'Preferential Allotment To A Few Elites Promotes Inequality': Supreme Court Quashes Land Allotment For MPs, MLAs, Judges Etc In Hyderabad

The Supreme Court today quashed the preferential allotment of lands to the housing societies of MPs, MLAs, civil servants, Judges, defence personnel, journalists etc. within the Hyderabad Municipal Corporation limits.  

The Court held such a policy to be suffering from the malaise of unreasonableness and arbitrariness, and promoting inequality leading to the violation of Article 14 of the Constitution.

A bench comprising Chief Justice of India Sanjiv Khanna and Justice Dipankar Datta quashed the Andhra Pradesh Government Memoranda (GoM) of 2005 classifying MPs, MLAs, officers of the AIl India Service/State Government, Judges of the Constitutional Courts, and journalists as a separate class for allotment of land at the basic rate. The Court also quashed the subsequent GoMs issued in 2008 allotting the lands within the limits of the Greater Hyderabad Municipal Corporation to these classes as bad in law, being violative of Article 14 of the Constitution of India.

The Court dismissed the appeals filed by the State Government and the Cooperative Societies and their members against a 2010 judgment of the Telangana High Court. The allotments were made to Cooperative Societies composed of members of various groups, including Members of Parliament, Members of both houses of the State Legislature3, officers of All India Services, Judges of the Supreme Court and High Court, State Government employees, defence personnel, journalists and individuals from weaker sections of society.

"The allocation of land at basic rates to select privileged groups reflects a “capricious” and “irrational” approach. This is a classic case of executive action steeped in arbitrariness, but clothed in the guise of legitimacy, by stating that the ostensible purpose of the policy was to allot land to “deserving sections of society”. Shorn of pretence, this policy of the State Government, is an abuse of power meant to cater exclusively to the affluent sections of the society, disapproving and rejecting the equal right to allotment of the common citizen and the socio-economically disadvantaged," the Court observed.

Policy of preferential allotment undermines solidarity and fraternity

The judgment authored by Justice Khanna observed :

"Land is a finite and highly valuable resource, particularly in densely populated urban areas, where access to land for housing and economic activities is increasingly scarce. When the government allocates land at discounted rates to the privileged few, it engenders a system of inequality, conferring upon them a material advantage that remains inaccessible to the common citizen. This preferential treatment conveys the message that certain individuals are entitled to more, not due to the necessities of their public office or the public good, but simply because of their status. Such practices foster resentment and disillusionment among ordinary citizens, who perceive these actions as corrupt or unjust, thereby eroding trust in democratic institutions. This policy undermines solidarity and fraternity, reinforcing societal hierarchies rather than actively working to dismantle them."

Journalists can't be treated as a separate class for preferential treatment

"We are also of the opinion that, accredited journalists cannot be treated as a separate class for such preferential treatment. In fact, a careful study of the policy indicates that higher echelons of all the three wings of the government, —legislators, bureaucrats, and Judges of the Supreme Court and High Courts—have been afforded such preferential treatment. Journalists, who are considered the fourth pillar of democracy, have also been included. These four pillars of democracy are expected to act as checks and balances on the arbitrary exercise of the State's power. However, the distribution of such extraordinary State benefits renders nugatory the very optics of healthy checks and balances within our democratic system."

Allotment policy suffers from malaise of unreasonableness and arbitrariness

"Thus, the core framework of these policies suffers from the malaise of unreasonableness and arbitrariness. It reeks of colourable exercise of power whereby the policymakers are bestowing valuable resources to their peers and ilk, triggering a cycle of illegal distribution of State resources. The State holds all its resources in trust for its citizens, to be utilised in larger public and social interest. The State, including the three organs – Legislature, Executive and the Judiciary, are de facto trustees and agents/repositories which function and govern for the benefit of the citizens who are the beneficiaries"

Policy perpetuates inequality

"We are of the opinion that Judges of the Supreme Court and the High Court, MPs, MLAs, officers of the AIS, journalists etc. cannot be treated as a separate category for allotment of land at a discounted basic value in preference to others. The object of the policy perpetuates inequality. The policy differentiates and bestows largesse to an advantaged section/group by resorting to discrimination and denial. It bars the more deserving, as well as those similarly situated, from access to the land at the same price. It promotes social-economic exclusion, to favour a small and privileged section/group. The policy does not meet the equality and fairness standards prescribed by the Constitution."

State cannot  use discretion to benefit a few elites

"Of course, the State has the discretion and duty under the Constitution, to distribute its resources to marginalised sections of society, or other imminent and deserving personalities, to the extent necessary to discharge their public functions. Personalities who contribute to the nation's progress through excellence in sports or other public activities may also be compensated through reasonable and non-arbitrary distribution of State largesse. We would also like to clarify that a policy or law allotting land to public servants may be justifiable provided such allotment is within the confines of Article 14. Unless the classification satisfies the twin prong test and the substantive equality benchmark, the mandate of Article 14 is not met. The State cannot exercise discretion to benefit a select few elites disproportionately, especially ones who are already enjoying pre-existing benefits and advantages."

Some judges withdrew their appeals filed in the Supreme Court.

While cancelling the allotments, the Court passed an order of restitution and directed that the Cooperative Societies and their members, as the case may be, will be entitled to a refund of the entire amount deposited by them, including the stamp duty and the registration fee paid by them, along with the interest which may be quantified by the State of Telangana. The rate of interest will not exceed the Reserve Bank of India's rate of interest applicable from time to time, as may be deemed fit by the State of Telangana.

The lease deeds executed by the State of Telangana in favour of the societies/members will be treated as cancelled. Similarly, development charges/expenses paid by the Cooperative Societies/members, as reflected in the books of accounts of the Cooperative Societies /members, duly certified by the income-tax returns, will be refunded to them along with interest at the rates specified.

It will be open to the State of Telangana to deal with the land in the manner it deems fit and proper and as per law, keeping in mind the observations and findings recorded in this judgment.

Case : State of Andhra Pradesh v. Dr Rao VBJ Chelikani

Citation : 2024 LiveLaw (SC) 918

Click here to read the judgment