Yamuna Expressway Industrial Development Authority vs. M/s Shakuntla Education and Welfare Society
Background
YEIDA had acquired land in Gautam Budh Nagar and allotted developed plots on 90-year leases to entities (such as the respondent, which built Galgotias University) and individual buyers. After farmers whose land was acquired for neighbouring NOIDA/Greater NOIDA were awarded a 64.7% "no litigation incentive" following litigation, farmers whose land went to YEIDA agitated and stalled development. Following representations even from the allottees themselves, the State Government set up a committee, decided to pay farmers a matching 64.7% additional amount, and directed YEIDA to recover this cost from allottees by demanding additional premium. The allottees, including the respondent society, then challenged this additional demand before the Allahabad High Court, which struck it down; YEIDA appealed to the Supreme Court.
Decision Breakdown
The Supreme Court held that courts must exercise great restraint in second-guessing considered government economic/policy decisions unless they are shown to be arbitrary, mala fide, irrational, or unconstitutional, relying on a long line of precedent on judicial deference to policy. It found the State's decision to recover the additional farmer compensation from allottees was taken after wide deliberation with all stakeholders (farmers, allottees, YEIDA), was guided by reason, and served the larger public interest by enabling the stalled development to proceed, benefiting the allottees too. The Court also noted that the allottees themselves had earlier sought the State's intervention to resolve the farmers' agitation, and could not now "approbate and reprobate" by resisting the resulting policy; it noted over 98% of individual plot owners had in fact accepted the additional premium demand. The High Court's judgment quashing the demand was set aside, and the appeals were allowed.
Lesson Learnt
Courts will not strike down a government policy decision merely because it burdens private parties financially, so long as it was made after genuine deliberation, is not arbitrary or mala fide, and serves a larger public interest, especially where the affected parties had themselves sought the government's intervention that led to the policy.