Legislation Relating To Single Individual Permissible: Telangana High Court Upholds Law Cancelling 800 Acres Land Allotted To IMG Academies

The Telangana High Court has upheld the validity of the Telangana Government Property (Preservation, Protection and Resumption) Act, 2007 (previously Andhra Pradesh) by way of which, the government of Telangana resumed 800 acres of land alienated in favour of IMG Academies Bharata Private Limited.

The Division Bench of Chief Justice Alok Aradhe and Justice Anil Kumar Jukanti passed the order, and while doing so upheld the right of the State to pass a legislation that may affect only a single entity. The bench relied upon the precedent State of Himachal Pradesh vs. Kailash Chand Mahajan to hold:

“Thus, from aforesaid enunciation of law, it is evident that there could be legislation relating to a single individual on account of some special circumstances or reasons applicable to him and not applicable to others. It is equally well settled proposition that the burden was on the person to assail the validity of the legislation that there were also other persons similarly situate and he alone was discriminated against.”

The Bench further held that to invoke the protection provided under Article 14 of the Constitution, it must be demonstrated by way of specific pleadings based on the factual foundation that persons situated in similar situations have been treated differently. However, no such grounds had been made out by the petitioner to contend that the Act was 'manifestly arbitrary.' The Bench noted that the only grounds raised by the petitioner were in relation to jurisdiction and the safeguard under Article 298.

“In the instant case, twin tests of Article 14 i.e., there has to be a reasonable basis for classification and there has to be nexus with the purpose sought to be achieved are fulfilled. The 2007 Act annuls the transactions which are a class in itself and the same has nexus with the object i.e., protection and preservation of public interest. The petitioner has not been able to demonstrate that any other person similarly situate like it has been subjected to a different treatment. Therefore, the plea of discrimination under Article 14 is not attracted to the facts of the case. Even otherwise, no discernible grounds have been made out in the pleadings to assail the validity of the impugned legislation.”

Background:

The petitioner-company was incorporated in August 2003 and claimed to be a 100% subsidiary of IMG Academies East, Ltd., LLC, organized under the laws of the State of Delaware, United States and a part of IMG Worldwide, with headquarters located in Florida, United States of America (a global sports and culture company).

The Memorandum of Understanding (MoU) executed between the petitioner and the erstwhile State of Andhra Pradesh said the State agreed to sell 400 acres of land to the petitioner to build, develop, own and operate sports academies. The State further agreed to sell another extent of land measuring Acs.450.00 to build, operate and for extension of facilities and activities relating to sports academies and also agreed to sell land measuring Ac.1.00 to Acs.5.00 to build an international class office headquarters with a condition that the petitioner shall not alienate such lands.

In November 2003, the Legislative Assembly of the erstwhile State of AP was dissolved at the request of the then CM and a caretaker government was brought into existence. In February 2004, the land measuring 400 acres was sold to the petitioner at the rate of INR 50,000 per acre.

In 2006 the State issued an ordinance, which was soon after enacted into an Act, namely Andhra Pradesh Government Property (Preservation, Protection and Resumption) Act, 2007 by way of which all properties alienated in favour of the petitioner were resumed. The Act further nulled any arbitration clause and provided for compensation at an interest rate.

The petitioner challenged the Act stating that the power to enact a law (by the State) is confined to the Entries contained in List II and List III to the Seventh Schedule of the Constitution and therefore, the State Government lacks the legislative competence to enact the law. They further contended that the land was garnered for a valid consideration and that the State could not unilaterally cancel the sale deed by way of a legislative enactment. Hence the Act is manifests arbitrariness and is violative of Article 14 of the Constitution.

The state on the other hand contended that the MoU was entered into without the approval of the Cabinet and that the price at which the land was sold was unbelievably lower than the value of land at the appropriate time. However, most importantly, the State brought to the notice of the Bench that the petitioner had no connections to IMG Worldwide as claimed and had been created only 3 days before entering into the MoU with the State. Evidently, the State argued, that fraud had been played.

The Bench after hearing both sides noted a few issues arose for consideration. Firstly, referring to the State List, the Court noted that the State is well within its bounds to enact a statute in relation to land.

“The Constitution divides the topics of legislation to three categories – (a) entries enabling laws to be made, (b) entries enabling taxes to be imposed and (c) entries enabling fees and stamp duties to be collected. Thus, under Entry 18 of the State List, the State Legislature has the power to enact a law with regard to land including right in or over the land. Similarly, under Entry 6 of the Concurrent List, law can be enacted in relation to transfer of property other than agriculture land, other than registration of deeds and documents. The 2007 Act is clearly referable to the fields of legislation as mentioned in the said entries."

The Court further held that an Act could be enacted against a single person, however, the petitioner is a class within itself.

The Court also noted that the State was empowered to unilaterally terminate the MoU and nullify the sale deed by way of an Act. The Court noted that merely because the State by the power of Article 298 could alienate State land, it did not confer any absolute right with the petitioner and the State is capable of enacting a statute to cancel the Sale transactions.

With these observations the Writ petition was dismissed and the validity of the Act was upheld.

Case no.: WP 24781 of 2006

Counsel for petitioner: Vedula Venkataramana Senior Counsel

Counsel for respondent/State: Advocate General and Senior Counsel A. Sudarshan Reddy

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