JUDGMENT 1. - Greed, whether in an individual, or in a Corporation, or even in a State, is a cardinal sin. Allured by the elusive El Dorado, like the conquistadors, at times, the State can plunder the Constitutional treasure trove of rights and duties. When the State behaves like a drunken elephant in a lotus pond, the task of reining in the mammoth falls on the Judiciary. For, State excess invite judicial intervention. The present case is a paradigm example of the State acting as a modern day King Midas. 2. The bone of contention between the petitioner, on the one hand, and the State and the Urban Improvement Trust, Kota (the UIT, for short), on the other hand, is a piece of land which initially belonged to the Instrumentation Ltd. (IL for short), a Central Government undertaking. In order to fully comprehend the dispute in the present case, it is imperative to first understand the history of the land. 3. In order to encourage industrialization in Rajasthan, the Central Government decided to establish the IL in Kota. For this purpose, on 16-4-1970, the Revenue department of the Government of Rajasthan allotted about 400 acres of land to the IL in Kota. However, despite the best of efforts, after three decades, the IL became a sick industry. The task of reviving the sick industry fell on the State Government and on others. Therefore, a decision was taken that out of the 400 acres of land allotted to the IL, about 90 acres of land would be surrendered to the State Government. The said land would be referred to as the surplus land. 4. In order to dispose of the surplus land, vide order dated 3-6-1999, the State Government constituted a Committee headed by the Collector, Kota. The said Committee consisted of the following persons namely, the Collector, Kota as the Chairperson, the General Manager of the Instrumentation Ltd., the Chief Accounts Officer of the Industry Department, and the Senior Regional Manager of Rajasthan State Industrial Development & Investment Corporation (RIICO, for short). According to the order dated 3-6-1999, the Committee was to dispose of the surplus land in accordance with the local laws or byelaws. However, for the purpose of the present case it is essential to notice that the said Committee was an independent entity which had nothing to do whatsoever with the UIT, Kota. 5. According to the order dated 3-6-1999, the Committee was to dispose of the surplus land in accordance with the local laws or byelaws. However, for the purpose of the present case it is essential to notice that the said Committee was an independent entity which had nothing to do whatsoever with the UIT, Kota. 5. Further, vide letter dated 1-4-2000, the Deputy Secretary, Industries informed the Collector, Kota that the Government has decided to dispose of the surplus land through RIICO. RIICO was to act as an agency of the State Government and was to dispose of the land in accordance with the RIICO Disposal of Land Rules, 1979. Moreover, the surplus land was to be disposed of through pubic auction under the supervision of the Committee constituted for the purpose under the chairmanship of the Collector, Kota. Further, RIICO was required to deposit the proceeds from the sale of the surplus land with the State Government. The State Government would then transfer the amount to the Instrumentation Ltd. as interest free loan."" 6. However, subsequently, vide letter dated 14-8-2000 the Deputy Secretary informed the Collector that vide order dated 3-6-1999, a Committee was constituted for disposing of the surplus land of IL. In pursuance of the letter dated 1-4-2000, the Government has granted approval for substituting the UIT, Kota in place of RIICO for the purpose of conversion and sale of the surplus land. The surplus land was being placed at the disposal of the UIT, but the sale was to be under the supervision of the Committee. Moreover, the other conditions contained in the letter dated 1-4-2000 would continue. Thus, the UIT would act only as an agent of the Government while converting and selling the surplus land."" 7. These facts make the following conclusions obvious: firstly, the surplus land did not vest in the UIT. It merely holds the land as an agent of the Government. Secondly, the UIT is to sell of the land under the supervision of the Committee, and not on its own. Thirdly, although the Collector is the Ex-officio Chairman of the UIT, but the Committee is independent of the UIT. Merely because the Committee and the UIT are headed by the Collector, it would not fuse the two separate entities into one entity namely, the UIT. Thirdly, although the Collector is the Ex-officio Chairman of the UIT, but the Committee is independent of the UIT. Merely because the Committee and the UIT are headed by the Collector, it would not fuse the two separate entities into one entity namely, the UIT. This distinction is not only real, but is also essential to keep in mind while dealing with the issues in controversy. 8. On 12-10-2000, out of 90 acres of land, the IL finally surrendered only 80 acres, 1 Bigha, and 5 Biswa of land to the State. On 21-3-2001, the land was declared as Siwai Chak (Government land). Vide order dated 29-3-2001, the Collector demarcated and specified the land. He further set the land apart under Section 92 of the Rajasthan Land Revenue Act, 1956 (the Revenue Act, for short). He further placed the land at the disposal of the UIT under Section 102-A of the Revenue Act, but with certain condition: the UIT would dispose of the land in terms of the letter dated 14-8-2000. According to Section 102-A of the Land Revenue Act, the UIT was to hold the land for and on behalf of the State Government and subject to such conditions and restrictions as the State Government may lay down and in such manner as it may prescribe. Thus, obviously, the land did not vest in the UIT; the UIT was holding the land only as an agent of the Government; the UIT was bound by the conditions and restriction prescribed by the Government. Lastly, the disposal of the land was to be under the supervision of the Committee. Thus, the UIT could not deal with the land independently of the Government or of the Committee. 9. In order to encourage foreign investment in Rajasthan, in 2003, the then Chief Minister of Rajasthan participated in the Rajasthan Association of North America (RANA) Convention held at New York City. Dr. Mukesh Chatter, a member of the Governing Body of RANA, along with his other brother, Dr. Peeyush Chatter showed interest in establishing a state of the art Hospital and a Biotech Research Centre in Kota. It was proposed that initially, in Phase-I, a hospital of 120 beds would be constructed. Subsequently, in Phase-II, another 120 beds would be added. In Phase-II, the project also envisaged the establishment of Center for Biotech Research and Studies. Peeyush Chatter showed interest in establishing a state of the art Hospital and a Biotech Research Centre in Kota. It was proposed that initially, in Phase-I, a hospital of 120 beds would be constructed. Subsequently, in Phase-II, another 120 beds would be added. In Phase-II, the project also envisaged the establishment of Center for Biotech Research and Studies. Since Rajasthan lacks biotechnology institutes, it was felt that the founding of a Biotech institute would fill the prevailing vacuum. The Hospital would be a super-specialty one. It would provide services of visiting doctors from around the world. Lastly, it was proposed that the institute would not only have modern incinerators in order to eliminate environment pollution, but would also have a green belt and landscaping in order to ensure a healthy environment. The institute would be established by the petitioner company, which is a private company incorporated under the Companies Act, 1956. The petitioner had also assured that it would get enough investment from abroad for establishing the Hospital and the Biotech Research Centre in Kota. 10. Since the Government was convinced about the project, vide order dated 30-9-03, the Government gave permission for allotment of 7946 sq. meters of land @ Rs. 2750/- per sq. meter by the UIT to the petitioner. The said allotment was to be made subject to four conditions imposed by the Government namely, i) the construction of the main building should commence within one year of the allotment, ii) the 240 bed hospital and Biotech Research Centre should be completed within five years from the date of allotment, iii) in case the construction work of the main building were not started within one year of allotment, the allotment of land would stand cancelled automatically without any compensation and the Government would take over the possession of the building constructed and over the allotted land, iv) in case the allottee wants an extension of time, he will have to satisfy the Department of Industries. In case the period is extended for a period of one year, 25 % price shall be paid. 11. In pursuance of the letter dated 30-9-03, on 1-10-03, the UIT issued an allotment letter in favor of the petitioner. According to the allotment letter, 7949 sq. mts of land was to be allotted out of the land which belonged to the IL and which fell under the Rajiv Gandhi Nagar Yojana. 11. In pursuance of the letter dated 30-9-03, on 1-10-03, the UIT issued an allotment letter in favor of the petitioner. According to the allotment letter, 7949 sq. mts of land was to be allotted out of the land which belonged to the IL and which fell under the Rajiv Gandhi Nagar Yojana. The said allotment was made under the Rajasthan Improvement Trust (Disposal of Urban Land) Rules, 1974 (the Rules of 1974, for short). However, while making the said allotment, the UIT imposed sixteen other conditions. The petitioner was aggrieved by some of the conditions. Therefore, the petitioner immediately brought the objectionable conditions to the notice of the UIT. The UIT agreed to delete some of the conditions. 12. But the petitioner continued to be aggrieved by few of the remaining conditions. Vide letter dated 18-10-03, the petitioner pointed out to the Collector about the unreasonableness of some of the remaining conditions. The petitioner specifically pleaded that the condition prohibiting the transfer of the land and building, for 99 years without the permission of the UIT is highly arbitrary. However, this letter did not elicit any response from the UIT. Hence, began the petitioners marathon run from the pillar to post in the corridors of the bureaucracy. 13. On 8-12-03, the petitioner wrote to the Manager, Bureau of Investment Promotion (BIP, for short), as at the relevant time, BIP was acting as a single window clearance point for large investments being made in the State; hence, the letter to the Manager. On 30-12- 03, the petitioner wrote to the Commissioner, BIP, again pointing out the unreasonableness of the conditions imposed by the UIT. Since no response was forthcoming, the petitioner sent another letter on 8-1- 04 to the Commissioner, BIP. Again another letter was sent to the Commissioner, BIP on 28-2-04. However, all these letters fell on deaf ears. Ironically, the Government, which had invited businessmen and entrepreneurs, like the petitioner, to invest their capital and to es"tablish their projects in Rajasthan, turned a blind eye to their plight. 14. While ignoring the petitioners plea, vide letter dated 1-4-2004, the Secretary UIT wrote to the Deputy Secretary, Urban Improvement Department, about the fact that the petitioner had failed to pay the total price of the land within the stipulated period. He therefore, requested that the process for cancellation of the allotment be started. 14. While ignoring the petitioners plea, vide letter dated 1-4-2004, the Secretary UIT wrote to the Deputy Secretary, Urban Improvement Department, about the fact that the petitioner had failed to pay the total price of the land within the stipulated period. He therefore, requested that the process for cancellation of the allotment be started. A copy of this letter was endorsed to the petitioner. Immediately, the petitioner wrote to the Commissioner, BIP on 8-5- 04, requesting him to intervene in the matter. However, even this letter failed to solicit any reaction from the BIP. Since the petitioner could not convince the BIP to intervene, vide its letter dated 16-12-2004, the petitioner also sought personal hearing from the Principal Secretary, Industries. On 1-1-05, the petitioner also wrote to the Secretary, Urban Development & Housing Department ('the UDH', for short), requesting that he should issue the necessary directions to the UIT. Since no response was forthcoming, vide letter dated 27-1- 05, the petitioner canvassed its difficulties before the Minister for UDH. Vide letter dated 8-3-05, the petitioner informed the Additional Chief Secretary that it is willing to deposit the entire price of the land. While fulfilling its promise, on 11-3-05, the petitioner did deposit Rs. 2, 64, 99, 994/- with the UIT. However, vide letter dated 22-3-05, the UIT not only returned the said amount to the petitioner, but also informed the petitioner that the allotment stands cancelled. Vide letter dated 28-3-05, the petitioner sought a personal hearing from the then Chief Minister. Simultaneously, the petitioner sought an appointment with the Minister for Urban Development and Local Self Government. Vide letter dated 2-5-05, the petitioner was informed that the Minister would meet the officers of the petitioner company on 17-5-05 in order to discuss their difficulties. But before the meeting could take place, on 12-5-05, the Cabinet decided to cancel the allotment of land. Vide letter dated 23-7-05, the UIT communicated the Cabinet decision to the petitioner. Hence, this petition before this court. 15. Mr. S. N. Kumawat, the learned Additional Advocate General, and Mr. Alok Sharma, the learned counsel for the UIT, have raised the same set of preliminary objections: firstly, the writ petition is not maintainable as neither the fundamental rights, nor the civil rights of the petitioner have been violated. Secondly, the petitioner is cleverly trying to get the conditions of the contract modified through this court. Alok Sharma, the learned counsel for the UIT, have raised the same set of preliminary objections: firstly, the writ petition is not maintainable as neither the fundamental rights, nor the civil rights of the petitioner have been violated. Secondly, the petitioner is cleverly trying to get the conditions of the contract modified through this court. The petitioner would like this court to modify the lock-in period and to reduce the price of the land. Such a subterfuge should not be entertained as the petitioner is trying to abuse the process of the court. 16. On the other hand, Mr. Paras Kuhad, the learned counsel for the petitioner, has contended that the counsel for the respondents have misunderstood the entire thrust of the petition. The petitioner is not aggrieved by the price of the land. It is willing to pay the price of the land. It had already done so; it is willing to pay even now. The petitioner is, in fact, challenging the arbitrary action of the UIT and of the State. According to the petitioner, the UIT does not have the power to impose conditions while allotting the land. The imposition of the conditions by the UIT is, thus, an arbitrary, unreasonable and unjust act. Thus, the petitioner is questioning the imposition of the conditions by the UIT. Secondly, the conditions are per se unfair and unjust. The condition with regard to perpetual ban on transfer of the property is illegal as it interferes with the petitioners right as the owner of the property. The conditions with regard to automatic cancellation of the allotment both in case of non-payment of monies within the stipulated period, and for non-construction of the buildings within the stipulated period are unwarranted under the Rules of 1974. Thirdly, both the UIT and the State have cancelled the allotment without giving the petitioner an opportunity of hearing. Ironically, the concerned Minister had fixed a date for hearing the petitioner, yet even before the said date, the Cabinet decided to cancel the allotment. Such an action is clearly in violation of the principles of natural justice. Fourthly, once the State Government itself had invited investment into the state, it was legally bound to facilitate the investment of the capital in the state. Such an action is clearly in violation of the principles of natural justice. Fourthly, once the State Government itself had invited investment into the state, it was legally bound to facilitate the investment of the capital in the state. After all, due to the promises made by the Government at the RANA Convention in New York, the petitioner had changed its legal position; it had motivated investors in the United States of America to invest their money in the project, it had tried to convince the authorities in Rajasthan to implement the project in Kota. Thus, the petitioner had invested its capital, its energy, its goodwill. The petitioner had a legitimate expectation that the promise made by the Government would be honored. Yet, the State has left the petitioner high and dry. Fifthly, any action of the State which is arbitrary, unfair and unjust is ipso facto in violation of Article 14 of the Constitution of India. Lastly, it is the duty of the State to protect and to promote the fundamental rights of the people. The people have the fundamental right to engage in business under Article 19 of the Constitution of India. Therefore, the State should endeavor to promote the business of the people rather than trying to create hindrance in it. In the present case, the State has created more obstacles than facilities for the petitioner. Hence, both the civil rights and the fundamental rights of the people have been violated by the UIT and the State. Thus, the writ petition is, indeed, maintainable. 17. Heard the learned counsel for the parties on the preliminary objections. 18. The Social Contract theorist like Locke, Hobbes and Rousseau tell us that Man entered into a social contract for the creation of a political State in order to protect and promote his interests and rights. Thus, it is We the people who created the Constitution of India. The Preamble of the Constitution contains our dreams and aspirations. Justice, both social and economic, is one of our great expectations. It is the duty of the State to ensure and implement social and economic justice to the people. Article 19 also guarantee the fundamental right to carry out any business. Economic justice imposes a constitutional duty upon the State to create favorable conditions for business. Justice, both social and economic, is one of our great expectations. It is the duty of the State to ensure and implement social and economic justice to the people. Article 19 also guarantee the fundamental right to carry out any business. Economic justice imposes a constitutional duty upon the State to create favorable conditions for business. Thus, it is the sacred duty of the State to facilitate, to encourage economic activities, rather than to create impediments, for the smooth functioning of the business world. Moreover, under the Directive Principles, the raising of living standards of the people, the providing of a better health care system to the people is one of the goals of State policy. Hence, the State is constitutionally bound to create more hospitals, more health care units. Even while deciding individual cases, like the petitioners, the State cannot be oblivious of its constitutional obligations towards the people."" 19. The State is the custodian of the people; it is patriarch of the people; it is the Karta of the people; it is the trustee of the people. It holds the national assets as a trustee. Thus, it is under a legal obligation to dispose of the land to the best interest of the people. While dispensing State largesse, it is legally bound to keep in mind the interest of the people. State largesse should be so distributed as to achieve the goals laid down in the Preamble of the Constitution. Moreover, as a trustee of the people, the State is constitutionally bound to act in a fair, just and reasonable manner. Any action of the State which is arbitrary, unfair or unjust is ipso facto an anathema to the concept of equality enshrined in Article 14 of the Constitution of India. 20. In Ramana Dayaram Shettty v. International Airport Authority of India & Ors [ (1979) 3 SCC 489 ] , the Honble Supreme Court had observed as under: Today the Government in a welfare State is the regulator and dispenser of special services and provider of a large number of benefits, including jobs, contracts, licences, quotas, mineral rights, etc. The Government pours forth wealth, money, benefits, services, contracts, quotas and licences. The valuables dispensed by Government take many forms, but they all share one characteristic. They are steadily taking the place of traditional forms of wealth. The Government pours forth wealth, money, benefits, services, contracts, quotas and licences. The valuables dispensed by Government take many forms, but they all share one characteristic. They are steadily taking the place of traditional forms of wealth. These valuables which derive from relationships to Government are of many kinds. They comprise social security benefits, cash grants, for political sufferers and the whole scheme of State and local welfare. Licences are required before one can engage in many kinds of businesses or work.There is growth in the Government largesse and more and more of our wealth consists of these new forms. Some of these forms of wealth may be in the nature of legal rights but the large majority of them are in the nature of privileges. The Apex Court further observed: The law has not been slow to recognise the importance of this new kind of wealth and the need to protect individual interest in it and with that end in view, it has developed new forms of protection. Some interests in Government largesse, formerly regarded as privileges, have been recognised as rights while others have been given legal protection not only by forging procedural safeguards but also by confining/structuring and checking Government discretion in the matter of grant of such largesse. The discretion of the Government has been held to be not unlimited in that the Government cannot give or withhold largesse in its arbitrary discretion or at its sweet will. It is insisted, that Government action be based on standards that are not arbitrary or unauthorized. The Government is still the Government when it acts in the matter of granting largesse and it cannot act arbitrary. It is insisted, that Government action be based on standards that are not arbitrary or unauthorized. The Government is still the Government when it acts in the matter of granting largesse and it cannot act arbitrary. It does not stand in the same position as a private individual."" The Honble Supreme Court further held as under: It must, therefore, be taken to be the law that where the Government is dealing with the public, whether by way of giving jobs or entering into contracts or issuing quotas or licences or granting other forms of largesse, the Government cannot act arbitrarily at its sweet will and, like a private individual deal with any person it pleases, but its action must be in conformity with standard or norms which is not arbitrary, irrational or irrelevant, and if the Government departs from such standard or norm in any particular case, or cases, the action of the Government would be liable to be struck down, unless it can be shown by the Government that the departure was not arbitrary, but was based on some valid principle which in itself was not irrational, unreasonable or discriminatory. 21. The actions of the Executive and of the Legislature are subject to judicial review. The power of judicial review is a basic structure of the Constitution of India. Under Article 226 of the Constitution, the High Court have been bestowed with the role of protector of the rights of the people. In turn, the people have a right to challenge the action of the Executive, and the laws enacted by the legislature before this court. Where the action is in violation of the civil or fundamental rights of the people, this court is constitutionally bound to rush to the rescue of the people. 22. In Kumari Shrilekha Vidyarthi & Ors v. State of U.P. & Ors [ (1991) 1 SCC 212 ] dealing with judicial review of States contractual obligation, the Honble Supreme Court observed as under: The requirement of Articles 14 should extend even in the sphere of contractual matters for regulating the conduct of the Sate activity. 22. In Kumari Shrilekha Vidyarthi & Ors v. State of U.P. & Ors [ (1991) 1 SCC 212 ] dealing with judicial review of States contractual obligation, the Honble Supreme Court observed as under: The requirement of Articles 14 should extend even in the sphere of contractual matters for regulating the conduct of the Sate activity. Applicability of Article 14 to all executive actions of the State being settled and for the same reason its applicability at the threshold to the making of a contract in exercise of the executive power being beyond dispute, the State cannot thereafter cast off its personality and exercise unbridled power unfettered by the requirements of Article 14 in the sphere of contractual matters and claim to be governed therein only by private law principles applicable to private individuals whose rights flow only from the terms of the contract without anything more. The personality of the State, requiring regulation of its conduct in all spheres by requirements of Article 14, does not undergo such a radical change after the making of a contract merely because some contractual rights accrue to the other party in addition. It is not as if the requirements of Article 14 and contractual obligations are alien concepts, which cannot co-exist. The Constitution does not envisage or permit unfairness or unreasonableness in State actions in any sphere of its activity contrary to the professed ideals in the Preamble. Therefore, total exclusion of Article 14non-arbitrariness which is basic to rule of lawfrom State actions in contractual field is not justified. This is more so when the modern trend is also to examine the unreasonableness of a term in such contracts where the bargaining power is unequal so that these are not negotiated contracts by standard form contracts between unequals. The Apex Court further held as under: Unlike the private parties the State while exercising its powers and discharging its functions, acts indubitably, as is expected of it, for public good and in public interest. The impact of every State action is also on public interest. It is really the nature of its personality as State which is significant and must characterise all its actions, in whatever field, and not the nature of function, contractual or otherwise, which is decisive of the nature of scrutiny permitted for examining the validity of its act. The impact of every State action is also on public interest. It is really the nature of its personality as State which is significant and must characterise all its actions, in whatever field, and not the nature of function, contractual or otherwise, which is decisive of the nature of scrutiny permitted for examining the validity of its act. The requirement of Article 14 being the duty to act fairly, justly and reasonably, there is nothing which militates against the concept of requiring the Sate always to act, even in contractual matters. This factor alone is sufficient to import at least the minimal requirements of public law obligations and impress with this character the contracts made by the sate or its instrumentality. It is different matter that the scope of judicial review in respect of disputes falling within the domain of contractual obligations may be more limited and in doubtful cases the parties may be relegated to adjudication of their rights by resort to remedies provided for adjudication of purely contractual disputes. However, to the extent, challenge is made on the ground of violation of Article 14 by alleging that the impugned act is arbitrary, unfair or unreasonable, the fact that the dispute also falls within the domain of contractual obligations would not relieve the Sate of its obligation to comply with the basic requirements of Article 14. To this extent, the obligation is of a public character invariably in every case irrespective of there being any other right or obligation in addition thereto. An additional contractual obligation cannot divest the claimant of the guarantee under Article 14 of non-arbitrariness at the hands of the Sate in any of its actions.Lastly, the Honble Supreme Court proclaimed as under: Every holder of a public office is a trustee whose highest duty is to the people of the country and, therefore, every act of the holder of a public office, irrespective of the label classifying that act, is in discharge of public duty meant ultimately for public good. With the diversification of State activity in Welfare State requiring the State to discharge its wide ranging functions even through its several instrumentalities, which requires entering into contracts also, it would be unreal and not pragmatic, apart from being unjustified to exclude contractual matters from the sphere of State actions required to be non-arbitrary and justified on the touchstone of Article. 14. 14. Emphasis now is on review ability of every State action because it stems not from the nature of function, but from the public nature of the body exercising that function and all powers possessed by a public authority, howsoever conferred, are possessed solely in order that it may use them for the public good. The only exception limiting the same is to be found in specific cases where such exclusion may be desirable for strong reasons of public policy. This, however, does not justify exclusion of reviewability in the contractual field involving the State since it is no longer a mere private activity to be excluded from public view or scrutiny. 23. In Sterling Computers Ltd. v. M/s M & N Publications Limited & Ors [ (1993) 1 SCC 445 ] , while dealing with the power of judicial review, the Honble Supreme Court proclaimed as under: By way of judicial review the Court is not expected to act as a court of appeal while examining an administrative decision and to record a finding whether such decision could have been taken otherwise in the facts and circumstances of the case. While exercising the power of judicial review, in respect of contracts entered into on behalf of the State, the Court is concerned primarily as to whether there has been any infirmity in the decision making process. By way of judicial review the court cannot examine the details of the terms of the contract which have been entered into by the public bodies or the State. Courts have inherent limitations on the scope of any such enquiry. If the contract has been entered into without ignoring the procedure which can be said to be basic in nature and after an objective consideration of different options available taking into account the interest of the State and the public, then Court cannot act as an appellate authority by substituting its opinion in respect of selection made for entering into such contract. But at the same time the courts can certainly examine whether decision-making process was reasonable, rational, not arbitrary and violative of Article 14. But at the same time the courts can certainly examine whether decision-making process was reasonable, rational, not arbitrary and violative of Article 14. Once the procedure adopted by an authority for purpose of entering into a contract is held to be against the mandate of Article 14, the courts cannot ignore such action saying that the authorities concerned must have some latitude or liberty in contractual matters and any interference by court amounts to encroachment on the exclusive right of the executive to take such decision. 24. In ABL International Ltd. & Anr. v. Export Credit Guarantee Corporation of India & Ors [ (2004) 3 SCC 553 ] , the Honble Supreme Court held that On a given set of facts if the State acts in an arbitrary manner even in a matter of contract, an aggrieved party can approach the court by way of writ under Article 226 of the Constitution and the court depending on facts of the said case is empowered to grant the relief."" 25. In the present case, it is a misnomer that the petitioner is trying to get the conditions of a contract amended through the judicial process. In fact, the petitioner is challenging the power of the UIT to impose the conditions; it is also questioning the validity of the conditions so imposed. Thus, it is not raising questions of private law, but arguing questions of public law. It is also pleading the violation of Articles 14 and 19 of the Constitution of India while exposing the arbitrary action of the State. Since the action of the State is under scrutiny, since constitutional issues are involved, as expounded in the above noted cases, the petition is certainly maintainable. Thus, the preliminary objections raised by the State and by the UIT are unacceptable. 26. Mr. Paras Kuhad has raised a cornucopia of contentions before this court: firstly, vide order dated 3-6-1999, the Government had constituted a Committee for sale of the surplus land. Although the Committee was chaired by the Collector, Kota, although the Collector is the Ex-officio Chairman of the UIT, Kota, but merely because the Collector is part of both the entities, the two entitiesthe Committee and the UIT--cannot be treated as a single entity. The two bodies are separate and independent of each other. Moreover, according to the letter dated 1-4-2000, the surplus land was placed at the disposal of RIICO. The two bodies are separate and independent of each other. Moreover, according to the letter dated 1-4-2000, the surplus land was placed at the disposal of RIICO. RIICO was to dispose of the said land as an agent of the Government. Further, according to the letter dated 14-8-2000, while the surplus land was placed at the disposal of the UIT, the sale of the land was to be carried out under the supervision of the Collectors Committee. Most importantly, even while placing the land at the disposal of the UIT, the other conditions mentioned in the letter dated 1-4-2000 namely, that the UIT would act only as an agent of the Government, that the monies realised through the sale would be deposited with the Government, that the said monies would be granted to the IL as an interest free loan, such conditions would continue to apply to the UIT as well. Thus, clearly, the UIT was acting only as an agent of the Government. It could not act independently of the Government, or act beyond the terms and conditions imposed by the Government. 27. Secondly, according to the order dated 29-3-2001, the Collector had demarcated and specified the surplus land; he had set it apart under Section 92 of the Revenue Act for the purpose of developing the land for abadi (inhabitation). He further allotted the surplus land to the UIT under Section 102-A of the Revenue Act. Most importantly, he clearly directed that the UIT would dispose of the land in terms of the letter dated 14-8-2000. 28. Thirdly, according to Section 102-A of the Revenue Act, the Nazul land or land set apart under Section 92 of the Revenue Act may be placed by the State Government at the disposal of the local authority--in this case the UIT. The local authority holds the land for and on behalf of the State Government. The local authority can use the land for the special purpose for which it has been set apart, to such extent and subject to such conditions and restrictions as the State Government may lay down and in such manner as it may from time to time prescribe. Therefore, when land is set apart under Section 92 of the Revenue Act, when it is placed at the disposal of the UIT, the UIT holds the land for and on behalf of the Government. Therefore, when land is set apart under Section 92 of the Revenue Act, when it is placed at the disposal of the UIT, the UIT holds the land for and on behalf of the Government. Thus, the UIT acts as an agent of the State Government. It does not become the absolute owner of the land. In fact, the land is placed at the disposal of the UIT for a limited purpose, to carry out the special purpose for which the land is set apart. Moreover, the UIT is bound to carry out the work to the extent, and under such conditions and restrictions, and in the manner specified by the State Government. Thus, when a land is placed at the disposal of the UIT under Section 102-A of the Revenue Act, the power and the jurisdiction of the UIT is subject to the supervision and control of the State Government. Hence, the UIT can not act as an independent entity, free from the control of the State Government. It is bound by the conditions and terms imposed by the State Government; it cannot overreach, circumvent or go beyond the conditions and terms prescribed by the State Government. In short, it cannot amend the conditions and terms specified by the State Government. 29. Fourthly, vide order dated 30-9-03 the State Government had allotted 7946 sq. mts. of land to the petitioner. While doing so, it had imposed only four conditions. The UIT could not have added further conditions to these four conditions laid down by the State. 30. Fifthly, both the respondents have taken an ambivalent and self-contradictory position with regard to the specific provision of law under which the UIT had allotted the land to the petitioner. According to the State, the land was allotted either under Rule 15 or Rule 15 B of the Rules of 1974. According to the UIT, although the land was allotted under Rule 15 B of the Rules of 1974, but the allotment could not be made under Rule 15 B of the Rules of 1974. The respondents cannot be permitted to approbate and reprobate simultaneously. Since the respondents have not been able to pinpoint the specific provision under which the allotment was made, they could not impose conditions upon the allotment. For, they must reveal the source of the power for imposing the conditions. 31. According to Mr. The respondents cannot be permitted to approbate and reprobate simultaneously. Since the respondents have not been able to pinpoint the specific provision under which the allotment was made, they could not impose conditions upon the allotment. For, they must reveal the source of the power for imposing the conditions. 31. According to Mr. Kuhad, even accepting for the sake of argument that the allotment was made under Rule 15 B of the Rules of 1974, even then the UIT is not justified in imposing conditions beyond the conditions laid down by the State Government. For, the said Rule begins with the words Notwithstanding anything contained in these Rules. The non-obstante clause, clearly, ousts the jurisdiction of the UIT. Further, the Rule clearly states that the UIT shall allot the land with the prior approval of the State Government and that too on such terms and conditions and at such rates as may be determined by the State Government from time to time. Hence, under Rule 15 B of the Rules of 1974, the UIT is bound by the terms and conditions and the rates specified by the State Government. It cannot impose conditions beyond the terms and conditions laid down by the State Government. 32. Rule 15 B of the Rules of 1974 deals with allotment of land for infrastructure projects. Such infrastructure projects include projects of public utility. The use of the word includes in the Rule 15 B of the Rules of 1974 expands the meaning of the term infrastructure projects. Further, according to circular dated 17-11-01, infrastructural projects include medical and health education institutes. Therefore, Rule 15 B of the Rules of 1974 would include land for establishing Hospital and Bio-tech Research Institute. Hence, notwithstanding the ambiguous stand taken by the State and the UIT, the allotment, at best, could be made under Rule 15 B of the Rules of 1974."" 33. Sixthly, vide letter dated 30-9-2003, the State Government had imposed only four conditions. These conditions were imposed by the State Government under Rule 15 B of the Rules of 1974 when the State Government allotted the land to the petitioner. Thus, the UIT cannot travel beyond these four conditions under the garb of allotting the land to the petitioner under Rule 15 B of the Rules of 1974. These conditions were imposed by the State Government under Rule 15 B of the Rules of 1974 when the State Government allotted the land to the petitioner. Thus, the UIT cannot travel beyond these four conditions under the garb of allotting the land to the petitioner under Rule 15 B of the Rules of 1974. Hence, the conditions imposed by the UIT, in the allotment letter dated 1-10-2003, are without any legal basis; they are, thus, illegal. 34. Seventhly, the conditions imposed by the UIT cannot be imposed under law. The condition forbidding transfer of land in perpetuity is clearly against Section 10 of the Transfer of Property Act. Moreover, the Rules of 1974 do not permit the UIT to impose an absolute ban on the transfer of the land, yet the UIT has imposed such an absolute ban on the petitioner. Moreover, it is a misnomer that under the Rules of 1974 there is automatic cancellation of the allotment in case of non-construction of the buildings within the stipulated period. For, the Rules empower the concerned authority to relax the period within which the construction has to be made. Since the power to relax exists, the concept of automatic cancellation is misplaced. Further, since the power to relax the period does exists, the petitioner should have been given a chance to plead that the power be invoked in its favor. Hence, the conditions imposed by the UIT is ultra-vires its power as prescribed under the Rules of 1974. Hence, the conditions are illegal. 35. Eighthly, the cancellation of the allotment by the respondents is absolutely arbitrary. For, it was the State which invited the investment in Rajasthan. In the RANA convention in New York, it held out that a favorable treatment would be granted to those who would invest in the State. Relying on the assurance given by the Government, the petitioner had changed its legal position. It had motivated others to invest their money in their project of Hospital and Biotech Research Center. It had staked out its goodwill while negotiating with the Government. It has invested energy and money in trying to plead with the Government for redressal of its difficulties. It had repeatedly pointed out to the Government about the unreasonableness and illegality of the conditions imposed by the UIT. It had submitted representations which went unheeded. 36. It had staked out its goodwill while negotiating with the Government. It has invested energy and money in trying to plead with the Government for redressal of its difficulties. It had repeatedly pointed out to the Government about the unreasonableness and illegality of the conditions imposed by the UIT. It had submitted representations which went unheeded. 36. The petitioners, like others, have legitimate expectations that the Government would be fair in its dealings; it does have the legitimate expectation that the Government would listen to its pleas with regard to the imposition of unreasonable and illegal conditions; it does have the legitimate expectation that the State largesse would be distributed in a just, fair and reasonable manner; it does have the legitimate expectation that before an adverse order is passed, an opportunity of hearing would be given; it does have a legitimate expectation that once an appointment is given, an opportunity of hearing has been fixed, then the decision to cancel the allotment would be made only thereafter and not prior to the appointment. But the respondents have violated all these bona fide legitimate expectations. 37. Ninthly, by suddenly shutting the doors on the petitioner, by denying them an opportunity of hearing, the respondents have also violated the principles of natural justice. 38. Tenthly, despite the fact that the UIT was to act merely as an agent of the Government, in spite of the fact that the land was allotted by the State, even prior to the decision taken by the Cabinet, the UIT cancelled the allotment vide order dated 22-3-05. Thus, the UIT has clearly overreached the powers of the Government. It has exercised a power, which was clearly not vested in it. 39. Eleventh, the reason given for cancellation is absurd. According to the respondents the allotment stood automatically cancelled as the petitioner had failed to pay the price of the land within the stipulated period. A bare perusal of Condition No. 11 of the letter of allotment dated 1-10-03 clearly reveals that non-payment of consideration within the stipulated period does not lead to automatic cancellation of allotment. For, the condition permits the UIT to extend the period for payment of the cost of land. Moreover, the respondents have ignored the fact that but for the illegality and unreasonableness of the conditions imposed upon the petitioner, the petitioner was always willing to pay the consideration. For, the condition permits the UIT to extend the period for payment of the cost of land. Moreover, the respondents have ignored the fact that but for the illegality and unreasonableness of the conditions imposed upon the petitioner, the petitioner was always willing to pay the consideration. In fact, the petitioner did deposit the entire amount along with the interest. However, without assigning any cogent reason, the said amount was returned to the petitioner. Furthermore, in the information given by the UIT to the Cabinet, the UIT did not mention the fact that the petitioner had deposited the entire amount and the same was returned to it. The UIT has purposefully created the impression in the mind of the Cabinet that the petitioner had defaulted in depositing the price of the land. Hence, the correct facts were not placed before the Cabinet. 40. Further, the other reason submitted by the respondents, before this court, for cancellation of the allotment is non-construction of the hospital within the stipulated period. However, such a stand ignores certain cardinal facts: a) the petitioner was running from pillar to post pleading that the unreasonable and illegal conditions imposed by the UIT be deleted; b) although the petitioner had paid the entire amount due, the said amount had been returned to the petitioner; c) the possession of the land was never given to the petitioner. Since the possession of the land was never given, obviously the petitioner could not raise the requisite construction; d) non-construction does not lead automatically to cancellation of allotment. Under the Rules of 1974, the UIT has the power to extend the period for construction; e) although the power to relax the period of construction does exist, the petitioner was not given an opportunity to plead that the said power be exercised in its favor; f) the Cabinet note clearly shows that, in fact, the allotment was cancelled as the UIT had held out that cancellation would permit the UIT to realise more money than the monies offered by the petitioner. Thus, the allotment was cancelled for ulterior motives. 41. Mr. S. N. Kumawat, the learned Additional Advocate General for the State has taken an ambivalent and self-contradictory stand before this court. Thus, the allotment was cancelled for ulterior motives. 41. Mr. S. N. Kumawat, the learned Additional Advocate General for the State has taken an ambivalent and self-contradictory stand before this court. According to the reply submitted by the State, the State claims that the land in question was allotted by the UIT to the petitioner under Rule 15 of the Rules of 1974. However, before this court, the learned Additional Advocate General has contended that the land was, in fact, allotted under Rule 15 B of the Rules of 1974. When pressed further by this court to specify the particular provision under which the land was granted, the learned Additional Advocate General has taken the ambiguous stand that the land was allotted under the Rules of 1974 per se. He could not pinpoint the specific provision under which the land was actually allotted. 42. He has further contended that as the allotment was under the Rules of 1974, therefore the UIT could impose extra conditions beyond the conditions imposed by the State. He has, however, failed to address this court on the scope and ambit of Section 102 A of the Revenue Act, and about the scope and ambit of Rule 15 B of the Rules of 1974. 43. He has also contended that all the facts were placed before the Cabinet in its meeting 12-5-2005, and after applying its mind the Cabinet had decided to cancel the allotment as the petitioner had failed to pay the price of the land within the stipulated period and had failed to complete the requisite construction within the prescribed period. He has, thus, supported the decision dated 12-5-2005 and the impugned order dated 23-6-05. 44. Mr. Alok Sharma, the learned counsel for the UIT, has vigorously attacked the petitioners position and has raised the following counter-contentions before this court: firstly, the petitioner has tried to weave a new case before this court. According to the writ petition, the petitioner had pleaded that the petitioner was not being granted the land on same terms and conditions which were imposed upon G. E. Capital Services while the land was allotted to them at Jaipur. Thus, the petitioner had painted a picture of hostile discrimination being committed by the respondents. According to the writ petition, the petitioner had pleaded that the petitioner was not being granted the land on same terms and conditions which were imposed upon G. E. Capital Services while the land was allotted to them at Jaipur. Thus, the petitioner had painted a picture of hostile discrimination being committed by the respondents. However, before this court the petitioner has argued strenuously about the lack of power of UIT to impose the conditions and about the unreasonableness of the conditions so imposed. The petitioner cannot be permitted to travel beyond its pleading and to raise new pleas before this court. 45. Secondly, the State did not allot the land to the petitioner vide letter dated 30-9-03. Through the said letter, the State merely granted the permission to the UIT to allot a land of specific size to the petitioner at a specified rate. Therefore, the petitioner is unjustified in claiming that the State had allotted the land to it vide letter dated 30-9-03. In fact, it is the UIT which has allotted the land to the petitioner vide order dated 1-10-03."" 46. Thirdly, the grant of state largesse is the concern of the State. The land was allotted to the petitioner at a concessional rate. It was a grant made by the State under the Rajasthan Government Grants Act, 1961 (the Grants Act, for short) through the UIT. According to Section 2 of the Grants Act, the provisions of Transfer of Property Act are inapplicable to a grant made by the State Government. Thus, the petitioner cannot challenge the ban on transfer as being in violation of the Transfer of Property Act. Further, according to Section 4 of the Grants Act, every restrictions, conditions and limitations contained in any grant are deemed to be valid notwithstanding that the conditions, limitations may be contrary to any rule of law, statute or enactment or any decree or direction of a court of competent jurisdiction. Hence, the petitioner is pre-empted from challenging the conditions imposed by the UIT. Further, since it was a concessiona concession that comes as a packagethe petitioner cannot challenge the grant as being unreasonable or arbitrary. The petitioner has the choice to take it, or leave it."" 47. Fourthly, the land was never demarcated or set apart by the Collector. Therefore, Section 92 of the Revenue Act is inapplicable. Further, since it was a concessiona concession that comes as a packagethe petitioner cannot challenge the grant as being unreasonable or arbitrary. The petitioner has the choice to take it, or leave it."" 47. Fourthly, the land was never demarcated or set apart by the Collector. Therefore, Section 92 of the Revenue Act is inapplicable. Although the land was placed at the disposal of the UIT under Section 102 A of the Revenue Act, the placement of the land was a matter between the State and the UIT. It did not concern the petitioner. Therefore, the petitioner cannot derive any benefit from the fact that the land was placed at the disposal of the UIT under the said provision of law. According to the learned counsel, the petitioner is intentionally misleading the court by creating the impression that the land was set apart and was placed at the disposal of the UIT under Section 102 A of the Revenue Act specifically for the purpose of allotting the said land to the petitioner. 48. Fifthly, the land was initially surrendered by the IL to the State. Thus, it vested in the State. According to Section 3 (ib) of the Revenue Act any abadi land which falls within the limits of a municipality or panchayat circle or a village, town or city, and which vests in the State is Nazul land. Since the surplus land surrendered by the IL falls within a town, and the said land vests in the state, therefore, ipso facto, it is nazul land, as defined under Section 3 (ib) of the Revenue Act. 49. Section 43 of the Urban Improvement Act, (the UIT Act, for short) permits the State to place a nazul land at the disposal of the UIT for the purposes of improvement in accordance with a scheme framed and sanctioned under the Act. Once the nazul land has been placed at the disposal of the UIT by the State, the land vests in the UIT; the UIT has absolute dominion over the said land. Moreover, the power of the UIT to impose conditions arises out of Sections 43 and 60 of the UIT Act. Section 60 of the UIT Act empowers the UIT to impose conditions for securing the improvement of urban area. The Rules of 1974 were enacted under Sections 43 and 60 of the UIT Act. Moreover, the power of the UIT to impose conditions arises out of Sections 43 and 60 of the UIT Act. Section 60 of the UIT Act empowers the UIT to impose conditions for securing the improvement of urban area. The Rules of 1974 were enacted under Sections 43 and 60 of the UIT Act. An allotment made by the UIT is always under the Rules of 1974. Thus, the UIT has ample powers to impose conditions both under the UIT Act and under the Rules of 1974, while allotting a land to the petitioner. 50. Sixthly, the allotment was made under Rule 15 B of the Rules of 1974. However, the interpretation of Rule 15 B by the petitioner is misplaced. The petitioner is not justified in claiming that the nonobstante clause ousts the jurisdiction of the UIT. For, if the interpretation offered by the petitioner were accepted, it would prevent the UIT from implementing other provisions of the Rules, such as Rule 3 requiring that land be sold on lease hold basis, or Rule 4 fixing the tenure of the lease as 99 years. The Legislature could not have intended that the power of the UIT be ousted so blatantly. Thus, the non-obstante clause does not completely oust the power of the UIT. 51. But simultaneously Mr. Alok Sharma has argued that the said allotment could not be made under Rule 15 B of the Rules of 1974. For, Rule 15 B deals with infrastructure projects which includes public utilities. The term public utility has been defined in Rule 2 (6- K) of the Rules of 1974. According to the definition, the term excludes medical facilities. Thus, hospitals are excluded from public utility projects. Hence, the land could not be allotted for the purpose of construction of a hospital and Biotech Research Institute under Rule 15 B of the Rules of 1974. But notwithstanding the legal position, the allotment was, indeed, made under the Rule 15 B of the Rules of 1974."" 52. Seventhly, even if the allotment were made under Rule 15 B of the Rules of 1974, it does not prevent the UIT from imposing conditions independent of and beyond the conditions imposed by the State. Although the said Rule begins with a non-obstante clause, but such a non-obstante clause does not oust the jurisdiction of the UIT to impose conditions. Seventhly, even if the allotment were made under Rule 15 B of the Rules of 1974, it does not prevent the UIT from imposing conditions independent of and beyond the conditions imposed by the State. Although the said Rule begins with a non-obstante clause, but such a non-obstante clause does not oust the jurisdiction of the UIT to impose conditions. The conditions imposed flow from other provisions of the Rules of 1974. Thus, they are legally valid. 53. Eighthly, both according to the Rules of 1974 and according to Condition No. 11 of the allotment letter dated 1-10-03, in case the payment is not made within the stipulated period, then the allotment stands automatically cancelled. Thus, the cancellation is by flux of time and by operation of law. In such a situation, the giving of opportunity of hearing would be a futile exercise. Moreover, since the petitioner was aware that the allotment would stand cancelled automatically in case of non-payment, it cannot claim that its interest is prejudiced due to denial of opportunity of hearing. Hence, the UIT has not violated the principles of natural justice. 54. Lastly, if it is accepted for the sake of argument that the UIT is acting as an agent of the State, even then State has ratified the action of the UIT. Section 196 of the Contract Act deals with the doctrine of ratification. The said section empowers the person on whose behalf an action has been done, but it has been done without his knowledge, to subsequently ratify or to disown the act. If he ratifies the act, then the same effect will follow as if the act had been performed by his authority. Since the State did not object to the imposition of the conditions by the UIT, since the State did not delete the said conditions despite the request of the petitioner, the State is deemed to have ratified the imposition of the conditions. Moreover, the decision of the UIT on 22-3-05 to cancel the allotment was further ratified by the Cabinet vide its decision dated 12-5-05. 55. In rejoinder, Mr. Kuhad has tried to demolish the case of the UIT: firstly, the petitioner is not trying to paint a fresh picture before this court. Moreover, the decision of the UIT on 22-3-05 to cancel the allotment was further ratified by the Cabinet vide its decision dated 12-5-05. 55. In rejoinder, Mr. Kuhad has tried to demolish the case of the UIT: firstly, the petitioner is not trying to paint a fresh picture before this court. The petitioner has assailed the power of the UIT to impose the conditions, and questioned the reasonableness of the conditions as, in its reply, the UIT had itself claimed the said power and had further claimed that the conditions were reasonable. Hence, the petitioner was compelled to argue on these two issues. Thus, the petitioner is not raising any new pleas before the court. The petitioner is merely challenging the position taken by the State and the UIT. 56. Secondly, although it is true that, generally, the UIT allots the land to the people and institutions, but there are certain exceptional circumstances where the land is allotted by the State through the UIT. Sections 92 and 102 A of the Revenue Act, and Rule 15 B of the Rules of 1974 deal with the exceptional circumstances where the land is to be allotted through the UIT but under the terms and conditions specified by the State. The present case falls under one of the exceptional circumstances. Therefore, the UIT cannot claim the exclusive power to allot the land as per its whims and caprice. 57. Thirdly, Section 102 A of the Revenue Act makes a clear cut distinction between nazul land and land kept apart under Section 92 of the Revenue Act. Vide order dated 29-3-2001, the Collector had specifically demarcated and set apart the land under Section 92 of the Revenue Act. Therefore, the said land cannot fall within the definition of nazul land. The two categories cannot be confused. 58. Fourthly, before a nazul land can be placed at the disposal of the UIT, certain procedure has to be followed: the State and the UIT have to enter into an agreement specifying the terms and conditions for disposal of the land; the terms and conditions so agreed upon have to be notified in the Gazette. However, in the present case there is neither any agreement, nor any notification in the Gazette in existence. Hence, the procedure prescribed by Section 43 of the UIT Act has not been followed. However, in the present case there is neither any agreement, nor any notification in the Gazette in existence. Hence, the procedure prescribed by Section 43 of the UIT Act has not been followed. Thus, Section 43 of the UIT Act does not cover the present case. 59. Fifthly, Section 60 of the UIT Act deals with disposal of land acquired by the State. However, in the present case the land was not acquired by the State. Thus, ipso facto Section 60 of the UIT Act is inapplicable to the land in dispute."" 60. Sixthly, since neither Section 43, nor Section 60 of the UIT Act cover the land in dispute, the allotment of the said land cannot be made under Rules of 1974. For, the said Rules were enacted under Sections 43 and 60 of the UIT Act. In fact, since the land was set apart under Section 92 of the Revenue Act, the land can be allotted only under Section 102 A of the Revenue Act subject to such conditions and restrictions as the State Government may place from time to time. It can not be allotted under the Rules of 1974. 61. Seventhly, it is not the petitioners case that the land was placed at the disposal of the UIT under Section 102 A of the Revenue Act for the benefit of the petitioner. The land was placed per se under the said provision. But once the land has been placed at the disposal of the UIT under the said provision, the said provision would cover the disposal of the land. Under Section 102 A of the Revenue Act, the UIT acts merely as an agent of the State. Thus, the UIT does not have the power to impose its own conditions. 62. Eighthly, the series of letters sent by the State clearly prove that the UIT was to act as an agent of the Government. According to letter dated 1-4-2000, when the land was placed at the disposal of RIICO, RIICO was directed to act as an agent of the Government. Subsequently, the UIT was substituted in the place of the RIICO vide order dated 14-8-2000; according to this letter also the UIT was to act as an agent of the Government. According to letter dated 1-4-2000, when the land was placed at the disposal of RIICO, RIICO was directed to act as an agent of the Government. Subsequently, the UIT was substituted in the place of the RIICO vide order dated 14-8-2000; according to this letter also the UIT was to act as an agent of the Government. Most importantly, according to both the letters, mentioned above, the land was to be disposed of under the supervision of the Committee under the chairmanship of the Collector. Thus, the land was not to be disposed of by the UIT independently of the Committee. Hence, clearly the status of the UIT in the scheme of things was merely as an agent. 63. Ninthly, even if for the sake of argument it is accepted that the UIT has the power to impose conditions under Rules of 1974, even then the conditions imposed are unreasonable. Under the Rules of 1974 there is no concept of automatic cancellation. In fact, the Rules provide for relaxation of the period for payment of the price, for construction of the building. In fact, condition No. 11 of the letter 1- 10-2003, also provided for relaxation of the period for payment of the consideration. Furthermore, the restriction on transfer of the land is unwarranted by the Rules of 1974. 64. Tenthly, the argument that the land has been allotted by the State under the Rajasthan Grants Act is fallacious and selfcontradictory. For, according to the UIT, the State did not allot the land vide letter dated 30-9-2003, but merely gave the permission for allotment. Further, in case the land were granted by the State, the State being the sovereign, the UIT could not modify, add, or alter the conditions specified by the State. After all, the UIT can not claim a paramount power over the sovereign power of the State. Furthermore, in the order dated 30-9-2003, the State itself does not claim that the allotment/ permission is being given by the State under the Grants Act. Lastly, even in its reply the State has not taken the stand that it had granted the land under the Grants Act. Thus, UIT is trying to create a defense which is clearly an afterthought. It is merely trying to hide behind a fig leaf of legal provisions while hiding its naked use of arbitrary power. 65. Lastly, even in its reply the State has not taken the stand that it had granted the land under the Grants Act. Thus, UIT is trying to create a defense which is clearly an afterthought. It is merely trying to hide behind a fig leaf of legal provisions while hiding its naked use of arbitrary power. 65. Eleventh, arbitrary exercise of power in distribution of State largesse can always be challenged by the Petitioner. Since the allotment of land is not under the Grants Act, it is subject to judicial scrutiny. Hence, the UIT is not justified in invoking the immunity contained in the said Grants Act. 66. Twelfth, the State in its reply has not stated that it has ratified the conditions imposed by the UIT. Ratification has to be expressed; it can not be implied by the silence of the State. Although the petitioner kept on challenging the unreasonableness of the conditions, the State never expressed its opinion that it upholds or confirms or agrees with the conditions. Thus, doctrine of ratification is another boggy that the UIT is raising before this court. 67. Thirteenth, both according to condition No. 11 of the letter dated 1-10-2003, and according to the Rules of 1974, the petitioner was entitled to plead for relaxation. Therefore, the argument about automatic cancellation is misplaced. Since the petitioner could request for relaxation, an opportunity of hearing had to be given before shutting the door on the petitioners face. 68. Fourteenth, the cancellation of allotment should be done as the last resort, for such a cancellation has evil consequences for the petitioner. Moreover, the cancellation is disproportionate to the default of the petitioner. In the present case, there were certain genuine reasons for the delay in payment of the cost, in nonconstruction of the buildings. Despite the existence of these germane reasons, the respondents have cancelled the allotment. Thus, the cancellation is patently illegal. In order to buttress this contention, the learned counsel has relied upon Teri Oat Estates (P) Ltd. v. U.T. Chandigarh & Ors. [ (2004) 2 SCC 130 ] . 69. Fifteenth, the UIT had not placed all the relevant facts before the Cabinet. Therefore, the Cabinet was misinformed. Hence, the decision of the Cabinet is misplaced.70-71. Heard the learned counsel for the parties and perused the record. This case raises a series of interesting legal issues: 1. [ (2004) 2 SCC 130 ] . 69. Fifteenth, the UIT had not placed all the relevant facts before the Cabinet. Therefore, the Cabinet was misinformed. Hence, the decision of the Cabinet is misplaced.70-71. Heard the learned counsel for the parties and perused the record. This case raises a series of interesting legal issues: 1. What is the inter-relationship between the State and the UIT? 2. What is the scope and ambit of Sections 92 and 102 A of the Revenue Act? 3. Under Section 102 A of the Revenue Act what is the role of the UIT? Does it act as an agent or does it have an independent existence and role to play? 4. From where does the UIT derive its power to impose conditions? 5. What is the scope and ambit of Sections 43 and 60 of the UIT Act? Are the said provisions applicable to the present case? 6. What is the scope and ambit of Rule 15 B of the Rules of 1974? Could the allotment be made under the said Rule? 7. Whether the conditions imposed by the UIT are reasonable or not? 8. Was the allotment of land a grant under the Rajasthan Government Grants Act? 9. Is such an allotment subject to judicial review? 10. Should an opportunity of hearing be given to the petitioner before canceling the allotment? 11. Whether the action of cancellation of allotment an arbitrary act or not? 12. Whether the conditions imposed and the cancellation of allotment by the UIT legally ratified by the State or not? 72. Land is the concern of different entities, such as the Panchayat, the Municipalities, the Urban Improvement Trust, the Development Authorities, and, of course, of the State. Born out of the UIT Act, 1959, the UIT is a statutory body having an autonomous existence. But its autonomy does not make the UIT independent of the State. Being the paramount power, the State has a supervisory role in the functioning of the UIT. Although the land is owned by the State, under the statutory provisions of the UIT Act, generally, the land vests in the UIT. But where the land is used for certain specific purposes, the State has a vital role to play in its allotment. Being the paramount power, the State has a supervisory role in the functioning of the UIT. Although the land is owned by the State, under the statutory provisions of the UIT Act, generally, the land vests in the UIT. But where the land is used for certain specific purposes, the State has a vital role to play in its allotment. These specific purposes are where the land is reserved for cinemas, luxury hotels, film studios and amusement parks, hospitals, diagnostic centre, nursing homes, and tourism units, petrol pumps and for setting up godowns by persons having authorised agencies for domestic gas, or for infrastructure projects which include power-plant, telecommunication, transport facilities, tourism units, public utilities, information technology, water supply technical educational institutions, waste disposal project etc. [Ref to Rule 15 and 15 B of the Rules of 1974]. Since the land use affects the public at large, since the land is used in the interest of the public, since the investment is large, since it may involve the participation of private and/ or public sector, since a large track of land may be required, since it may require policy decision of the State, the State has an essential role to play in the allotment of the land. Therefore, specific provisions carve out exceptions to the power and jurisdiction of the UIT and bestow the absolute power on the State. While dealing with the specific provisions, one would have to keep these objectives of the provision in mind.""73. Chapter VI of the Revenue Act deals with Land. According to Section 88 of the Revenue Act all lands which are not the property of others belong to the State.""74. Section 92 of the Revenue Act is as under: Land may be set apart for special purposes: Subject to the general orders of the State Government, the Collector may set apart land for any special purpose, such as, for free pasturage of cattle, for forest reserve, for development of abadi or for any other public or municipal purpose; and such land shall not be used otherwise than for such purpose without the previous sanction of the Collector. 75. 75. Section 102 A of the Revenue Act read as follow: Land which may be entrusted with the Local Authorities: Any Nazul land or land set apart under Section 92 may be placed by the State Government at the disposal of a local authority having jurisdiction and such local authority may take over with the land so placed at its disposal for and on behalf of the State Government, or may use the same for the special purpose for which it has been set apart, to such extent and subject to such conditions and restrictions as the State Government may, from time to time, lay down and in such, manner as it may, from time to time prescribe. 76. A bare perusal of Section 92 reveals that the Collector has the power to set apart land for any special purpose for the development of abadi, or for any other public or municipal purpose. Such setting apart of the land is of course subject to the general orders of the Government. Moreover, once the land is set apart it cannot be used for any other purpose without the previous sanction of the State Government.""77. An analysis of Section 102 A of the Revenue Act reveals the following elements: firstly, the heading of the provision is Land which may be entrusted with the Local authority. Thus, the provision deals with the entrustment of the land with the local authority. Hence, the land is entrusted to the local authority and does not vest in the local authority. The land is placed at the disposal of the local authority for certain purpose, but the land continues to vest in the Government. This position is further clarified by the use of the expression for and on behalf of the Government. Thus, the local authority holds the land for and on behalf of the Government. Hence, the local authorityand in this case the UIT acts as an agent of the Government in order to dispose of the land. Therefore, the UIT cannot act independently of the Government.78. Secondly, two classes of land may be entrust ednazul land, or land set apart under Section 92 of the Revenue Act. Section 3 (ib) of the Revenue Act defines the term nazul land as abadi land within the limits of a municipality or a panchayat circle or a village, town or city, vesting in the State Government. Secondly, two classes of land may be entrust ednazul land, or land set apart under Section 92 of the Revenue Act. Section 3 (ib) of the Revenue Act defines the term nazul land as abadi land within the limits of a municipality or a panchayat circle or a village, town or city, vesting in the State Government. But Section 102 A of the Revenue Act draws a distinction between nazul land and land set apart under Section 92 of the Revenue Act. Hence, the section clearly deals with two separate categories of land. Therefore, the land which is surrendered to the State Government and is set apart under Section 92 of the Revenue Act does not become nazul land.""79. Thirdly, the local authority can use the land only to the extent and subject to such conditions and restrictions as the State Government may lay down and in such manner as the State Government may prescribe from time to time. The use of the word extent clearly shows that it is for the State Government to prescribe the limits of the use of the land. These limits once prescribed cannot be expanded by the local authority. Moreover, the use of the land is subject to such conditions and restrictions as laid down by the State Government. Further, the manner of the use would also be prescribed by the State Government. Therefore, under Section 102 A of the Revenue Act, the extent of the use, the manner of the use, the conditions for the use, the restrictions under which the land can be used are all to be prescribed by the State Government. Thus, the absolute power is vested in the Government and not in the local authority. Since the land is entrusted to the local authority, as a trustee the local authority cannot travel beyond the terms of entrustment. Hence, the local authority does not have the power to amend the conditions and restrictions placed by the State Government.80. On 12-10-2000, out of the 90 acres of surplus land which belonged to the IL, 80 acres, 1 Bigha and 5 Biswa of land was surrendered to the State Government. On 21-3-2001, the said land was declared as siwai chak (Government land). Vide Order dated 29-3-2001, the Collector not only demarcated the land, but also set it apart under Section 92 of the Revenue Act. Thus, Mr. On 21-3-2001, the said land was declared as siwai chak (Government land). Vide Order dated 29-3-2001, the Collector not only demarcated the land, but also set it apart under Section 92 of the Revenue Act. Thus, Mr. Alok Sharmas contention that the land was never demarcated and set apart by the Collector is against the record. Hence, it is unacceptable.""81. The Collector further placed the Government land at the disposal of the UIT under Section 102 A of the Revenue Act. Once the land has been entrusted to the UIT under Section 102 A of the Revenue Act, the disposal of the land would have to be strictly in accordance with said Section. Thus, the UIT would hold the land for and on behalf of the Government. Moreover, the UIT could use the land to such an extent and subject to such conditions and restrictions as the State Government may lay down from time to time. Hence, the UIT is absolutely bound by the limits placed by the State Government. It can neither alter, nor amend, nor add or subtract from the said limits. Lastly, even the manner of usage once prescribed by the State Government cannot be altered by the UIT. Thus, the UIT is unjustified in imposing conditions beyond the conditions spelt out by the State in its letter dated 30-9-03.82. Mr. Sharma has canvassed two contentions before this court. Firstly, that even if the land were placed at the disposal of the UIT under Section 102 A of the Revenue Act, even then the matter is between the UIT and the State. Therefore, the petitioner cannot take the benefit of such entrustment. Such an argument deserves to be rejected. For, the role of the UIT is determined by the very act of entrustment under Section 102 A of the Revenue Act. Under Section 102 A of the Revenue Act, the power of the UIT to impose conditions stands cribbed, cabined and confined. Thus, the petitioner is justified in claiming that the UIT cannot act independently of the State Government once the land has been entrusted under Section 102 A of the Revenue Act.83. Secondly, Mr. Sharma has contended that the petitioner is creating a false impression that the land was set apart and placed at the disposal of the UIT for the purpose of allotting the land to the petitioner. Secondly, Mr. Sharma has contended that the petitioner is creating a false impression that the land was set apart and placed at the disposal of the UIT for the purpose of allotting the land to the petitioner. However, this has never been the stand of the petitioner. The petitioner has merely argued that the surplus land was set apart by the Collector and was placed at the disposal of the UIT under Section 102 A of the Revenue Act. Therefore, the power of the UIT to impose conditions would have to be tested keeping in mind the scope and ambit of Section 102 A of the Revenue Act. Hence, this contention also deserves to be dismissed.84. Not only the legal provisions under which the land was placed at the disposal of the UIT, but also the facts of the case reveal that the Government wanted the UIT to act merely as an agent. The Government had constituted a Committee headed by the Collector for the disposal of the land. Even while the land was placed at the disposal of RIICO, vide letter dated 1-4-2000, it was made clear that RIICO would act as an agent of the Government. The same position was continued vide letter dated 14-8-2000, whereby the UIT was substituted in place of RIICO. The letter clearly stated that the sale of the land was to be under the supervision of the Committee headed by the Collector. It, further, stipulated that the conditions contained in letter dated 1-4-2000, that is the UIT acting as an agent of the Government in place of RIICO would continue. Similar was the tenor of order dated 29-3-2001. Thus, the UIT is not justified in claiming that it is not an agent of the Government. Hence, it cannot usurp the status of acting independently of the Government.85. Mr. Sharma has further contended that the power to impose conditions emanates from Sections 43 and 60 of the UIT Act. Section 43 of the UIT Act is as under: 43. Nazul lands. Hence, it cannot usurp the status of acting independently of the Government.85. Mr. Sharma has further contended that the power to impose conditions emanates from Sections 43 and 60 of the UIT Act. Section 43 of the UIT Act is as under: 43. Nazul lands. (1) The State Government may by notification in the official Gazette and upon such terms and conditions as may be agreed upon between it and the Trust, place at the disposal of the Trust all or any improved and unimproved lands in the urban area for which the Trust has been constituted and which may be vested in the State (known and hereinafter referred to as Nazul lands) for the purpose of improvement in accordance with a scheme framed and sanctioned under this Act. (2) No improvement of any Nazul land shall be undertaken or carried out except by, or under the control and supervision of the trust after such land has been placed at the disposal of the Trust under sub-section (1). (3) After any such Nazul land has been improved by, or under the control and supervision of, the Trust, it shall be dealt with by the Trust in accordance with the rules and directions given by the State Government in this behalf. (4) If any Nazul land placed at the disposal of the Trust under sub-section (1) is required at any time thereafter by the State Government the Trust shall, by notification in the official Gazette, replace it at the disposal of the State Government upon such terms and conditions as may be agreed upon between that Government and the Trust. 86. The provision does deal with the placement of nazul land at the disposal of the UIT by the State. However, before the said land can be placed at the disposal of the UIT, certain procedure has to be followed: there has to be an agreement between the State and the UIT with regard to the said land; the terms and conditions need to be notified in the official gazette; the UIT has to frame a scheme and the scheme should be sanctioned under the Act. However, in the present case none of these elements are present. Neither the State, nor the UIT has placed any agreement between the two before this court. However, in the present case none of these elements are present. Neither the State, nor the UIT has placed any agreement between the two before this court. No notification has been issued which spells out the terms and conditions agreed between the State and the UIT. Thus, the present case is not covered by Section 43 of the UIT Act. Section 60 of the UIT Act is as follows: 60. Disposal of land by the Trust. (1) The Trust may- (a) with the sanction of the State Government, dispose of by way of allotment, regularisation or auction, any land acquired by the State Government and transferred to the Trust without undertaking or carrying on any improvement thereon, or (b) subject to any directions given by the State Government dispose of any such land after undertaking or carrying on such improvement as it thinks fit, to such persons, in such manner and subject to such terms and conditions as it considers expedient for securing the improvement of the urban area concerned according to the master plan or the scheme or both. (2) The power of the Trust with respect to the disposal of land under sub-section (1) shall be exercised as to secure, so far as practicable, that persons who are living or carrying on business or other activities on the land shall, if they desire to obtain accommodation on land belonging to the Trust and are willing to comply with any requirements of the Trust as to its improvement and used have an opportunity to obtain thereon accommodation suitable to their reasonable requirements on terms settled with due regard to the price at which any such land has been acquired from them: Provided that where the Trust purposes to dispose of by sale any land without any improvement having been undertaken or carried out thereon, it shall offer the land in the first instance to the persons from whom it was acquired, if they desire to purchase it, subject to such requirements as to its improvement and use as the Trust may think fit to impose. (3) Nothing in this Act shall be construed as enabling the Trust to dispose of land by way of gift but subject as aforesaid references in this Act to the disposal of land shall be construed as references to the disposal thereof in any manner, whether by way of sale, exchange, mortgage or lease or by the creation of any easement, right or privilege or otherwise. (4) All lands which are deemed to have been placed at the disposal of the Trust under section 90-B of the Rajasthan Land Revenue Act, 1956 (Act No.15 of 1956) upon resumption or surrender of tenancy rights and interest of khatedars thereof, as the case may be, shall be available for allotment or regularisation preferably to the persons having possession over such land or part thereof, as the case may be, on the basis of allotment made or Patta given to them by the Housing Co-operative Society or on the basis of any other document of transfer of land to them either by tenant or any other person claiming through the tenant, whose tenancy rights have been resumed or surrendered, under the said provision, on such terms and conditions and subject to payment to the Trust of such charges or premium or both, as the case may, and at such rates as may be prescribed by the State Government in this behalf: Provided that no allotment or regularisation of any land shall be made which has been duly earmarked for public utilities/ services such as park, nursery, civil or military aviation, bus stand, transport terminal, railways, public roads, highways, footpath, sewage lines, water supply, electricity supply, telephone lines, hospital, school, educational institution, university, cremation ground, grave-yard and for such other purposes as State Government may specify by notification in the Official Gazette. (5) The charges realised under sub-section (4) shall be credited to the Consolidated Fund of the State and the fund of the Trust as may be determined by the State Government. 87. The said provision empowers the Trust to dispose of the land acquired by the State Government and which has been transferred to the Trust by the State Government. However, in the present case the land was not acquired by the State Government. As mentioned above, the surplus land was surrendered to the State Government by IL. 87. The said provision empowers the Trust to dispose of the land acquired by the State Government and which has been transferred to the Trust by the State Government. However, in the present case the land was not acquired by the State Government. As mentioned above, the surplus land was surrendered to the State Government by IL. Further, the said land was not transferred in the sense that the land did not vest in the UIT. As discussed above, the surplus land was merely entrusted to the UIT under Section 102 A of the Revenue Act. Therefore, Section 60 of the UIT Act does not cover the present case. Hence, the powers under Sections 43 and 60 of the UIT Act cannot be invoked by the UIT for imposing conditions on the petitioner.88. Mr. Sharma has also contended that urban land is disposed of by the UIT under the provisions of Rules of 1974. Under the said Rules, the UIT has ample power to impose the conditions. The power to impose conditions under the Rules is independent of the State. In fact, the power of the UIT is not limited by the terms and conditions laid down by the State. Thus, the UIT could add conditions under the said Rules.89. Whether the UIT has the power or not would depend upon the particular provision of the Rules under which the land has been allotted. For, while generally the UIT does have the power to impose conditions, but there are certain provisions which carve out an exception and deny this power to the UIT. On the issue about the particular provision under which the land has been allotted, the learned counsel for the respondents have taken very ambivalent position. While both of them claim that the land was allotted under the said Rules, they are unable to specify the exact provision under which the land was allotted. While both claim that the allotment was made under Rule 15 B of the Rules of 1974, Mr. Sharma contends that the allotment could not be made under the said provision.90. But let us presume the allotment could be made and was, indeed, made under Rule 15 B of the Rules of 1974, could the UIT impose conditions under the said Rule? This is the moot question before this court.91. Sharma contends that the allotment could not be made under the said provision.90. But let us presume the allotment could be made and was, indeed, made under Rule 15 B of the Rules of 1974, could the UIT impose conditions under the said Rule? This is the moot question before this court.91. Rule 15 B of the Rules of 1974 reads as under: Notwithstanding anything contained in these rules, land may be allotted with prior approval of the State Government for infrastructure projects which includes power-plant, telecommunication, transport facilities, tourism units, public utilities, information technology, water supply, technical educational institutions, waste disposal project, on such terms and conditions and at such rates as may be determined by the State Government. 92. The Rule begins with a non-obstante clause. It is, indeed, a settled principle of interpretation that non-obstante clause carves out an exception to the other provisions. Therefore, it clearly ousts all other rules contained in the Rules of 1974. Hence, Mr. Sharma is not justified in claiming that despite the non-obstante clause, the UIT is still empowered to impose conditions emanating from other provisions of the Rules.93. A holistic reading of the provision clearly shows that the land is to be allotted by the local authority with the prior approval of the Government. But the land shall be allotted on such terms and conditions and at such rates as may be determined by the State Government from time to time. Thus, it is for the State Government to spell out the terms and conditions and the rate at which the land is to be allotted. Hence, again the UIT cannot determine the terms and conditions or the rate of the land. As stated above, there is logic in this provision. After all, the infrastructure projects require planning and policy decision by the State Government. They require a large capital; they possibly require the participation of the public or private sector; they are in public interest and affect the public at large. Therefore, it is for the State to determine the terms and conditions and not for the UIT to decide them. Hence, the UIT cannot claim that although the allotment was made under Rule 15 B of the Rules of 1974, still it could impose conditions upon the petitioner. In the light of Rule 15 B of the Rules of 1974, this position is untenable.94. Mr. Hence, the UIT cannot claim that although the allotment was made under Rule 15 B of the Rules of 1974, still it could impose conditions upon the petitioner. In the light of Rule 15 B of the Rules of 1974, this position is untenable.94. Mr. Sharma has also argued that the allotment could not be made under Rule 15 B of the Rules of 1974. For, although the provision claims that the infrastructure projects would include public utilities, but the definition of public utilities given in Rule 2 (6-K) excludes medical facilities. Mr. Kuhad has tried to rely on Circular dated 17-11-01 to argue that the word infrastructure projects has been defined to include medical and health educational institutions. Thus, the allotment could be made under Rule 15 B of the Rules of 1974. In rejoinder Mr. Sharma has contended that the definition of public utilities cannot be enlarged through a circular. For, a parental law cannot be amended through a circular.95. A bare perusal of the Circular dated 17-11-01 clearly reveals that it is based on a Cabinet decision dated 7-11-2001. Secondly, the Circular defines infrastructure projects and does not amend the definition of public utilities. It merely states that land for infrastructure projects which includes medical and health educational institutes shall be allotted at concessional rate. It further goes on to give the rates at which the land can be allotted. Lastly, it spells out the conditions under which the land would be allotted. Thus, the Circular does not amend the definition of public utilities, but defines the term infrastructure projects. Hence, the contention raised by Mr. Sharma is misplaced.""96. Mr. Kumawat has argued that the land was allotted under Rule 15 of the Rules of 1974. Therefore, the UIT has the power to impose conditions on the petitioner. Rule 15 of the Rules is as follows: 15. Hence, the contention raised by Mr. Sharma is misplaced.""96. Mr. Kumawat has argued that the land was allotted under Rule 15 of the Rules of 1974. Therefore, the UIT has the power to impose conditions on the petitioner. Rule 15 of the Rules is as follows: 15. Allotment and sale of non-residential land- Land for non-residential purposes shall be allotted to public and charitable institutions on terms and conditions prescribed under these rules provided that lands of commercial nature shall be disposed of by public auction in the manner, as prescribed in Annexure A, provided further that lands reserved for cinemas, Luxury hotels, Film Studios and Amusement Parks, Hospital, Diagnostic Centre, Nursing Homes and Tourism Unit, Petrol pumps and for setting up godowns by persons having authorised agencies of domestic gas allotted to them shall be disposed of in accordance with the directions of the State Government that may be issued from time to time: Provided that plots of land for consumer co-operative Stores duly certified to the registered with the Assistant Registrar, Co-operative Societies of the concerned Districts, shall be allotted in the commercial areas on the reserve price of the scheme, the price shall be recovered in four equal annual instalments; Provided further that the number and size of such plots shall be determined by the Trust in consultation with the Government. Provided further also that the price for allotment of land for gas godowns to be set up by War windows, member of Scheduled Castes and Scheduled Tribes and handicapped persons shall be the reserve price determined for land meant for commercial use in the scheme and for other category of persons the price shall be double the reserve price determined for land meant for commercial use in the scheme. 97. A bare perusal of this Rule also clearly reveals that the land reserved for Hospital, Diagnostic Centre, Nursing Homes shall be disposed of in accordance with the directions of the State Government as may be issued from time to time. Thus, even if the allotment were made under Rule 15 of the Rules of 1974, even then the UIT was duty bound to follow the directions issued by the State Government. It could not have gone beyond the said directions. The State Government had defined the terms and conditions, had given the permission to the UIT vide letter dated 30-9-03. Thus, even if the allotment were made under Rule 15 of the Rules of 1974, even then the UIT was duty bound to follow the directions issued by the State Government. It could not have gone beyond the said directions. The State Government had defined the terms and conditions, had given the permission to the UIT vide letter dated 30-9-03. Obviously, the UIT could not have gone beyond the said terms and conditions. Moreover, while allotting the land under Rule 15 of the Rules of 1974, the UIT could not be oblivious of the fact that the surplus land was entrusted to it under Section 102 A of the Revenue Act. Hence, it was bound by the said provision. Under Section 102 A of the Revenue Act read with Rule 15 of the Rules of 1974, the UIT could not have imposed conditions beyond the terms and conditions laid down by the State. To do so, the UIT would be over-stepping its power and jurisdiction.98. Mr. Sharma has contended that not only the UIT has the power to impose the conditions, but the conditions imposed are also most reasonable. He has also argued that in case the conditions are not fulfilled, then there is automatic cancellation of the allotment. The petitioner is aggrieved by Condition Nos. 6 and 11 of the allotment letter dated 1-10-2003.99. Condition No. 6 prohibits the transfer of the property for 99 years without the permission of the UIT. From day one, the petitioner has been challenging the unreasonableness of the lock-in period of 99 years. It had pointed out this condition to the Collector, Kota in its letter dated 18-10-2003a letter issued just seventeen days after the allotment letter dated 1-10-2003. Under the Rules of 1974, different Rules limit the transfer of the property. Rule 14-A deals with land purchased through auction. The said Rule requires the auction purchaser to inform the UIT about the transfer. However, the said Rule is inapplicable to the present case as the land has not been sold through auction. Moreover, the requirement of the Rule is merely to inform the UIT and not to seek the permission of the UIT. But, in the present case, the UIT demands that its permission be sought for the lease hold period of 99 years. Thus, the said condition is not warranted by Rule 14-A of the Rules of 1974.""100. Moreover, the requirement of the Rule is merely to inform the UIT and not to seek the permission of the UIT. But, in the present case, the UIT demands that its permission be sought for the lease hold period of 99 years. Thus, the said condition is not warranted by Rule 14-A of the Rules of 1974.""100. Rule 17 deals with allotment of residential plots at concessional rates to the weaker section of the society. The first proviso prohibits transfer of plot/ house before expiry of 10 years. This Rule, too, is inapplicable to the present case as the land is not a residential plot to be allotted for the weaker section of the society. Moreover, the prohibition on transfer is only for a period of ten years and not for 99 years.""101. Rule 18 deals with allotment of land to public and charitable institutions. However, the said Rule does not contain any prohibition on transfer of land.102. Rule 18-A deals with allotment of undeveloped land to public, charitable, and other institutions. However, the said Rule deals with land which was acquired by the Government or land purchased by the Trust. This Rule does contain an absolute bar on transfer. However, the said Rule is inapplicable as the land was neither acquired by the State, nor purchased by the Trust. Hence, the absolute bar cannot be read against the petitioner in the garb of Rule 18-A of the Rules of 1974.103. Rule 19 of the Rules deals with allotment of land to institutions other than charitable and public institutions. However, this Rule covers the case of those institutions which are registered under the Societies Registration Act, 1960. This Rule does require the prior permission of the UIT for transfer of the property. But as the petitioner is not a Society registered under the Societies Registration Act, obviously Rule 19 is inapplicable to the petitioner.104. Mr. Sharma has tried to justify Condition No. 6 on the basis of Rule 27 of the Rules of 1974. Rule 27 reads as under: 27. But as the petitioner is not a Society registered under the Societies Registration Act, obviously Rule 19 is inapplicable to the petitioner.104. Mr. Sharma has tried to justify Condition No. 6 on the basis of Rule 27 of the Rules of 1974. Rule 27 reads as under: 27. Power to lay more conditions.- The lands allotted or disposed by public auction on payment of premium shall further be subject to levy of such imposed by way of rent, revenue, assessment, betterment tax and development charges and shall be further subject to such terms and conditions and restrictions as the State Government may impose or order under Rajasthan Land Revenue Act, 1956, Rajasthan Municipalities act, 1959 of any other law or enactment of in accordance with the rules made thereunder in this regard. 105. A bare perusal of the Rule clearly reveals that the power to impose more conditions by the UIT is limited to levy of rent, revenue, assessment, betterment tax and development charges. Moreover, the power is subjected to terms and conditions and restrictions as the State Government may impose under Rajasthan Land Revenue Act, 1956. The condition of lock-up period of 99 years comes neither under the levy of rent, revenue, etc., nor under terms and conditions etc. imposed by the State Government. Hence, the said condition cannot be justified under Rule 27 of the Rules of 1974. Therefore, the plea raised by Mr. Sharma is unacceptable.""106. But for the Rules enumerated above, there is no other provision which permits the UIT to impose a condition that the prior permission of the UIT be sought before transferring the land. Thus, Condition No. 6, which creates a lock-in period for 99 years, is not supported by any legal provision. It is, hence, an arbitrary and an illegal condition imposed by the UIT. The imposition of such a condition is, therefore, in violation of Article 14 of the Constitution of India.107. On the other hand, Condition No. 11 is as follows: Allotment of 7946 sq. meter land @ Rs. 2750/- per sq. meter, totaling Rs. 2,18,51,500/- shall be made. The said amount shall be deposited with thirty days of the date of allotment. If the amount is not deposited within the said period, the same shall be deposited within sixty days along with 15 % interest. The entire amount shall be deposited in one lump sum. 2750/- per sq. meter, totaling Rs. 2,18,51,500/- shall be made. The said amount shall be deposited with thirty days of the date of allotment. If the amount is not deposited within the said period, the same shall be deposited within sixty days along with 15 % interest. The entire amount shall be deposited in one lump sum. After the expiry of the said period, the allotment shall stand automatically cancelled and the land shall vest in UIT. However, the allotment can be restored in case the whole amount is deposited along with interest and penalty. The period can be extended for one more year. The extension of the period shall be the discretion of the Chairman or the UIT and cannot be claimed as a right by the allottee. 108. Condition No. 11 does not find any mention in the letter dated 30-9-2003 whereby the State Government had granted permission for allotment of the land. The said condition has been imposed independently by the UIT. Mr. Sharma has tried to justify the imposition of the said Condition under Rule 17 of the Rules of 1974. According to him, Rule 17 (5) deals with recovery of cost of land. However, the Rule 17 deals with allotment of residential plots at concessional rates to the weaker section of the society. Hence, Rule 17 (5) is inapplicable to the present case. Interestingly, there is no other provision in the Rules of 1974 which permits the UIT to impose Condition No. 11. Thus, the condition is without any legal basis; it, too, is illegal. Like imposition of Condition No.6, the imposition of Condition No.11 is in violation of Article 14 of the Constitution of India.109. The learned counsel for the respondents have harped on the theme that since the cost of the land was not paid within the stipulated period of thirty days, therefore, the allotment stood cancelled automatically. But Condition No. 11 does not prescribe an automatic cancellation of allotment in case the cost is not paid within thirty days. A bare perusal of the Condition clearly shows that even after the lapse of thirty days, another period of sixty days is given to the allottee to deposit the cost. Moreover, the Chairman or the UIT, in its discretion, can extend the period of payment by one year. A bare perusal of the Condition clearly shows that even after the lapse of thirty days, another period of sixty days is given to the allottee to deposit the cost. Moreover, the Chairman or the UIT, in its discretion, can extend the period of payment by one year. Of course, the allottee cannot claim, by way of right, that the period be extended by one year. But, before the door can be shut, before the allotment is cancelled, an opportunity of hearing has to be given to the petitioner. Since the discretion lies with the Chairman or with the UIT, an opportunity to canvass its case has to be given to the petitioner. It is only after the petitioner has been heard that the Chairman or the UIT can decide whether to exercise its discretion or not. Discretion cannot be exercised suo moto.110. Initially the petitioner did not pay the cost as it was faced with unreasonable and illegal conditions. As mentioned above, the petitioner had voiced its concern about the conditions in its letter dated 18-10-2003. It tried its best to convince the UIT and the State to listen to its pleas. But, as the facts narrated above clearly demonstrate, all the pleas fell on deaf ears. Eventually sensing the possibility that the allotment might be cancelled, on 1-1-05, the petitioner offered to pay the cost. In fact, on 11-3-05 it paid the entire cost including the interest. It also begged for an opportunity to be heard. But the UIT ignored the petitioners earnest request. Instead, without giving an opportunity of hearing to the petitioner, vide letter dated 22-3-05 the UIT not only returned the money to the petitioner, but also informed him that the allotment stood automatically cancelled. Like the Queen of Hearts in Lewis Carroll's Alice in Wonderland, all the UIT could say was Off with his head.""111. The record reveals a very interesting story about the conduct of the UIT. The letter of allotment dated 1-10-2003, contained the Condition No. 11. As noticed above, the Condition did provide a discretionary power to the Chairman and the UIT to extend the period for payment of the cost by one year. Vide letter dated 29-1-04, the UIT informed the petitioner that it had failed to deposit the cost within the stipulated period of 90 days. As noticed above, the Condition did provide a discretionary power to the Chairman and the UIT to extend the period for payment of the cost by one year. Vide letter dated 29-1-04, the UIT informed the petitioner that it had failed to deposit the cost within the stipulated period of 90 days. However, instead of informing the petitioner that it could seek the extension of time, it directed the petitioner to deposit the said amount within seven days, or the process of cancellation would begin. It is interesting to note that the said letter was sent by the UIT without first responding to the petitioners letter dated 18-10-03, whereby the petitioner had pointed out about the unreasonable conditions and had prayed for their deletion. Instead of first redressing the anxiety of the petitioner, the UIT threatened the petitioner to either deposit the money within a period of seven days or to face cancellation. Hence, from the beginning, the UIT was being unfair with the petitioner.112. In its letter dated 1-4-2004, a letter written to the Deputy Secretary, UDH, the UIT did not reveal the fact about the existence of the discretionary power with the UIT or the Chairman. In the said letter it merely stated that the petitioner has failed to deposit the cost within the stipulated period of ninety days, therefore, the process of cancellation should be started. Hence, from the very beginning, the UIT submitted wrong set of facts to the higher authority.113. Vide letter dated 26-8-04, the Collector asked the UIT to furnish the prevalent market rate of the land which was allotted to the petitioner and to send the factual report about the petitioners conduct as the conditions had to be re-determined. This letter clearly shows that the Collector was aware about the petitioners pleas for redetermining the conditions. Similar information was also sought by the Deputy Secretary, UDH from the UIT over the telephone. These facts are clear from the letter dated 29-9-04 sent by the UIT to the Deputy Secretary, UDH. The said letter refers to both the telephonic conversation and to the letter of the Collector dated 26-8-04. But, instead of stating all the relevant facts, the UIT informed the Deputy Secretary that the petitioner had defaulted in paying the cost within the stipulated period of ninety days. The said letter refers to both the telephonic conversation and to the letter of the Collector dated 26-8-04. But, instead of stating all the relevant facts, the UIT informed the Deputy Secretary that the petitioner had defaulted in paying the cost within the stipulated period of ninety days. It further pointed out that a piece of land lying on the same road as the land allotted to the petitioner has fetched a high price of Rs. 11,500/- per sq. meter in an auction. Hence, it recommended that it would be better to cancel the petitioners allotment and to auction of the petitioners land.114. Since the UIT was lured by the prospect of earning more money through auctioning of petitioners plot, vide letter dated 27-10- 04, it sought the Governments permission to cancel the allotment. Hence, began the greed of UIT for the city of gold. In its letter dated 16-12-04, the UIT not only sought the permission to cancel the allotment on the ground of earning more money, but also misled the Government by claiming that according to the Rules of 1974 in case the money is not deposited within a period of ninety days, the allotment stands automatically cancelled. As discussed above, there is no such provision under the Rules of 1974. Thus, the statement made by the UIT was patently false.115. The UIT indulged in the art of double-speak when it sent its proposal to the then Chief Minister sometime before January 2005. Before the Chief Minister it placed two proposals: firstly, in order to encourage the establishment of a Biotech Institute, the lock-in period should be reduced to eight years. Moreover, the petitioners demand that it should be permitted to sub-let 22.5 % of the build-up area should be granted provided the sub-letting is done for medical or biotech facilities. It further claimed that since the Government was encouraging employment of the local people, therefore conditions should be relaxed in favor of the petitioner. Secondly, since the petitioner had not deposited the cost, it should be treated as a defaulter and should be given one months time to make the payment. Interestingly, before the Chief Minister, the UIT did not mention about automatic cancellation of the allotment. Furthermore, it did not reveal to the Chief Minister about its asking the Government for the permission to cancel the allotment. Interestingly, before the Chief Minister, the UIT did not mention about automatic cancellation of the allotment. Furthermore, it did not reveal to the Chief Minister about its asking the Government for the permission to cancel the allotment. Instead, it showed its willingness to permit the petitioner to deposit the cost within one month. According to the Cabinet Memo dated 6-1-05, the Chief Minister directed that the matter be placed before the Cabinet.116. But before the Cabinet, the UIT changed its stand. According to the Cabinet Memo dated 6-1-05, the UIT claimed that as the prevalent market rate of the land is about Rs. 10,000/ per sq. meter, it would be in the interest of justice to cancel the allotment and to auction the plot. It further held out that the petitioner had defaulted in paying the cost. While it painted one picture before the Chief Minister, it presented a different profile before the Cabinet. Interestingly, there is no evidence to show that, between 6-1-05when the cabinet note was sent, and 12-5-05--when the Cabinet decided to cancel the allotment, the UIT had informed the Cabinet that, in fact, on 11-3-05 the petitioner had deposited the money with it. Moreover, it did not inform the Cabinet that the UIT had returned the money to the petitioner and had cancelled the allotment vide its letter dated 22-3- 05. It also withheld the fact that it had cancelled the allotment without taking the permission from the Cabinet. The UIT did not reveal these material facts to the Cabinet. Thus while hiding its own mistakes, the UIT painted a wrong picture before the Cabinet. It indulged in suppresso veri and suggesto falsi (suppression of the truth and suggestion of falsehood).""117. Since the UIT was acting as an agent of the State Government, it was legally bound to place all the relevant facts before the Cabinet. But it failed to do so. Since the material facts were not revealed to the Cabinet, the Cabinet could not legally and validly decide the issue. Hence, the decision of the Cabinet dated 12-5-05 cannot be upheld.118. Mr. Sharma has taken another slippery slope argument that since the allotment by the Government was under the Grants Act, therefore, the petitioner cannot challenge the grant before this court. However, such argument only needs to be uttered, to be rejected. Hence, the decision of the Cabinet dated 12-5-05 cannot be upheld.118. Mr. Sharma has taken another slippery slope argument that since the allotment by the Government was under the Grants Act, therefore, the petitioner cannot challenge the grant before this court. However, such argument only needs to be uttered, to be rejected. Firstly, the Government has not taken the stand that it had granted the land to the petitioner under the Grants Act. Secondly, the letter dated 30-9-03 does not reveal that the State had given the permission under the Grants Act. Thirdly, according to the letter dated 1-10-03, the land was allotted to the petitioner under the Rules of 1974 and not under the Grants Act. Hence, the said argument is merely an after-thought to shield the arbitrary action of the UIT.119. Mr. Sharma has also claimed that since the land is being allotted at a concessional rate, the petitioner is free to take it or leave it. According to the learned counsel, the petitioner does not have the right to challenge the action of the State or of the UIT. Such an argument smacks of imperial arrogance on the part of the UIT. The Crown can do no wrong is an antediluvian doctrine in the modern era of Rule of Law. It is too late in the day for Mr. Sharma to argue that the judiciary cannot examine cases of State largesse. In catena of cases, the Honble Supreme Court has unequivocally held that the power of judicial review does extend to contractual obligations of the State, and to cases of State largesse. {Ref. to Ramana Dayaram Shetty (supra), Kasturi Lal Lakshmi Reddy v. State of J & K [ (1980) 4 SCC 1 ] , Ram and Shyam Co. v. State of Haryana [ (1985) 3 SCC 267 ] , Mahabir Auto Stores v. Indian Oil Corpn. [ (1990) 3 SCC 752 ] , Sterling Computers Ltd. v. M & N Pblications Ltd [ (1993) 1 SCC 445 ] , ABL International Ltd (supra), Meerut Development Authority v. Association of Management Studies & Ano. [ (2009) 6 SCC 171 ] . Therefore, the contention raised by Mr. Sharma is unacceptable.120. Mr. [ (1990) 3 SCC 752 ] , Sterling Computers Ltd. v. M & N Pblications Ltd [ (1993) 1 SCC 445 ] , ABL International Ltd (supra), Meerut Development Authority v. Association of Management Studies & Ano. [ (2009) 6 SCC 171 ] . Therefore, the contention raised by Mr. Sharma is unacceptable.120. Mr. Sharma has further pleaded that in light of Condition No. 11 of the allotment letter, it was well within the knowledge of the petitioner that non-deposit of cost of land within the stipulated period would automatically entail cancellation of the allotment. Therefore, denial of opportunity of hearing did not cause any prejudice to the petitioner. Moreover, since the cancellation of allotment was by operation of law, an opportunity of hearing would have been a futile exercise. Lastly, principles of natural justice are not of universal application. If no 'prejudice' is caused, if giving of opportunity of hearing is 'a futile exercise', in such cases the denial of hearing does not amount to violation of principles of natural justice. Hence, the respondents were justified in denying an opportunity of hearing to the petitioner. But these contentions are also unacceptable for reasons to be discussed hereinafter.121. Principles of natural justice have an ancient ancestry. Law presumes that Man has an innate sense of goodness, of fairness, and of morality. Since certain principles are considered to be omnipresent in Nature, Mans conscience has been able to discover them. These principles are not part of the codified law, but they permeate the codified laws like ether. Two main principles of natural justice are firstly, nemo judix in causa sua or nemo debet esse judex in propria causa sua that is, no man shall be a judge in his own cause. The second rule is audi alteram partem, that is, hear the other side. A corollary has been deduced from the above two rules and particularly the audi alteram partem rule, namely qui aliquid statuerit, parte inaudita altera acquum licet dixerit, haud acquum fecerit that is, he who shall decide anything without the other side having been heard, although he may have said what is right, will not have done what is right or in other words, as it is now expressed, justice should not only be done but should manifestly be seen to be done.122. Till the beginning of 20th Century, the applicability of these principles was restricted to the judicial and quasi-judicial authorities. However, with the obscuring of the demarcation between the quasijudicial and administrative functions, these principles were equally applied to the administrative functions. Thus, in the case of State of Orissa v. Dr. (Mrs) Binapani Dei (AIR 1967 Supreme Court 1269) , the Apex Court observed that even an administrative order which involves civil consequencesmust be made consistently with the rules of natural justice. In the case of Mohinder Singh Gill v. Chief Election Commissioner, New Delhi [ (1978) 1 SCC 405 ], while defining the term civil consequence, the Honble Supreme Court said, Civil consequence undoubtedly cover infraction of not merely property or personal rights but of civil liberties, material deprivations and nonpecuniary damages. In its comprehensive connotation, everything that affects a citizen in his civil life inflicts a civil consequence. The Apex Court has reiterated this view as in the case of S. L. Kapoor v. Jagmohan & Ors [ (1980) 4 SCC 379 ] and in Canara Bank & Ors. v. Debasis Das & Ors [ (2003) 4 SCC 557 ] 123. In the case of Sahara India (Firm), Lucknow v. Commissioner of Income Tax, Central- I & Ano. [ (2008) 14 SCC 151 ] the Apex Court underlined the aim of these principles when it held as under: The underlying principle of natural justice, evolved under the common law, is to check arbitrary exercise of power by the State or its functionaries. Therefore, the principle implies a duty to act fairly i.e. fair play in action. The aim of rules of natural justice is to secure justice or to put it negatively to prevent miscarriage of justice. These rules can operate only in areas not covered by any law validly made. They do not supplant the law but supplement it. 124. As far back as 1963, in England in the case of Ridge v. Baldwin [(1963) 2 All England Reporter 66, HL] it was observed that breach of the principles of natural justice is in itself sufficient to grant relief and that no further de facto prejudice needs be shown. But this rule was applicable in the case of no notice, no opportunity, and no hearing; in such cases, the prejudice was presumed to exist. But this rule was applicable in the case of no notice, no opportunity, and no hearing; in such cases, the prejudice was presumed to exist. It was not for the complainant to establish that, indeed, prejudice has been caused to him by denial of principles of natural justice. The Honble Supreme Court has religiously followed this principle in catena of cases.""125. However, despite the generality of the principles, the principles of natural justice are not necessarily of universal application. There are certain circumstances where these principles need not be applied. Thus, their non-observance would not instinctively imply that the impugned action, or order, should be set aside. In the case of Sahara India (Firm) (supra), the Apex Court has held as under: However, no general rule of universal application can be laid down as to the applicability of the principle audi alteram partem, in addition to the language of the provision. Undoubtedly, there can be exceptions to the said doctrine. The question whether the principle has to be applied or not is to be considered bearing in mind the express language and the basic scheme of the provision conferring the power; the nature of the power conferred and the purpose of which the power is conferred and the final effect of the exercise of that power. It is only upon a consideration of all these matters that the question of application of the said principle can be properly determined." 126. In the case of K. L. Tripathi v. State Bank of India & Ors [ (1984) 1 SCC 43 ] , the Honble Supreme Court had developed the test of prejudice being caused to the complainant in case of violation of principle of natural justice. It observed as under:"" It is not possible to lay down rigid rules as to when the principles of natural justice are to apply: nor as to their scope and extent. Everything depends on the subject matter, the application of principles of natural justice, resting as it does upon statutory implication, must always be in conformity with the scheme of the Act and with the subject-matter of the case. In the application of the concept of fair play there must be real flexibility. There must also have been some real prejudice to the complainant; there is no such thing as a merely technical infringement of natural justice. In the application of the concept of fair play there must be real flexibility. There must also have been some real prejudice to the complainant; there is no such thing as a merely technical infringement of natural justice. The requirements of natural justice must depend on the facts and the circumstances of the case, the nature of the inquiry, the rules under which the tribunal is acting, the subject-matter to be dealt with, and so forth. 127. Although in State Bank of Patiala v. S. K. Sharma [ (1996) 3 SCC 364 ] the Honble Supreme Court dealt with a case of departmental enquiry, but the Apex Court dealt with the finer points about the applicability of the principle of audi alterm partem, and about the consequences of its non-applicability. At page 389 of the Report it summarised and held as under: We may summarise the principles emerging from the above discussion. [These are by no means intended to be exhaustive and are evolved keeping in view the context of disciplinary enquiries and orders of punishment imposed by an employer upon the employee]: (1) An order passed imposing a punishment on an employee consequent upon a disciplinary/departmental enquiry in violation of the rules/regulations/statutory provisions governing such enquiries should not be set aside automatically. The Court or the Tribunal should enquire whether (a) the provision violated is of a substantive nature or (b) whether it is procedural in character. (2) A substantive provision has normally to be complied with as explained hereinbefore and the theory of substantial compliance or the test of prejudice would not be applicable in such a case. (3) In the case of violation of a procedural provision, the position is this: procedural provisions are generally meant for affording a reasonable and adequate opportunity to the delinquent officer/employee. They are, generally speaking, conceived in his interest. Violation of any and every procedural provision cannot be said to automatically vitiate the enquiry held or order passed. Except cases falling under 'no notice', 'no opportunity' and 'no hearing' categories, the complaint of violation of procedural provision should be examined from the point of view of prejudice, viz., whether such violation has prejudiced the delinquent officer/ employee in defending himself properly and effectively. Except cases falling under 'no notice', 'no opportunity' and 'no hearing' categories, the complaint of violation of procedural provision should be examined from the point of view of prejudice, viz., whether such violation has prejudiced the delinquent officer/ employee in defending himself properly and effectively. If it is found that he has been so prejudiced, appropriate orders have to be made to repair and remedy the prejudicate, including setting aside the enquiry and/or the order of punishment. If no prejudice is established to have resulted therefrom, it is obvious, no interference is called for. In this connection, it may be remembered that there may be certain procedural provisions which are of a fundamental character, whose violation is by itself proof of The Court may not insist on proof of prejudice in such cases. As explained in the body of the judgment, take a case where there is a provision g expressly providing that after the evidence of the employer/Government is over, the employee shall be given an opportunity to lead defence in his evidence, and in a given case, the enquiry officer does not give that opportunity inspite of the delinquent officer/employee asking for it. The prejudice is self- evident. No proof of prejudice as such need be called for in such a case. To repeat, the test is one of prejudice, i.e., whether the person has received a fair hearing considering all things. Now, this very aspect can also be looked at from the point of view of directory and mandatory provisions, if one is so inclined. The principle stated under (4) hereinbelow is only another way of looking at the same aspect as is dealt with herein and not a different or distinct principle. (4)(a) In the case of a procedural provision which is not of a mandatory characters the complaint of violation has to be examined from the standpoint of substantial compliance. Be that as it may the order passed in violation of such a provision can be set aside only where such violation has occasioned prejudice to the delinquent employee. (4) In the case of violation of a procedural provisional which is of a mandatory character, it has to be ascertained whether the provision is conceived in the interest of the person proceeded against or in public interest. (4) In the case of violation of a procedural provisional which is of a mandatory character, it has to be ascertained whether the provision is conceived in the interest of the person proceeded against or in public interest. If it is found to be the former, then it must be seen whether the delinquent officer has waived the said requirements either expressly or by his conduct. If he is found to have waived its then the order of punishment cannot be set aside on the ground of said violation. If, on the other hand, it is found that the delinquent officer/employee has not it or that the provision could not be waived by him, then the Court or Tribunal should make appropriate directions [include the setting aside of the order of punishment], keeping in mind the approach adopted by the Constitution Bench in B.Karunkar. The ultimate test is always the same viz., test of prejudice or the test of fair hearing, as it may be called. (5) Where the enquiry is not governed by any rules/regulations/statutory provisions and the only obligation is to observe the principles of natural justice - or, for that matter, wherever such principles are held to be implied by the very nature and impact of the order/action the Court or the Tribunal should make a distinction between a total violation of natural justice [rule of audi alteram] and violation of a facet of the said rule, as explained in the body of the judgment. In other words, a distinction must be made between no opportunity" and no adequate opportunity, i.e., between "no notice"/"no hearing" "no fair hearing". (a) In the case of former, the order passed would undoubtedly be invalid [one may call it "void" or a nullity if one chooses to]. In such cases, normally, liberty will be reserved for the Authority to take proceedings afresh according to law, i.e., in accordance with the said rule [audi alteram partem ]. (b) But in the latter case, the effect of violation [of a facet of the rule of audi alteram] has to be examined from the standpoint of prejudice; in other words, what the Court or Tribunal has to see is whether in the totality of the circumstances, the delinquent officer/employee did or did not have a fair hearing and the orders to be made shall depend upon the answer to the said query. [It is made clear that this principle [No.5] does not apply in the case of rule against bias, the test in which behalf are laid down elsewhere.] (6) While applying the rule of audi alteram partem [the primary principle of natural justice] the Court/ Tribunal/Authority must always bear in mind the ultimate and over-riding objective underlying the said rule, viz., to ensure a fair hearing and to ensure that there is no failure of justice. It is this objective which should guide them in applying the rule to varying situations that arise before them. (7) There may be situations where the interests of state or public interest may call for a curtailing of the rule of audi alteram partem. In such situations, the Court may have to balance public/State interest with the requirement of natural justice and arrive at an appropriate decision. 128. In the case of M. C. Mehta v. Union of India [ (1999) 6 SCC 237 ] , the Apex Court spelt out certain circumstances where, under Article 226 of the Constitution of India, the High Court need not interfere with the impugned order/ action, for non-observation of principles of natural justice: firstly, where the striking down will result in restoration of another order passed earlier, in favor of the petitioner and against the opposite party, in violation of the principles of natural justice, or is otherwise not in accordance with law. Secondly, if on the admitted or indisputable facts only one conclusion is possible and permissible, the Court need not issue a writ merely because there is violation of principles of natural justice. However, in the above quoted case, the Apex Court left the applicability of the theory of useless formality or empty formality open.129. Later on, in the case of Punjab National Bank & Ors v. Manjeet & Ors. [ (2006) 8 SCC 647 ] , the Hon'ble Supreme Court held that The principles of natural justice were also not required to be complied with as the same would have been an empty formality.""130. There are other well known circumstances where principles of natural justice can be excluded namely, where a right to a prior notice and an opportunity to be heard before an order is passed would obstruct the taking of prompt action, such a right can be excluded. There are other well known circumstances where principles of natural justice can be excluded namely, where a right to a prior notice and an opportunity to be heard before an order is passed would obstruct the taking of prompt action, such a right can be excluded. This right can also be excluded where the nature of the action to be taken, its object and purpose and the scheme of the relevant statutory provisions warrant its exclusion, nor can the audi alteram partem rule be invoked if importing it would have the effect of paralyzing the administrative process or where the need for promptitude or the urgency of taking action so demands, as pointed out in Maneka Gandhi v. Union of India [ (1978) 1 SCC 248 ] [ Ref. to Jagdish Swarup. Constitution of India 2nd Edn., p. 289]. The principles of natural justice can also be ousted by a provision of law, for example the second proviso to Article 311 (2) of the Constitution of India specifically ousts the applicability of these principles in emergent situations. [Ref. to Tulsi Ram Patel v. Union of India (1985) 3 SCC 398 ]131. Having scanned the doctrine of principle of natural justice, the moot questions before this court are whether the principles should have been applied in the present case or not? Whether the petitioners rights under the said doctrine have been violated or not? As discussed above, the Condition No. 11 did not prescribe an automatic cancellation of the allotment for non-payment of the cost within the stipulated period. The Condition clearly held out that the time for payment of the cost can be extended at the discretion of the Chairman or the UIT. Although the Condition stated that relaxation cannot be claimed as of right, but nonetheless under the Condition, the petitioner did have a right of consideration. Thus, the petitioner had a right that its case be considered for grant of relaxation.132. Naturally, a case cannot be considered until and unless an opportunity of hearing is given to the party. Hence, the rule of audi alteram partem is built into the Condition No. 11 of the allotment letter. Therefore, the contention raised by Mr. Sharma that since the allotment was to be cancelled automatically under Condition No. 11, thus no prejudice is caused deserves to be dismissed.133. Hence, the rule of audi alteram partem is built into the Condition No. 11 of the allotment letter. Therefore, the contention raised by Mr. Sharma that since the allotment was to be cancelled automatically under Condition No. 11, thus no prejudice is caused deserves to be dismissed.133. Similarly, as noticed above, different provisions of the Rules of 1974 clearly lay down that period for construction of the building can also be extended by the appropriate authority. Thus, non construction of the building within the stipulated period could not automatically cancel the allotment as claimed by the learned counsel for the UIT. Hence, these provisions also bestow a right of consideration upon the petitioner. Under these Rules, the petitioner should have been given an opportunity of hearing in order for it to explain its side and to plead for extension of time. Therefore, the argument that since cancellation is by operation of law and grant of opportunity of hearing would be a futile exercise, even this contention is clearly unacceptable.134. Ironically, the petitioner was given an appointment to meet the Minister, but before the meeting could materialize, the Cabinet decided to cancel the allotment. Thus, it is a case of no opportunity, of no hearing, of no notice. According to the principle of laid down in Ridge v. Baldwin , prejudice can be presumed. It is, therefore, not necessary for the petitioner to plead prejudice. Even otherwise, the denial of opportunity of hearing has caused prejudice to the petitioner. For, having invested its money, energy, and goodwill, having run from pillar to post, having looked forward to possessing a land and constructing its Hospital and Biotech Research Institute, suddenly everything came to naught. The petitioner has lost his money, time and goodwill. It has had to cut a sorry figure and had to earn a bad reputation in the market. Hence, its image has been tarnished only because of violation of principles of natural justice. It had to face evil consequences, without an opportunity of hearing being given to it. Thus, clearly the petitioners rights under principles of natural justice have been violated. The respondents have acted in an arbitrary, unreasonable and unjust manner.""135. Lastly, the respondents action involved civil consequences. Therefore, it was imperative for the respondents to extend an opportunity of hearing to the petitioner. Thus, clearly the petitioners rights under principles of natural justice have been violated. The respondents have acted in an arbitrary, unreasonable and unjust manner.""135. Lastly, the respondents action involved civil consequences. Therefore, it was imperative for the respondents to extend an opportunity of hearing to the petitioner. After all, the State and its instrumentalities have to remember that the principle that justice should not only be done, but should manifestly appear to be done applies as much to them as to the judiciary. The foundation of a democracy is the faith of the people. Unless the people have a faith in the Government, in the functioning of the State, they will not have faith in the political system. Hence, the State and its functionaries must function in such a way as not to tarnish and trample the faith of the people.136. According to the Constitutional scheme the sovereignty lies with the people. The State and its instrumentalities are merely trustees of the people. They are the trustees of the national assets, of national culture, of national conscience. As trustees, it is the foremost duty of the State to be benevolent, to be generous, to be fair to its people. The state should not be pedantic in its approach or myopic in its vision. Plato, the famous Greek philosopher, in his book Republic warns that democracy degenerates into anarchy. If the Indian democracy is to be saved from degenerating into anarchy, the Indian State has to be more sensitive to the needs, the interest and the rights of its people. Our Founding Fathers have inscribed certain dreams in the Preamble of the Constitution of India, which are yet to be fulfilled by the State. The State and the people must endeavor to achieve these expectations of the Preamble of the Constitution of India. It is a long and a arduous journey, but we must keep tryst with our destiny.137. Mr. Sharmas last refuge is under the doctrine of ratification. According to him, for the sake of arguments let us accept the position that, in fact, the UIT was acting as an agent of the State. Since the State did not disturb the conditions imposed by the UIT, it ratified the same. Similarly, the cancellation by the UIT in its letter dated 22-3-2005 was ratified later on by the Cabinet in its decision on 12-5-2005. Since the State did not disturb the conditions imposed by the UIT, it ratified the same. Similarly, the cancellation by the UIT in its letter dated 22-3-2005 was ratified later on by the Cabinet in its decision on 12-5-2005. Since the acts of the UIT have been ratified, they are valid. But even the last argument is without any force.""138. Section 196 of the Contract Act deals with the doctrine of ratification. The said doctrine emanates from the Latin maxim ratihabitio mandato aequiparatur namely, a subsequent ratification of an act is equivalent to a prior authority to perform such act. Sections 196 to 200 of the Contract Act deal with ratification. While Section 196 of the Contract Act empowers the principal to ratify the act of the agent, Section 197 provides that ratification can be implied or express. However, Section 198 lays down that there cannot be valid ratification if the knowledge of the principal is defective. Further, Section 199 requires that the principal must ratify the whole transaction. Lastly, Section 200 of the Contract Act provides that ratification of an unauthorized act shall not injure a third person.""139. However, before an act can be ratified, there are certain essential requirements for ratification of the act: firstly, the act must have been done on behalf of a named or ascertained principal. An undisclosed principal cannot ratify. Secondly, person ratifying must be competent to ratify. Thirdly, acts which are in violation of the law cannot be ratified. Fourthly, knowledge of the principal should not be defective. Fifthly, ratification should not harm the interest or the rights of a third party.140. In the present case, some of these elements remain unsatisfied. As discussed above, the UIT did not have the power to impose the conditions which it did in the allotment letter dated 1-10-2003. Thus, those conditions were in violation of the law. Therefore, the State could not have ratified the said conditions. Similarly, as discussed above the material facts were withheld from the Cabinet in its meeting of 12-5-05. Therefore, the knowledge of the Cabinet was clearly defective. Thus, in light of Section 198 of the Contract Act, the Cabinet could not have validly ratified the actions of the UIT. Hence, the last contention raised by Mr. Sharma is equally unacceptable.141. For the reasons stated above, this court quashes and sets aside the Condition Nos. Therefore, the knowledge of the Cabinet was clearly defective. Thus, in light of Section 198 of the Contract Act, the Cabinet could not have validly ratified the actions of the UIT. Hence, the last contention raised by Mr. Sharma is equally unacceptable.141. For the reasons stated above, this court quashes and sets aside the Condition Nos. 6 and 11 of the allotment letter dated 1-10-2003, as well as the decision of the Cabinet dated 12-5-2005, and the order dated 23-7-2005 whereby the UIT had informed the petitioner about the Cabinet decision dated 12-5-2005. The State Government is directed to issue the demand note to the petitioner. No order as to costs.Petition allowed. *******