"Textbook Example Of State Instrumentality's Unjust Enrichment": Madras High Court Slams BSNL For Its Failure To Use Land For 20 Yrs

The Bench of Justice N. Anand Venkatesh observed:

"This writ petition is a textbook as to how the instrumentality of a State has attempted to unjustly enrich itself and had thereby virtually grabbed the property belonging to the petitioner measuring an extent of 59 cents by paying a paltry sum of just Rupee one."

The matter of the Court

The Court was hearing the plea of the petitioner, Marimuthi who gave property measuring an extent of 59 cents to BSNL in return for a token consideration of Rupee one.

In fact, the petitioner wanted to construct a memorial in the property in the name of his illustrious father and at that point in time, BSNL was looking for a property to construct a telephone exchange.

The petitioner thought that he could gift this property to BSNL free of cost with the only condition that the building in which the telephone exchange is operated, will stand in the name of the father of the petitioner.

However, when the BSNL took a stand that they cannot get the property as a gift or settlement and therefore insisted that a sale deed should be executed by receiving a token consideration. The petitioner had conceded even for this request made by BSNL.

The grievance of the petitioner was that no construction came up in the property and whenever the petitioner approached the respondents, he was informed that the administrative sanction must be accorded for putting up the construction.

There was absolutely no development for nearly 13 years and left with no other alternative, the present writ petition was filed in the year 2014 seeking for the cancellation/reconveyance of the property in favor of the petitioner.

Court's observations

At the outset, the Court observed that if the facts of the present case are put to any such ordinarily prudent man, he will be shocked and bemused and he will never be able to consider this transaction to be reasonable.

"A man with a normal intelligence will not convey a land measuring 59 cents for a pittance by receiving Rupee one, unless there was a purpose behind such conveyance" added the Court.

Further, the Court observed that BSNL, being an instrumentality of the State, was bound to act reasonably and fairly in its dealings with citizens.

The Court also noted that the petitioner lost his property, and the building that was promised had not come up for the past 20 years, although the BSNL says (and is still saying) that it intends to put up a superstructure.

"With BSNL playing cloak and dagger, the petitioner has been deprived of a valuable property of 59 cents for just Rupee one," observed the Court.

The Court also stressed that where arbitrariness exists at the time of entering into a contract, the same would offend Article 14, enabling the writ Court to annul such an action [Mahabir Auto Stores v. Indian Oil Corpn., (1990) 3 SCC 752].

Regarding the instant sale, the Court stated that it was opposed to all norms of fairness, good conscience, and equity with the result that it is clearly opposed to public policy as well and further said:

"Even when the State or its instrumentalities enter into a private contract, it is expected that they maintain a higher degree of fairness and reasonableness and it should not be assessed from the point of view of a private individual who may be driven with the only aim of making a personal gain out of the transaction."

The Court also opined that every citizen of this country has been vested with a constitutional right under Article 300 A of the Constitution of India which guarantees right to property and that the State or its instrumentalities cannot expropriate the property of a citizen.

Court's order

The contract entered into between the petitioner and BSNL by the virtue of the sale deed was ruled to be totally unfair, arbitrary and unreasonable.

Therefore, the Court directed BSNL to pay the market value of the property as it stood on the date of execution of the sale deed that is on 06.09.2001 along with interest at the rate of 9% per annum from 06.09.2001 till the date of the payment of the market value of the property to the petitioner.

in the alternative, the Court granted liberty to BSNL to reconvey the property to the petitioner if there is no proposal to construct any telephone exchange in the property.

In either case, BSNL has been directed to comply with the direction within a period of eight weeks.

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