Wrong Terminology Employed By Statutory Authority While Granting Concession Not Ground To Revoke Such Concession: Karnataka High Court

The development comes in a writ petition filed before the bench of Justice Krishna S Dixit challenging the communication issued by the Bangalore Development Authority to Suchitra Cinema and Cultural Academy, whereby the latter was asked to pay back a sum of Rs.50 Lakh on the ground that the word ‘donation’ was used for granting concessions, whilst renewing lease of the sites.

The concession was granted at the instructions of the Chief Minister, presumably under Section 65 of the BDA Act, 1976. However, later, BDA turned around and claimed that it being the statutory authority has to function under the provisions of 1976 Act and therefore it cannot undertake any charitable activity like making donation that are not authorised by the statutory scheme.

At the outset, the bench remarked that where a person acts on that representation of another to his prejudice, whatever be the arguable prejudice, ordinarily it is not open to the representer to contend or conduct to the contrary, vide estoppel enacted in section 115 of the 1872 Act (Indian Evidence Act).

Expressing that this is a classic instance of wrong terminology employed by the officials of the respondent BDA, whilst interacting with the petitioner-lessee, the bench said “The wrong employment of this one single word of English language has played havoc in the matter to a great prejudice of the petitioner-Trust.”

It continued,

“The so called ‘audit objections’ at the hands of the statutory auditing party appear to have arisen because of wrong terminology employed by the BDA whilst granting concession to the petitioner by calling the same as ‘donation’, grossly unmindful of the meaning of the word, to say the least. There was nothing that the BDA had given to the petitioner by way of donation. What it did was only the granting of some concession to the lessee that too on the suggestive direction of the Chief Minister of the State. By no stretch of imagination such a concession could have been termed by the BDA as ‘donation’.”

The court held that BDA could have offered a proper explanation to the auditing party as to what it meant by the word ‘donation’ in the light of the transaction in question. "However, it did not choose to do that. The auditing party did not solicit explanation from the petitioner, either. Therefore, the contention of BDA Panel Counsel that his client being a statutory authority cannot give any donation to anyone since it has to act as the trustee of the public funds, does not impress the Court, even in the least.”

The bench reminded the BDA that being a statutory authority, it answers the description of State under Article 12 of the Constitution and the instrumentalities of the State have to conduct themselves with a measure of fairness and justice, in all their actions. "However, impugned action falls short of reasonable fairness standards.”

Accordingly it allowed the petition and petitioner-trust was relieved of the obligation to pay the subject amount claimed by the BDA.

Case Title: Suchitra Cinema and Cultural Academy v. The Commissioner, Bangalore Development Authority & ANR.

Case No: WRIT PETITION NO.58854 OF 2014

Citation: 2023 LiveLaw (Kar) 9

Date of Order: 03-01-2023

Appearance: Advocate Bhavana G K for petitioner

Advocate K Krishna, FOR R1.

HCGP N Anitha FOR R2.