The Supreme Court has declared that state property rights must be transferred through fair and transparent processes, ensuring the state secures the best possible price.
“State rights as the lessor should only be sold via public auction or another transparent method that allows competitive offers. Selling at a nominal price to a lessee is neither fair nor transparent, violating Article 14 of the Indian Constitution,” stated the bench comprising Justice Abhay S Oka and Justice Augustine George Masih.
This case involved the conversion of leasehold land to freehold, favoring the lessee in an auction where the lessee’s bid wasn’t the highest. The appellant had the highest bid, yet it was rejected by the state.
Referencing Akhil Bhartiya Upbhokta Congress v. State of Madhya Pradesh and Others, the court held that any state action not based on a sound, transparent policy is deemed arbitrary. The court emphasized that land allotments by the state must not be treated as private ventures, as this invites favoritism, violating the equality clause of Article 14.
Given that the appellant’s initial bid was accepted then rejected, the court found the process lacked fairness and transparency.
Highlighting a past decision, the court noted, “On November 26, 2001, the conversion fee for leasehold to freehold was set at Rs. 67,022.21, less than 10% of the school’s bid from 16 years earlier. This clearly isn’t a fair and transparent process for transferring state ownership rights.”
Acknowledging the passage of over 20 years since the auction, the court deemed it unfair to revert to the bid accepted two decades ago. The High Court’s decision to set aside the conversion order in favor of the lessee was upheld.
