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Rameshwar & Others v. State of Haryana & Others

Civil Appeal · 2018 INSC 227Decided 12 Mar 2018
Civil Appeal No. 8788 of 2015
Justice Adarsh Kumar Goel · Justice Uday Umesh Lalit

Background

In 2004 the Haryana Government notified acquisition of about 912 acres near Gurgaon for an industrial township. While the acquisition was pending, private builders began buying the same land directly from farmers at low prices, exploiting the farmers' fear of losing land to acquisition at even lower compensation. Shortly before the final award was to be announced, the State abruptly dropped the acquisition, and the builders then obtained licences to develop the very same land for private housing projects. 117 affected landholders filed a writ petition alleging the entire acquisition-and-withdrawal sequence was a deliberate fraud to benefit builders, which the High Court had dismissed.

Decision Breakdown

The Supreme Court found a clear pattern: the acquisition notification was used as a coercive device to frighten landholders into selling cheaply to builders, after which the State conveniently withdrew the acquisition once the builders had secured the land, and then readily granted them development licences. The Court held this amounted to an "unholy nexus" between the government machinery and private builders and that the decisions to drop the acquisition were not a bona fide exercise of power but a fraud on power, designed to enrich builders/middlemen at the landholders' and the public's expense. The Court allowed the appeals, set out detailed restitutionary directions (including recovery of unjust enrichment from middlemen/builders, protection and rehabilitation for landholders and bona fide third-party purchasers, and a CBI investigation into the money trail), while leaving certain subsidiary factual/claim-verification matters to be worked out by the State authorities and the High Court.

Lesson Learnt

A government acquisition process cannot be manipulated as a pressure tactic to push citizens into distress sales and then abandoned once private parties have benefited: courts will treat such an exercise of power as a "fraud on power" and can order restitution even years after the transactions occurred.

Official source (sci.gov.in)View Judgment (PDF)

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