Karnataka High Court quashes land allotment to trust headed by BJP MP's wife, imposes ₹1 lakh costs on Housing Board

The Karnataka High Court recently quashed the allotment of a plot of land to a trust, represented by its President Ms. Gayathri, who is the wife of Member of Parliament (MP) and Bharatiya Janata Party (BJP) member, Umesh G Jadhav [Adinarayanashetty vs Principal Secretary]..A Division Bench of then Acting Chief Justice Satish Chandra Sharma and Justice Sachin Shankar Magadum said that there was favoritism in the allotment of land to Murthy Charitable Trust (Trust) and the prescribed procedure was not followed. "However, in the present case favoritism has been done by respondent No.2 (Karnataka Housing Board) to respondent No.3 (Trust) without following the prescribed procedure. Therefore, the initial allotment as well as the sale deed dated July 28, 2020 deserves to be set aside," the Court ordered..The Court emphasised that State instrumentality is bound to follow a transparent procedure while leasing or disposing of public property. "Fairness, in the action of the State or local bodies or instrumentalities of the State while leasing out / disposing any public property is a sine qua non. The State and the instrumentality of the State are required to follow a transparent procedure. The statutory provisions as contained under the Act and the Regulations are required to be followed," the order said. .The verdict was passed on a public interest litigation petition filed by one Adinarayanashetty challenging the allotment deed to Murthy Charitable Trust.It was pointed out that a civic amenity was allotted by the Karnataka Housing Board (KHB) to the Trust on August 23, 2004 with specific conditions. .As per the conditions, the allottee was required to construct a building suitable for education and public service within a period of two years. Another condition was that KHB shall be entitled to cancel the allotment without issuing any notice after the expiry of five years. .However, no construction was carried out as mandated but KHB proceeded to execute an absolute sale deed in favour of the Trust for a sum of ₹3.87 crores even though the value of the land was more ₹10 crores, the petitioners argued. The Court was also informed that an additional amount of ₹18 crores was received by KHB for additional area allotted to the Trust. The procedure adopted was also was not as per the law, it was added. .Countering the maintainability of the plea, KHB argued that the petitioner cannot seek cancellation of a registered document in exercise of writ jurisdiction under Article 226 of the Constitution of India and the petitioner has to take shelter of the provisions of the Specific Relief Act..The Court, after noting the contentions of parties, opined that due process was not followed in the present case. "The most shocking aspect of the case is that an instrumentality of the State i.e KHB has allotted the site in question without following the allotment regulations. There is a detailed procedure provided under the KHB Regulations for allotment of sites and the procedure has not been followed at all especially when the site was reserved as a Civic Amenity Site," the Bench said. .After going through the contentions of the Karnataka Housing Board Act, 1962, the Court said the law makes it clear that a site can be sold or allotted only through a transparent process. "The aforesaid statutory provisions of law makes it very clear that a site can be allotted / can be sold only through a transparent process that too after wide publicity through tender notice / auction notice. In the present case, the conditions of the sale deed dated 23.08.2004 were not complied with. The KHB took no steps in the matter for cancellation of the sale deed," the Court observed. .After relying on various Supreme Court decisions, the Court noted that it is well settled proposition of law that State largesse should not be marred by any arbitrariness. .With these observations, the Court set aside the allotment deed and further imposed ₹1 lakh as costs on the KHB, which has to be paid to the Karnataka Advocate Clerks Association within a month. This apart, the Court ordered the Principal Secretary, Urban Development Department to conduct a fact finding enquiry in the matter, for fixing responsibility of such illegal allotment, upon the officers who have allotted the site in question without following the prescribed procedure. .If the officers are found to be guilty, the State should take appropriate action after holding departmental enquiry against such officers and should also recover the costs imposed on the KHB from them. The inquiry has to be conducted within six months. .[Read Order]