of  the Animal Husbandry and  Veterinary Services  Department  of  the Government of West  Bengal  is stated  to have written to some Bombay based firms,  reputed in  the  field,  to  salvage  the  two  projects.   Positive response  is  stated to have been received from  some  firms including  Genagro Foods (India) Limited, namely, respondent No.5  and M/s.I.Ahmed & Company.  The proposal of I.Ahmed  & Company  being very vague was not accepted.  Respondent No.5 had  shown interest in taking over both Durgapur & Mourigram sites  under certain terms and conditions for the purpose of revitalising and making operational the existing abattoir at Durgapur  and  for setting up of Integrated Food  Processing Unit along with abattoir at Mourigram.  It is further stated in  the  counter-affidavit of the  respondent-State,  that:- "Since, no response was received from the advertisements and the  personal  requests  made  in the manner  above  by  the Minister-in-charge of the Department from any concern except as aforesaid, the State took into account the credentials of the  group of companies of which Genagro Foods (India) Ltd., was  one, including the export award certificate awarded  to M/s.Allanasons  Limited  for  outstanding  contribution  for promotion of agricultural and processed food products during the year 1992-93 as proof of their excellence in their field and  thereupon  proceeded  to finalise the lease  terms  and conditions  under which inter alia the Mourigram land  would be  leased  out to the respondent No.5 for setting up of  an integrated  food  processing  unit along with  an  abattoir, products  whereof  could be exported as well as sold in  the State  of  West  Bengal.    Respondent  No.5  alongwith  its associated  companies  was  the first company  in  India  to export  1000 million rupees on agricultural and process food products  (in 1992-93).  The Agriculture and Processed Foods Export  Development Authority (APEDA), Ministry of Commerce, Govt.   of India, had acknowledged and certified the efforts of  Respondent  No.5  and its associated  companies  in  the export  of  Meat and other agro products such as rice,  tea, coffee,  spices,  onion, cashew, pulses extractions,  marine products and processed Food and vegetable."

   In  view of the peculiar facts and circumstances of  the case  we  are not persuaded to hold that the action  of  the@@               JJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJ respondent-State in executing the lease deed with respondent@@ JJJJJJJJJJJJJJJJJJJ No.5  was  unreasonable, illegal, arbitrary or  actuated  by extraneous  considerations.   In  this regard  it  is  worth noticing  that  none  except the erstwhile  owners  and  the propounders  of vegetarianism have made any grievance to the effect  that  the market value of the property,  as  charged from  respondent No.5, was either allegedly for a song or at

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a  throw  away  price.  The inaction of  the  appellants  in approaching  the  Court,  almost after three  years  of  the impugned  lease deed is an additional circumstance to  doubt their  bonafides in challenging the impugned action.  During the  pendency of the litigation between the parties, a  huge project  has actually, by now, come into existence where the production  has also commenced.  Respondent No.5 is  claimed to  have spent a sum of Rs.73.01 crores as of 30.10.1999  on the  project.   Interference  at this stage  will  not  only adversely  affect the business of respondent No.5 but  would also  render a large number of people unemployed and deprive the  State its cherished desire of developing the industrial growth.

   Under  the  circumstances, we do not find any ground  to interfere  with the impugned judgments or the action of  the@@            JJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJ respondent-State  in granting the lease to respondent  No.5.@@ JJJJJJJJJJJJJJJJJJJJ The appeal is accordingly dismissed but without any order as to costs.