Public authority's power only to be used for public good, says SC

A public authority possesses power only to use it for public good and this imposes a solemn duty on the State to act impartially and to adopt a procedure of allotment of licence which is 'fair play in action,' the Supreme Court has said.

The apex court observed this while dismissing the appeals against the August 2015 verdict of the Punjab and Haryana high court which said that policy adopted by the authorities in Haryana for grant of licence for development of a group housing colony under the final development plan of Gurgaon-­Manesar urban complex for 2025 on the principle of first come first serve basis cannot be held to be fair.

The top court noted that the undisputed facts which have emerged from the record are that the October 2010 public notice, the final development plan of May 2011 and policy instructions regarding receipt and validity of applications nowhere prescribed that method of allotment of licence shall be on the FCFS basis.

“Although this factor cannot be ruled out that those who are interested parties, they were aware of this so called alleged practice of first come first serve adopted in the office of the State respondent and that was the reason for which even before the public notice dated October 1, 2010 came to be published on October 4, 2010, people start running for submitting their applications as if they are participating in the mad race..,” a bench of Justices Ajay Rastogi and A S Oka said.

The apex court delivered the judgement on the appeals including those filed by some applicants, whose grant of licence was cancelled by the high court.

In its 27-page verdict, the bench said there was a 'fundamental flaw' in the state's policy of FCFS basis as it involves an element of pure chance or accident and it indeed has inherent inbuilt implications and this factor cannot be ruled out that any person who has an 'access to the power corridors' will be made available with an information from government records.

It noted that before there could be a public notice accessible to the people at large, the interested person may submit his application, as happened in this case, and become entitled to stand first in queue to have a better claim.

The apex court said it is the solemn duty of the State to ensure that a non­-discriminatory method is adopted, whether it is for distribution or allotment of licence on his own land or alienation of property and it is imperative and of paramount consideration that 'every action of the State should always be in public interest.'

It said that in a matter of grant of licence even on its own land to set up a group housing society, the policy of allotment must be fair and transparent and the method of selection has to be such that all eligible applicants get a fair opportunity of competition.

“A public authority possesses powers only to use them for public good. This imposes a solemn duty on the State to act impartially and to adopt a procedure of allotment of licence which is fair play in action,” it said.

The bench noted that even at the time of conclusion of submissions in the matter, it had posed question to the state's counsel as to from where this principle of FCFS for allotment of licence was borrowed and what was the basis or foundation to hold it as a practice in inviting applications from the prospective applicants.

“We find no difficulty in holding that in the first instance there is no such consistent practice as alleged of first come first serve basis for allotment of licence available under the entire scheme placed on record and secondly, from where this principle has been borrowed is alien to the statute and also the policy pursuant to which the process was initiated for allotment of licences to the prospective applicants,” it said.

The bench noted the top court was informed that in supersession of earlier policy of 2006, the state has come out with its self-contained policy of November 10, 2017 for grant of licence and change of land use and others to consider all pending and future applications in terms of its 2017 policy in a fair and transparent manner, taking note of the high court verdict.

“We make it clear that once the policy of 2017 has been introduced by the state respondents, it is open to consider all pending applications and the application of the present appellants for grant of licence under the policy of 2017 in accordance with law,” it said.

The apex court said the high court, taking note of the scheme of Haryana Development and Regulation of Urban Areas Act, 1975 read with Haryana Development and Regulation of Urban Areas Rules, 1976, had held that the policy adopted by the state authorities for the grant of licence on the principle of FCFS basis cannot be held to be fair, reasonable and transparent method and it led to an 'unholy race' amongst the applicants.

The high court had cancelled the grant of licence to some applicants with a direction to the state to consider the issue after framing a transparent and fair policy to grant privilege of licence.