SC cancels Modi govt's nod for sale of govt land by private party

NEW DELHI: The Narendra Modi government's transparent industry-friendly image was dented when the Supreme Court on Thursday faulted its revenue minister for illegally permitting Indigold Refninery, which was allotted 40 acres of land in Kutch district for setting up its plant, to sell it to Alumina Refinery Private Ltd.

The Gujarat High Court had dismissed a PIL filed by Congress leader Dipak Babaria, who had alleged that the revenue minister in 2009 carved out an exception to permit sale of agricultural land by Indigold to Alumina despite officials unanimously opposing it on the ground that was impermissible under Gujarat Tenancy and Agricultural Lands (Vidarbha Region and Kutch Areas) Act, 1958.

Under the Act, an agriculturist can sell his land for industrial use but if the purchaser did not put the land to use as specified under the Act, the land would revert to the state which would pay appropriate compensation to the private purchaser. The act prohibits sale of agricultural land by one company to another.

Babaria had appealed against the HC order in the Supreme Court stating that it was impermissible for a private party to sell land acquired from government to another private party. Indigold had paid Rs 70 lakh as compensation to farmers for purchasing the land in 2003, but sold it at Rs 1.20 crore to Alumina in 2010.

Allowing his appeal against the government's December 18, 2009 order permitting the private inter-party sale, a bench of Justices H L Gokhale and J Chelameswar said: "The sale of the land by Indigold to Alumina is held to be bad in law. The land involved in the present case is held to have vested in state of Gujarat free from all encumbrances, and an amount of Rs 1.20 crore paid by Alumina to Indigold is treated as full payment towards compensation payable by the state to Indigold."

The court could have rested its judgment there, but felt compelled to do complete justice. It said: "Although we do not approve the action of the state government, and hold it to be clearly arbitrary and untenable, we are of the view that the aforesaid order will be appropriate to do complete justice in the matter."

It said since the land now vested with the government after Indigold failed to put up the plant, its re-allotment to another private company should be for a value that could be relatable to the market price of the land at government rate.

Another factor weighed with the court to allow retention of the 40-acre land by Alumina. It said: "Alumina has acted on the basis of the commitment made to it by the government of Gujarat in the Vibrant Gujarat Summit, and in furtherance of the industrial development policy of the state."

Writing the judgment for the bench, Justice Gokhale took note of the fact that Alumina had been waiting since 2009 to set up its refinery in the bauxite rich Kutch area. The court also found Alumina willing to pay the market price of the land at government rate, which was calculated at Rs 4.35 crore.

Thus, it said the difference (after deducting the Rs 1.20 crore already paid to Indigold by Alumina) of Rs 3.15 crore would now have to be paid to the state by the company interested in setting up its plant in Kutch district.

"In the facts and circumstances of this case, having noted that Alumina claims to have made some good investment, and that it has also offered to pay Rs 3.15 crore to the state, the land will be permitted to be disposed of by the state government to Alumina provided it pays this amount of Rs 3.15 crore to the state government," the court said.

"Further activities of Alumina on the concerned parcel of land will start only after this payment is made, and in the event the amount is not so paid within 3 months, the government will proceed to take further steps to dispose of the land having regard to the use of the land," the bench said.

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