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In a landmark ruling, the Supreme Court of India has declared that the transfer of state land must be conducted through a fair and transparent process to ensure the state receives the best possible price. The decision in the case of City Montessori School vs. State of U.P. & Ors. emphasizes that the rights of the state in property transactions cannot be exercised arbitrarily or discriminatorily.
The case involved the conversion of leasehold land to freehold status in favor of a lessee who did not submit the highest bid in an auction. The highest bid was submitted by the appellant, City Montessori School, but their offer was rejected by the State, which instead favored the lessee’s bid. The Court observed that any allocation or grant of land by the State, if treated as a private venture, is likely to be deemed arbitrary and discriminatory.
The Court declared that any largesse or land allotment made by the State or its agencies/instrumentalities under the guise of a private enterprise could be viewed as arbitrary, discriminatory, and an act of nepotism or favoritism that violates the spirit of the equality clause found in Article 14 of the Constitution.
The ruling underscores the constitutional mandate that state assets must be managed in a way that upholds fairness and transparency. By rejecting the highest bid and converting leasehold land to freehold without a competitive process, the State’s actions were found to be in violation of the principles of equality and fairness.
This judgment is poised to impact how state-owned property is handled across India, reinforcing the need for accountability and openness in the disposal of public assets, and ensuring that all transactions adhere to constitutional principles of equality and transparency.