Civil Services (Preliminary) Examination, 2010. - writ for direction to the Union Public Service Commission (UPSC) to disclose the details of marks (raw and scaled) awarded to them in the Civil Services (Prelims) Examination 2010. = information sought with regard to marks in Civil Services Exam cannot be directed to be furnished mechanically. Situation of exams of other academic bodies may stand on different footing. Furnishing raw marks will cause problems as pleaded by the UPSC as quoted above which will not be in public interest. However, if a case is made out where the Court finds that public interest requires furnishing of information, the Court is certainly entitled to so require in a given fact situation. If rules or practice so require, certainly such rule or practice can be enforced. In the present case, direction has been issued without considering these parameters.= In view of the above, the impugned order(s) is set aside and the writ petitions filed by the writ petitioners are dismissed. This order will not debar the respondents from making out a case on above parameters and approach the appropriate forum, if so advised.

1
REPORTABLE
IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
CIVIL APPEAL NO.(s).6159-6162 OF 2013
UNION PUBLIC SERVICE COMMISSION ETC. Appellant(s)
 VERSUS
ANGESH KUMAR & ORS. ETC. Respondent(s)
WITH
C.A. No. 5924/2013
JOINT DIRECTORS AND CENTRAL PUBLIC
INFORMATION OFFICER AND ANR. Appellant(s)
 VERSUS
T.R. RAJESH Respondent(s)
AND
SLP(C) No. 28817/2014
SLP(C) No. 28801/2014
SLP(C) No. 28811/2014
SLP(C) No. 28816/2014
SLP(C) No. 28805/2014
SLP(C)No....... of 2018 (@Diary No(s). 15951/2017)
O R D E R
Civil Appeal No(s).6159-6162 of 2013 :
(1) We have heard learned counsel for the parties and
perused the record.
(2) These appeals have been preferred against
judgment and Order dated 13.7.2012 in LPA NO.229 of
2
2011 in W.P.(C)NO.3316 of 2011, 28.08.2012 in Review
Petition NO.486 of 2012 in LPA NO.229/2011 and Review
Petition NO.484 of 2012 in W.P.(C) NO.3316/2011 of the
High Court of Delhi at New Delhi.
(3) The respondents-writ petitioners were
unsuccessful candidates in the Civil Services
(Preliminary) Examination, 2010. They approached the
High Court for a direction to the Union Public
Service Commission (UPSC) to disclose the details of
marks (raw and scaled) awarded to them in the Civil
Services (Prelims) Examination 2010. The information
in the form of cut-off marks for every subject,
scaling methodology, model answers and complete
result of all candidates were also sought. Learned
Single Judge directed that the information sought be
provided within fifteen days. The said view of the
Single Judge has been affirmed by the Division Bench
of the High Court.
(4) The main contention in support of these appeals
is that the High Court has not correctly appreciated
the scheme of the Right to Information Act, 2005 (the
Act) and the binding decisions of this Court.
3
(5) It is submitted that though Sections 3 and 6 of
the Act confer right to information (apart from
statutory obligation to provide specified information
under Section 4), Sections 8, 9 and 11 provide for
exemption from giving of information as stipulated
therein. The exclusion by Sections 8, 9 and 11 is
not exhaustive and parameters under third recital of
the preamble of the Act can also be taken into
account. Where information is likely to conflict
with other public interest, including efficient
operation of the Government, optimum use of fiscal
resources and preservation of confidentiality of some
sensitive information, exclusion of right or
information can be applied in a given fact situation.
(6) In support of this submission, reliance has been
placed on judgment of this Court in Central Board of
Secondary Education and Anr. v. Aditya Bandopadhyay
and Ors., (2011) 8 SCC 497 wherein this Court
observed :
“61. Some High Courts have held that Section 8 of
the RTI Act is in the nature of an exception to
Section 3 which empowers the citizens with the
right to information, which is a derivative from
the freedom of speech; and that, therefore, Section
8 should be construed strictly, literally and
narrowly. This may not be the correct approach. The
4
Act seeks to bring about a balance between two
conflicting interests, as harmony between them is
essential for preserving democracy. One is to bring
about transparency and accountability by providing
access to information under the control of public
authorities. The other is to ensure that the
revelation of information, in actual practice, does
not conflict with other public interests which
include efficient operation of the Governments,
optimum use of limited fiscal resources and
preservation of confidentiality of sensitive
information. The Preamble to the Act specifically
states that the object of the Act is to harmonise
these two conflicting interests. While Sections 3
and 4 seek to achieve the first objective, Sections
8, 9, 10 and 11 seek to achieve the second
objective. Therefore, when Section 8 exempts
certain information from being disclosed, it should
not be considered to be a fetter on the right to
information, but as an equally important provision
protecting other public interests essential for the
fulfilment and preservation of democratic ideals.
62. When trying to ensure that the right to
information does not conflict with several other
public interests (which includes efficient
operations of the Governments, preservation of
confidentiality of sensitive information, optimum
use of limited fiscal resources, etc.), it is
difficult to visualise and enumerate all types of
information which require to be exempted from
disclosure in public interest. The legislature has
however made an attempt to do so. The enumeration
of exemptions is more exhaustive than the
enumeration of exemptions attempted in the earlier
Act, that is, Section 8 of the Freedom to
Information Act, 2002. The courts and Information
Commissions enforcing the provisions of the RTI Act
have to adopt a purposive construction, involving a
reasonable and balanced approach which harmonises
the two objects of the Act, while interpreting
Section 8 and the other provisions of the Act.
66. The right to information is a cherished right.
Information and right to information are intended
to be formidable tools in the hands of responsible
citizens to fight corruption and to bring in
transparency and accountability. The provisions of
the RTI Act should be enforced strictly and all
efforts should be made to bring to light the
necessary information under clause (b) of Section
4(1) of the Act which relates to securing
5
transparency and accountability in the working of
public authorities and in discouraging corruption.
But in regard to other information [that is,
information other than those enumerated in Sections
4(1)(b) and (c) of the Act], equal importance and
emphasis are given to other public interests (like
confidentiality of sensitive information, fidelity
and fiduciary relationships, efficient operation of
Governments, etc.).
67. Indiscriminate and impractical demands or
directions under the RTI Act for disclosure of all
and sundry information (unrelated to transparency
and accountability in the functioning of public
authorities and eradication of corruption) would be
counterproductive as it will adversely affect the
efficiency of the administration and result in the
executive getting bogged down with the
non-productive work of collecting and furnishing
information. The Act should not be allowed to be
misused or abused, to become a tool to obstruct the
national development and integration, or to destroy
the peace, tranquillity and harmony among its
citizens. Nor should it be converted into a tool of
oppression or intimidation of honest officials
striving to do their duty. The nation does not want
a scenario where 75% of the staff of public
authorities spends 75% of their time in collecting
and furnishing information to applicants instead of
discharging their regular duties. The threat of
penalties under the RTI Act and the pressure of the
authorities under the RTI Act should not lead to
employees of a public authorities prioritising
“information furnishing”, at the cost of their
normal and regular duties.”
(emphasis added)
(7) Thus, it is clear that in interpreting the
scheme of the Act, this Court has, while adopting
purposive interpretation, read inherent limitation in
Sections 3 and 6 based on the Third Recital in the
Preamble to the Act. While balancing the right to
information, public interest including efficient
6
working of the Government, optimum use of fiscal
resources and preservation of confidentiality of
sensitive information has to be balanced and can be a
guiding factor to deal with a given situation de hors
Sections 8,9 and 11. The High Court has not applied
the said parameters.
(8) The problems in showing evaluated answer
sheets in the UPSC Civil Services Examination are
recorded in Prashant Ramesh Chakkarwar v. UPSC1 .
From the counter affidavit in the said case,
following extract was referred to :
“(B) Problems in showing evaluated answer books to
candidates.—(i) Final awards subsume earlier stages
of evaluation. Disclosing answer books would reveal
intermediate stages too, including the so-called ‘raw
marks’ which would have negative implications for the
integrity of the examination system, as detailed in
Section (C) below.
(ii) The evaluation process involves several stages.
Awards assigned initially by an examiner can be struck
out and revised due to (a) totalling mistakes,
portions unevaluated, extra attempts (beyond
prescribed number) being later corrected as a result
of clerical scrutiny, (b) The examiner changing his
own awards during the course of evaluation either
because he/she marked it differently initially due to
an inadvertent error or because he/she corrected
himself/herself to be more in conformity with the
accepted standards, after discussion with Head
Examiner/colleague examiners, (c) Initial awards of
the Additional Examiner being revised by the Head
Examiner during the latter’s check of the former’s
work, (d) the Additional Examiner’s work having been
found erratic by the Head Examiner, been rechecked
entirely by another examiner, with or without the Head
1 (2013) 12 SCC 489
7
Examiner again rechecking this work.
(iii) The corrections made in the answer book would
likely arouse doubt and perhaps even suspicion in the
candidate’s mind. Where such corrections lead to a
lowering of earlier awards, this would not only breed
representations/grievances, but would likely lead to
litigation. In the only evaluated answer book that has
so far been shown to a candidate (Shri Gaurav Gupta in
WP No. 3683 of 2012 in Gaurav Gupta v. UPSC dated
6.7.2012(Del.)) on the orders of the High Court, Delhi
and that too, with the marks assigned masked; the
candidate has nevertheless filed a fresh WP alleging
improper evaluation.
(iv) As relative merit and not absolute merit is the
criterion here (unlike academic examinations), a
feeling of the initial marks/revision made being
considered harsh when looking at the particular answer
script in isolation could arise without appreciating
that similar standards have been applied to all others
in the field. Non-appreciation of this would lead to
erosion of faith and credibility in the system and
challenges to the integrity of the system, including
through litigation.
(v) With the disclosure of evaluated answer books, the
danger of coaching institutes collecting copies of
these from candidates (after perhaps
encouraging/inducing them to apply for copies of their
answer books under the RTI Act) is real, with all its
attendant implications.
(vi) With disclosure of answer books to candidates, it
is likely that at least some of the relevant examiners
also get access to these. Their possible resentment at
their initial awards (that they would probably
recognise from the fictitious code numbers and/or
their markings, especially for low-candidature
subjects) having been superseded (either due to
inter-examiner or inter-subject moderation) would lead
to bad blood between Additional Examiners and the Head
Examiner on the one hand, and between examiners and
the Commission, on the other hand. The free and frank
manner in which Head Examiners, for instance, review
the work of their colleague Additional Examiners,
would likely be impacted. Quality of assessment
standards would suffer.
(vii) Some of the optional papers have very low
candidature (sometimes only one), especially the
8
literature papers. Even if all examiners’ initials are
masked (which too is difficult logistically, as each
answer book has several pages, and examiners often
record their initials and comments on several pages
with revisions/corrections, where done, adding to the
size of the problem), the way marks are awarded could
itself be a give away in revealing the examiner’s
identity. If the masking falters at any stage, then
the examiner’s identity is pitilessly exposed. The
‘catchment area’ of candidates and examiners in some
of these low-candidature papers is known to be
limited. Any such possibility of the examiner’s
identity getting revealed in such a high-stakes
examination would have serious implications, both for
the integrity and fairness of the examination system
and for the security and safety of the examiner. The
matter is compounded by the fact that we have publicly
stated in different contexts earlier that the
paper-setter is also generally the Head Examiner.
(viii) UPSC is now able to get some of the best
teachers and scholars in the country to be associated
in its evaluation work. An important reason for this
is no doubt the assurance of their anonymity, for
which the Commission goes to great lengths. Once
disclosure of answer books starts and the inevitable
challenges (including litigation) from disappointed
candidates starts, it is only a matter of time before
these examiners who would be called upon to explain
their assessment/award, decline to accept further
assignments from the Commission. A resultant
corollary would be that examiners who then accept
this assignment would be sorely tempted to play safe
in their marking, neither awarding outstanding marks
nor very low marks, even where these are deserved.
Mediocrity would reign supreme and not only the
prestige, but the very integrity of the system would
be compromised markedly.”
(9) This Court thereafter approved the method of
moderation adopted by the UPSC relying upon earlier
judgment in Sanjay Singh v. U.P. Public Service
Commission, (2007) 3 SCC 720 and U.P. Public Service
Commission v. Subhash Chandra Dixit, (2003) 12 SCC
701.
9
(10) Weighing the need for transparency and
accountability on the one hand and requirement of
optimum use of fiscal resources and confidentiality
of sensitive information on the other, we are of the
view that information sought with regard to marks in
Civil Services Exam cannot be directed to be
furnished mechanically. Situation of exams of other
academic bodies may stand on different footing.
Furnishing raw marks will cause problems as pleaded
by the UPSC as quoted above which will not be in
public interest. However, if a case is made out
where the Court finds that public interest requires
furnishing of information, the Court is certainly
entitled to so require in a given fact situation. If
rules or practice so require, certainly such rule or
practice can be enforced. In the present case,
direction has been issued without considering these
parameters.
(11) In view of the above, the impugned order(s)
is set aside and the writ petitions filed by the writ
petitioners are dismissed. This order will not debar
the respondents from making out a case on above
10
parameters and approach the appropriate forum, if so
advised.
(12) The appeals are accordingly disposed of.
Civil Appeal No. 5924 of 2013:
(1) In view of judgment rendered today in Civil
Appeal No(s).6159-6162 of 2013, the impugned order is
set aside. The appeal stands disposed of in the same
terms.
SLP(C) No. 28817/2014, SLP(C) No. 28801/2014, SLP(C)
No. 28811/2014 SLP(C) No. 28816/2014, SLP(C) No.
28805/2014, SLP(C) NO......... of 2018 (arising out of
Diary No(s). 15951/2017) :
(1) Delay condoned.
(2) In view of judgment rendered in Civil Appeal
Nos.6159-6162 of 2013, these special leave petitions
are disposed of in the same terms.

..........................J.
 (ADARSH KUMAR GOEL)
..........................J.
 (UDAY UMESH LALIT)
New Delhi,
February 20, 2018.

corporate laws - Service tax - whether, the value of goods/material supplied or provided free of cost by a service recipient and used for providing the taxable service of construction or industrial complex, is to be included in computation of gross amount (charged by the service provider), for valuation of the taxable service, under Section 67 of the Act and for availing the benefits under Notification No. 15/2004-ST dated September 10, 2004 as amended by Notification No. Civil Appeal Nos. 1335-1358 of 2015 with Ors. Page 5 of 26 4/2005-ST dated March 01, 2005 (whereby an Explanation was added to Notification No. 15/2004-ST). = valuation of gross amount has a causal connection with the amount that is charged by the service provider as that becomes the element of ‘taxable service’. - Appeal by revenue dismissed

REPORTABLE
IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
CIVIL APPEAL NOS. 1335-1358 OF 2015
COMMISSIONER OF SERVICE TAX ETC. .....APPELLANT(S)
VERSUS
M/S. BHAYANA BUILDERS (P) LTD. ETC. .....RESPONDENT(S)
W I T H
CIVIL APPEAL NO. 15865 OF 2017
CIVIL APPEAL NO. 2888 OF 2015
CIVIL APPEAL NO. 7238 OF 2015
CIVIL APPEAL NOS. 3248-3252 OF 2015
CIVIL APPEAL NOS. 2452-2455 OF 2014
CIVIL APPEAL NO. 45 OF 2015
CIVIL APPEAL NO. 1400 OF 2015
CIVIL APPEAL NO. 10206 OF 2017
CIVIL APPEAL NO. 6207 OF 2016
CIVIL APPEAL NOS. 8148-8149 OF 2014
CIVIL APPEAL NO. 7370 OF 2014
Civil Appeal Nos. 1335-1358 of 2015 with Ors. Page 1 of 26
CIVIL APPEAL NO. 10027 OF 2014
CIVIL APPEAL NO. 4209 OF 2015
CIVIL APPEAL NO. 1326 OF 2015
CIVIL APPEAL NO. 1647 OF 2015
CIVIL APPEAL NO. 3060 OF 2015
CIVIL APPEAL NO. 2437 OF 2015
CIVIL APPEAL NO. 1888 OF 2015
CIVIL APPEAL NO. 2081 OF 2015
CIVIL APPEAL NOS. 2082-2083 OF 2015
CIVIL APPEAL NO. 4208 OF 2015
CIVIL APPEAL NO. 3247 OF 2015
CIVIL APPEAL NO. 2474 OF 2015
CIVIL APPEAL NO. 5601 OF 2015
CIVIL APPEAL NO. 7038 OF 2015
CIVIL APPEAL NO. 7235 OF 2015
CIVIL APPEAL NO. 7243 OF 2015
CIVIL APPEAL NO. 4970 OF 2016
CIVIL APPEAL NO. 5941 OF 2016
CIVIL APPEAL NO. 8484 OF 2016
CIVIL APPEAL NO. 2338 OF 2018
(ARISING OUT OF DIARY NO. 42349 OF 2016)
CIVIL APPEAL NOS. 5319-5320 OF 2017
Civil Appeal Nos. 1335-1358 of 2015 with Ors. Page 2 of 26
CIVIL APPEAL NO. 15485 OF 2017
CIVIL APPEAL NO. 11085 OF 2017
CIVIL APPEAL NO. 10606 OF 2017
CIVIL APPEAL NO. 15570 OF 2017
CIVIL APPEAL NO. 12451 OF 2017
CIVIL APPEAL NO. 11182 OF 2017
CIVIL APPEAL NO. 1430 OF 2015
CIVIL APPEAL NO. 9423 OF 2017
A N D
CIVIL APPEAL NO. 10611 OF 2017
J U D G M E N T
A.K. SIKRI, J.
Delay condoned in Diary No. 42349 of 2016.
2) The respondents herein are engaged in the business of
construction and, in the process, providing the services known as
‘Commercial or Industrial Construction Service’. This service is
exigible to service tax as per the provisions of Section 65(105)
(zzq) of the Finance Act, 1994 (hereinafter referred to as the
‘Act’). The assessees accept that they are covered thereby and,
therefore, are paying service tax as well. The dispute, however,
Civil Appeal Nos. 1335-1358 of 2015 with Ors. Page 3 of 26
is with regard to the valuation of taxable service provided by
them. Under Section 67 of the Act deals with such a valuation.
3) It is a matter of common knowledge that for undertaking
construction projects, the assessees not only render services, lot
of materials/goods are also used in the construction of building or
civil structure etc. For valuation of taxable services, the
material/goods element has to be excluded. In order to make the
things easier for the assessees as well as the Assessing Officers
(AOs), the Government issued the Notification No. 15/2004-ST
dated September 10, 2004 as per which service tax is to be
calculated on the value which is equivalent to 33% of the gross
amount charged from any person by such commercial concern for
providing the taxable service. This notification was amended vide
another Notification No. 4/2005-ST dated March 01, 2005
whereby an explanation was added to the original notification.
This explanation mentions that the ‘gross amount charged’ shall
include the value of goods and material supplied and provided or
used by the provider of construction services for providing such
service. It is made optional for the assessees to take advantage
of the aforesaid notification and get the value calculated as per
the aforesaid formula provided therein. The assessees have
Civil Appeal Nos. 1335-1358 of 2015 with Ors. Page 4 of 26
availed the benefit and paid the service tax @33% of the gross
amount which they have charged from the persons for whom
construction was carried out, i.e., the service recipients. It so
happened that in all these cases where the construction projects
were undertaken by the assessees, some of the goods/materials
(particularly, steel and cement) were supplied or provided by the
service recipients. As these materials were to be utilised in the
projects meant for service recipients themselves, obviously, no
costs thereof was charged from the assessees. The Department
wants that value of such goods/materials even when supplied or
provided free should be included, while calculating the “gross
value” and 33% thereof be treated as value for the purpose of
levying service tax.
4) The question, therefore, which has fallen for consideration is as to
whether, the value of goods/material supplied or provided free of
cost by a service recipient and used for providing the taxable
service of construction or industrial complex, is to be included in
computation of gross amount (charged by the service provider),
for valuation of the taxable service, under Section 67 of the Act
and for availing the benefits under Notification No. 15/2004-ST
dated September 10, 2004 as amended by Notification No.
Civil Appeal Nos. 1335-1358 of 2015 with Ors. Page 5 of 26
4/2005-ST dated March 01, 2005 (whereby an Explanation was
added to Notification No. 15/2004-ST).
5) We may mention here that different benches of the Customs,
Excise and Service Tax Appellate Tribunal (for short ‘CESTAT’)
had given conflicting views on the aforesaid question and,
therefore, the matter was referred to the Larger Bench which has,
by impugned judgment dated September 6, 2013 rendered in a
batch of matters, has decided the issue in favour of the
assessees by holding that the value of the goods/materials
cannot be added for the purpose of aforesaid notification dated
September 10, 2004, as amended by notification dated March 01,
2005. It is the said judgment of the Larger Bench dated
September 6, 2013, correctness whereof is the subject matter of
present appeals.
6) For answering the question, it would be necessary to refer to the
relevant provisions of the Act and the Notifications, which are as
under:
As mentioned above, ‘commercial or industrial construction
service’ is a taxable service enumerated under Section 65(105)
(zzq) of the Act. Section 65(25b) of the Act defines construction
or industrial construction service to mean:
Civil Appeal Nos. 1335-1358 of 2015 with Ors. Page 6 of 26
(a) construction of a new building or a civil
structure or a part thereof; or
(b) construction of pipeline or conduit; or
(c)completion and finishing services such as
glazing, plastering, painting, floor and wall tiling,
wall covering and wall papering, wood and meal
joinery and carpentry, fencing and railing,
construction of swimming pools, acoustic
applications or fittings and other similar services,
in relation to building or civil structure; or
(d) repair, alteration, renovation or restoration of,
or similar services in relation to, building or civil
structure, pipeline or conduit,
which is(i)
used, or to be used, primarily for; or
(ii) occupied, or to be occupied, primarily with; or
(iii) engaged, or to be engaged, primarily in,
commerce or industry, or work intended for
commerce or industry, but does not include such
services provided in respect of roads, airports,
railways, transport terminals, bridges, tunnels and
dams;”
7) Section 67 of the Act deals with valuation of taxable services.
This Section was amended w.e.f. April 18, 2006. Unamended
provision reads as under:
“67. Valuation of taxable services for charging service
tax.-For the purposes of this Chapter, the value of any
taxable service shall be the gross amount charged by
the service provider for such service provided or to be
provided by him.
Explanation 1.-For the removal of doubts, it is hereby
declared that the value of a taxable service, as the
Civil Appeal Nos. 1335-1358 of 2015 with Ors. Page 7 of 26
case may be, includes,-
(a) the aggregate of commission or brokerage
charged by a broker on the sale or purchase of
securities including the commission or brokerage paid
by the stock-broker to any sub-broker;
(b) the adjustments made by the telegraph authority
from any deposits made by the subscriber at the time
of application for telephone connection or pager or
facsimile or telegraph or telex or for leased circuit;
(c) the amount of premium charged by the insurer
from the policy holder;
(d) the commission received by the air travel agent
from the airline;
(e) the commission, fee or any other sum received by
an actuary, or intermediary or insurance intermediary
or insurance agent from the insurer;
(f) the reimbursement received by the authorised
service station from manufacturer for carrying out any
service of any motor car, light motor vehicle or two
wheeled motor vehicle manufactured by such
manufacturer; and
(g) the commission or any amount received by the rail
travel agent from the Railways or the customer,
but does not include(i)
initial deposit made by the subscriber at the time of
application for telephone connection or pager or
facsimile (FAX) or telegraph or telex or for leased
circuit;
(ii) the cost of unexposed photography film,
unrecorded magnetic tape or such other storage
devices, if any, sold to the client during the course of
providing the service;
(iii) the cost of parts or accessories, or consumable
such as lubricants and coolants, if any, sold to the
customer during the course of service or repair of
motor cars, light motor vehicle or two wheeled motor
Civil Appeal Nos. 1335-1358 of 2015 with Ors. Page 8 of 26
vehicles;
(iv) the airfare collected by air travel agent in respect
of service provided by him;
(v) the rail fare collected by rail travel agent in respect
of service provided by him;
(vi) the cost of parts or other material, if any, sold to
the customer during the course of providing
maintenance or repair service;
(vii) the cost of parts or other material, if any, sold to
the customer during the course of providing erection,
commissioning or installation service; and
(viii) interest on loans.
Explanation 2.-Where the gross amount charged by a
service provider is inclusive of service tax payable, the
value of taxable service shall be such amount as with
the addition of tax payable, is equal to the gross
amount charged.
Explanation 3.-For the removal of doubts, it is hereby
declared that the gross amount charged for the
taxable service shall include any amount received
towards the taxable service before, during or after
provision of such service.”
(i) in a case where the provision of service is for a
consideration in money, be the gross amount charged
by the service provider for such service provided or to
be provided by him;
(ii)in a case where the provision of service is for a
consideration not wholly or partly consisting of money,
be such amount in money as, with the addition of
service tax charged, is equivalent to the consideration;
(iii) in a case where the provision of service is for
a consideration which is not ascertainable, bet he
amount as may be determined in the prescribed
manner.
(2) Where the gross amount charged by a service
provider, for the service provided or to be provided is
Civil Appeal Nos. 1335-1358 of 2015 with Ors. Page 9 of 26
inclusive of service tax payable, the value of such
taxable service shall be such amount as, with the
addition of tax payable, is equal to the gross amount
charged.
(3) The gross amount charged for the taxable service
shall include any amount received towards the taxable
service before, during or after provision of such
service.
(4) Subject to the provisions of sub-sections (1), (2)
and (3), the value shall be determined in such manner
as may be prescribed.
Explanation.- For the purposes of this section.
(a) “consideration” includes any amount that is
payable for the taxable services provided or to be
provided;
(b)“money” includes any currency, cheque, promissory
note, letter of credit, draft, pay order, travellers
cheque, money order, postal remittance and other
similar instruments but does not include currency that
is held for its numismatic value;
(c) “gross amount charges” includes payment by
cheque, credit card, deduction from account and any
form of payment by issue of credit notes or debit notes
and [book adjustment, and any amount credited or
debited, as the case may be, to any account, whether
called ‘suspense account’ or by any other name, in the
books of account of a person liable to pay service tax,
where the transaction of taxable service is with any
associated enterprise.]”
8) After the amendment, Section 67 of the Act is as follows:
Section 67. Valuation of taxable services for
charging service tax
(1) Subject to the provisions of this Chapter, service
tax chargeable on any taxable service with reference
to its value shall,-
(i) in a case where the provision of service is for a
Civil Appeal Nos. 1335-1358 of 2015 with Ors. Page 10 of 26
consideration in money, be the gross amount charged
by the service provider for such service provided or to
be provided by him;
(ii) in a case where the provision of service is for a
consideration not wholly or partly consisting of money,
be such amount in money, with the addition of service
tax charged, is equivalent to the consideration;
(iii) in a case where the provision of service is for a
consideration which is not ascertainable, be the
amount as may be determined in the prescribed
manner.
(2) Where the gross amount charged by a service
provider, for the service provided or to be provided is
inclusive of service tax payable, the value of such
taxable service shall be such amount as, with the
addition of tax payable, is equal to the gross amount
charged.
(3) The gross amount charged for the taxable service
shall include any amount received towards the taxable
service before, during or after provision of such
service.
(4) Subject to the provisions of sub-sections (1), (2)
and (3), the value shall be determined in such manner
as may be prescribed
Explanation.-For the purposes of this section,-
[(a) “consideration” includes(i)
any amount that is payable for the taxable services
provided or to be provided;
(ii) any reimbursable expenditure or cost incurred by
the service provider and charged, in the course of
providing or agreeing to provide a taxable service,
except in such circumstances, and subject to such
conditions, as may be prescribed;
(iii) any amount retained by the lottery distributor or
selling agent from gross sale amount of lottery ticket in
addition to the fee or commission, if any, or, as the
case may be, the discount received, that is to say, the
Civil Appeal Nos. 1335-1358 of 2015 with Ors. Page 11 of 26
difference in the face value of lottery ticket and the
price at which the distributor or selling agent gets such
ticket.]
(c) “gross amount charged” includes payment by
cheque, credit card, deduction from account and any
form of payment by issue of credit notes or debit notes
and 2
[book adjustment, and any amount credited or
debited, as the case may be, to any account, whether
called “Suspense account” or by any other name, in
the books of account of a person liable to pay service
tax, where the transaction of taxable service is with
any associated enterprise.]”

9) Exemption Notifications:
(a) Notification No. 12/2003-ST dated June 26, 2003, issued by
the Central Government, exercising powers under Section 93(1)
of the Act exempted the value of goods and materials sold by a
service provider to a recipient of service from the tax leviable
thereon, subject to documentary proof specifically indicating the
value of such goods and material. This notification was specified
to come into force w.e.f. July 01, 2013.
(b) By Notification No. 15/2004-ST dated September 10, 2004,
a further exemption was granted in respect of taxable service
provided by a commercial concern to any person in relation to
construction service. This Notification reads:
“In exercise of the powers conferred by sub-section (1)
of section 93 of the Finance Act, 1994 (32 of 1994),
the Central Government, being satisfied that it is
necessary in the public interest so to do, hereby
exempts the taxable service provided by a commercial
concern to any person, in relation to construction
Civil Appeal Nos. 1335-1358 of 2015 with Ors. Page 12 of 26
service, from so much of the service tax leviable
thereon under Section 66 of the said Act, as is in
excess of the service tax calculated on a value which
is equivalent to thirty-three per cent of the gross
amount charged from any person by such commercial
concern for providing the said taxable service”
Provided that this exemption shall not apply in such
cases where(i)
the credit of duty paid on inputs or capital goods
has been taken under the provisions of the Cenvat
Credit Rules, 2004;
or
(ii)the commercial concern has availed the benefit
under the notification of the Government of India, in
the Ministry of Finance (Department of Revenue) No.
12/2003-Service Tax, dated the 20th June, 2003
[G.S.R. 503(E), dated the 20th June, 2003].”
(c) Notification No. 4/2005-ST was issued on March 01, 2005,
introducing an Explanation at the end of Notification No. 15/2004-
ST. This Explanation reads:
“Explanation. – For the purposes of this notification,
the “gross amount charged” shall include the value of
goods and materials supplied or provided or used by
the provider of the construction service for providing
such service.”
10) We may also note at this stage that the Board has also issued the
Circular dated September 17, 2004 clarifying the scope of these
services. In para 13.5 thereof, reasons for issuing the exemption
notifications were given. This para reads as under:
“13.5 The gross value charged by the building
contractors include the material cost, namely, the cost
of cement, steel, fittings and fixtures, tiles etc. Under
the Cenvat Credit Rules, 2004, the service provider
Civil Appeal Nos. 1335-1358 of 2015 with Ors. Page 13 of 26
can take credit of excise duty paid on such inputs.
However, it has been pointed out that these materials
are normally procured from the market and are not
covered under the duty paying documents. Further, a
general exemption is available to goods sold during
the course of providing service (Notification No.
12/2003-S.T.) but the exemption is subject to the
condition of availability of documentary proof specially
indicating the value of the goods sold. In case of a
composite contract, bifurcation of value of goods sold
is often difficult. Considering these facts, an
abatement of 67% has been provided in case of
composite contracts where the gross amount charged
includes the value of material cost. (Refer Notification
No. 15/2004-S.T. dated 10-9-2004). This would,
however, be optional subject to the condition that no
credit of input goods, capital goods and no benefit
(under Notification No. 12/2003-S.T.) of exemption
towards cost of goods are availed.”
11) As already pointed out in the beginning, all these assessees are
covered by Section 65(25b) of the Act as they are rendering
‘construction or industrial construction service’, which is a taxable
service as per the provisions of Section 65(105)(zzq) of the Act.
The entire dispute relates to the valuation that has to be arrived at
in respect of taxable services rendered by the assessees. More
precisely, the issue is as to whether the value of goods/materials
supplied or provided free of cost by a service recipient and used
for providing the taxable service of construction or industrial
complex, is to be included in computation of gross amount
charged by the service provider, for valuation of taxable service.
For valuation of taxable service, provision is made in Section 67
Civil Appeal Nos. 1335-1358 of 2015 with Ors. Page 14 of 26
of the Act which enumerates that it would be ‘the gross amount
charged by the service provider for such service provided or to be
provided by him’. Whether the value of materials/goods supplied
free of cost by the service recipient to the service
provider/assessee is to be included to arrive at the ‘gross
amount’, or not is the poser. On this aspect, there is no
difference in amended Section 67 from unamended Section 67 of
the Act and the parties were at ad idem to this extent.
12) On a reading of the above definition, it is clear that both prior and
after amendment, the value on which service tax is payable has
to satisfy the following ingredients:
a. Service tax is payable on the gross amount charged:-
the words “gross amount” only refers to the entire
contract value between the service provider and the
service recipient. The word “gross” is only meant to
indicate that it is the total amount charged without
deduction of any expenses. Merely by use of the word
“gross” the Department does not get any jurisdiction to
go beyond the contract value to arrive at the value of
taxable services. Further, by the use of the word
“charged”, it is clear that the same refers to the amount
Civil Appeal Nos. 1335-1358 of 2015 with Ors. Page 15 of 26
billed by the service provider to the service receiver.
Therefore, in terms of Section 67, unless an amount is
charged by the service provider to the service recipient, it
does not enter into the equation for determining the value
on which service tax is payable.
b. The amount charged should be for “for such service
provided”: Section 67 clearly indicates that the gross
amount charged by the service provider has to be for the
service provided. Therefore, it is not any amount
charged which can become the basis of value on which
service tax becomes payable but the amount charged
has to be necessarily a consideration for the service
provided which is taxable under the Act. By using the
words “for such service provided” the Act has provided
for a nexus between the amount charged and the service
provided. Therefore, any amount charged which has no
nexus with the taxable service and is not a consideration
for the service provided does not become part of the
value which is taxable under Section 67. The cost of free
supply goods provided by the service recipient to the
service provider is neither an amount “charged” by the
Civil Appeal Nos. 1335-1358 of 2015 with Ors. Page 16 of 26
service provider nor can it be regarded as a
consideration for the service provided by the service
provider. In fact, it has no nexus whatsoever with the
taxable services for which value is sought to be
determined”
13) A plain meaning of the expression ‘the gross amount charged by
the service provider for such service provided or to be provided
by him’ would lead to the obvious conclusion that the value of
goods/material that is provided by the service recipient free of
charge is not to be included while arriving at the ‘gross amount’
simply, because of the reason that no price is charged by the
assessee/service provider from the service recipient in respect of
such goods/materials. This further gets strengthened from the
words ‘for such service provided or to be provided’ by the service
provider/assessee. Again, obviously, in respect of the
goods/materials supplied by the service recipient, no service is
provided by the assessee/service provider. Explanation 3 to subsection
(1) of Section 67 removes any doubt by clarifying that the
gross amount charged for the taxable service shall include the
amount received towards the taxable service before, during or
after provision of such service, implying thereby that where no
Civil Appeal Nos. 1335-1358 of 2015 with Ors. Page 17 of 26
amount is charged that has not to be included in respect of such
materials/goods which are supplied by the service recipient,
naturally, no amount is received by the service
provider/assessee. Though, sub-section (4) of Section 67 states
that the value shall be determined in such manner as may be
prescribed, however, it is subject to the provisions of sub-sections
(1), (2) and (3). Moreover, no such manner is prescribed which
includes the value of free goods/material supplied by the service
recipient for determination of the gross value.
14) We may note at this stage that Explanation (c) to sub-section (4)
was relied upon by the learned counsel for the Revenue to
buttress the stand taken by the Revenue and we again reproduce
the said Explanation hereinbelow in order to understand the
contention:
(c) “gross amount charges” includes payment by
cheque, credit card, deduction from account and any
form of payment by issue of credit notes or debit notes
and [book adjustment, and any amount credited or
debited, as the case may be, to any account, whether
called ‘suspense account’ or by any other name, in the
books of account of a person liable to pay service tax,
where the transaction of taxable service is with any
associated enterprise.]” [emphasis supplied]
15) It was argued that payment received in ‘any form’ and ‘any
amount credited or debited, as the case may be...’ is to be
Civil Appeal Nos. 1335-1358 of 2015 with Ors. Page 18 of 26
included for the purposes of arriving at gross amount charges and
is leviable to pay service tax. On that basis, it was sought to
argue that the value of goods/materials supplied free is a form of
payment and, therefore, should be added. We fail to understand
the logic behind the aforesaid argument. A plain reading of
Explanation (c) which makes the ‘gross amount charges’ inclusive
of certain other payments would make it clear that the purpose is
to include other modes of payments, in whatever form received;
be it through cheque, credit card, deduction from account etc. It
is in that hue, the provisions mentions that any form of payment
by issue of credit notes or debit notes and book adjustment is
also to be included. Therefore, the words ‘in any form of
payment’ are by means of issue of credit notes or debit notes and
book adjustment. With the supply of free goods/materials by the
service recipient, no case is made out that any credit notes or
debit notes were issued or any book adjustments were made.
Likewise, the words, ‘any amount credited or debited, as the case
may be’, to any account whether called ‘suspense account or by
any other name, in the books of accounts of a person liable to
pay service tax’ would not include the value of the goods supplied
free as no amount was credited or debited in any account. In
fact, this last portion is related to the debit or credit of the account
Civil Appeal Nos. 1335-1358 of 2015 with Ors. Page 19 of 26
of an associate enterprise and, therefore, takes care of those
amounts which are received by the associated enterprise for the
services rendered by the service provider.
16) In fact, the definition of “gross amount charged” given in
Explanation (c) to Section 67 only provides for the modes of the
payment or book adjustments by which the consideration can be
discharged by the service recipient to the service provider. It
does not expand the meaning of the term “gross amount charged”
to enable the Department to ignore the contract value or the
amount actually charged by the service provider to the service
recipient for the service rendered. The fact that it is an inclusive
definition and may not be exhaustive also does not lead to the
conclusion that the contract value can be ignored and the value of
free supply goods can be added over and above the contract
value to arrive at the value of taxable services. The value of
taxable services cannot be dependent on the value of goods
supplied free of cost by the service recipient. The service
recipient can use any quality of goods and the value of such
goods can vary significantly. Such a value, has no bearing on the
value of services provided by the service recipient. Thus, on first
principle itself, a value which is not part of the contract between
Civil Appeal Nos. 1335-1358 of 2015 with Ors. Page 20 of 26
the service provider and the service recipient has no relevance in
the determination of the value of taxable services provided by the
service provider.
17) Faced with the aforesaid situation, the argument of the learned
counsel for the Revenue was that in case the assessees did not
want to include the value of goods/materials supplied free of cost
by the service recipient, they were not entitled to the benefit of
notification dated September 10, 2004 read with notification dated
March 01, 2005. It was argued that since building construction
contract is a composite contract of providing services as well as
supply of goods, the said notifications were issued for the
convenience of the assessees. According to the Revenue, the
purpose was to bifurcate the component of goods and services
into 67%:33% and to provide a ready formula for payment of
service tax on 33% of the gross amount. It was submitted that
this percentage of 33% attributing to service element was
prescribed keeping in view that in the entire construction project,
roughly 67% comprises the cost of material and 33% is the value
of services. However, this figure of 67% was arrived at keeping in
mind the totality of goods and materials that are used in a
construction project. Therefore, it was incumbent upon the
Civil Appeal Nos. 1335-1358 of 2015 with Ors. Page 21 of 26
assessees to include the value of goods/material supplied free of
cost by the service recipient as well otherwise it would create
imbalance and disturb the analogy that is kept in mind while
issuing the said notifications and in such a situation, the AO can
deny the benefit of aforesaid notifications. This argument may
look to be attractive in the first blush but on the reading of the
notifications as a whole, to our mind, it is not a valid argument.
18) In the first instance, no material is produced before us to justify
that aforesaid basis of the formula was adopted while issuing the
notification. In the absence of any such material, it would be
anybody’s guess as to what went in the mind of the Central
Government in issuing these notifications and prescribing the
service tax to be calculated on a value which is equivalent to 33%
of the gross amount. Secondly, the language itself demolishes
the argument of the learned counsel for the Revenue as it says
‘33% of the gross amount ‘charged’ from any person by such
commercial concern for providing the said taxable service’.
According to these notifications, service tax is to be calculated on
a value which is 33% of the gross amount that is charged from
the service recipient. Obviously, no amount is charged (and it
could not be) by the service provider in respect of goods or
Civil Appeal Nos. 1335-1358 of 2015 with Ors. Page 22 of 26
materials which are supplied by the service recipient. It also
makes it clear that valuation of gross amount has a causal
connection with the amount that is charged by the service
provider as that becomes the element of ‘taxable service’.
Thirdly, even when the explanation was added vide notification
dated March 01, 2005, it only explained that the gross amount
charged shall include the value of goods and materials supplied
or provided or used by the provider of construction service. Thus,
though it took care of the value of goods and materials supplied
by the service provider/assessee by including value of such
goods and materials for the purpose of arriving at gross amount
charged, it did not deal with any eventuality whereby value of
goods and material supplied or provided by the service recipient
were also to be included in arriving at gross amount ‘gross
amount charged’.
19) Matter can be looked into from another angle as well. In the case
of Commissioner, Central Excise and Customs, Kerala v. M/s.
Larsen & Toubro Ltd.1 This Court was concerned with
exemption notifications which were issued in respect of ‘taxable
services’ covered by sub-clause (zzq) of clause (105) read with
clause (25b) and sub-clause (zzzh) of clause (105) read with
1 (2016) 1 SCC 170
Civil Appeal Nos. 1335-1358 of 2015 with Ors. Page 23 of 26
clause (30a) and (91a) of Section 65 of Chapter V of the Act.
This Court in the aforesaid judgment in respect of five ‘taxable
services’ [viz. Section 65(105)(g), (zzd), (zzh), (zzq) and (zzzh)]
has held as under:
“23. A close look at the Finance Act, 1994 would show
that the fixed taxable services referred to in the
charging Section 65(105) would refer only to service
contracts simpliciter and not to composite works
contracts. This is clear from the very language of
Section 65(105) which defines ‘taxable service’ as ‘any
service provided’.
Further, while referring to exemption notifications, it observed:
“42. …Since the levy itself of service tax has been found
to be non-existent, no question of any exemption would
arise.”
It is clear from the above that the service tax is to be levied
in respect of ‘taxable services’ and for the purpose of arriving at
33% of the gross amount charged, unless value of some
goods/materials is specifically included by the Legislature, that
cannot be added.

20) It is to be borne in mind that the notifications in questions are
exemption notifications which have been issued under Section 93
of the Act. As per Section 93, the Central Government is
empowered to grant exemption from the levy of service tax either
wholly or partially, which is leviable on any ‘taxable service’
Civil Appeal Nos. 1335-1358 of 2015 with Ors. Page 24 of 26
defined in any of sub-clauses of clause (105) of Section 65.
Thus, exemption under Section 93 can only be granted in respect
of those activities which the Parliament is competent to levy
service tax and covered by sub-clause (zzq) of clause (105) and
sub-clause (zzzh) of clause (105) of Section 65 of Chapter V of
the Act under which such notifications were issued.
21) For the aforesaid reasons, we find ourselves in agreement with
the view taken by the Full Bench of CESTAT in the impugned
judgment dated September 6, 2013 and dismiss these appeals of
the Revenue.
22) Insofar as Civil Appeal No. 3247 of 2015 is concerned, where the
assessee is Gurmehar Construction, it may additionally be noted
(as pointed out by the learned counsel for the respondent) that
the assessee was a sole proprietorship concern of Mr. Narender
Singh Atwal, who died on February 24, 2014. This is so stated in
the counter affidavit filed by the respondent on May 16, 2017 and
this position has not been disputed by the Department. This
appeal, in any case, has abated as well in view of the judgment of
this Court in Shabina Abraham & Ors. v. Collector of Central
Excise & Customs2
2 (2015) 10 SCC 770
Civil Appeal Nos. 1335-1358 of 2015 with Ors. Page 25 of 26
23) As a result, all appeals stand dismissed.
.............................................J.
(A.K. SIKRI)
.............................................J.
(ASHOK BHUSHAN)
NEW DELHI;
FEBRUARY 19, 2018.
Civil Appeal Nos. 1335-1358 of 2015 with Ors. Page 26 of 26

allotment of an industrial plot in the Commercial Estate at Rourkela - regularization of unauthorised occupied plot- M/s. Sai Sankar Associates (Respondent No.7) was an unauthorized occupant of an extent of 14 decimals of land which is equivalent to 6300 sq.ft. in the Commercial Estate at Rourkela and was carrying on a small scale industry since 1996. The Respondent No.7 made representations dated 28th September, 1996, 27th January, 1999 and 25th July, 2002 seeking regularization of the industrial plot which was in their unauthorized occupation.-The regularization of the plot in favour of Respondent No.7 was in terms of the policy decision of 2004. As per the said policy decision, the price fetched for a similar plot of land in the auction conducted at the time of regularization would have to be paid by the person in whose favour the allotment is made. The Appellant stated that Rs.7,89,350/- was directed to be paid by the Respondent No.7 on the basis of the auction which fetched Rs.54,44,000/- per acre. It was also stated that the concessional rate at that point of time was Rs.18,21,000/- per acre. We do not find any fault with the Appellant charging Rs.7,89,350/- for 0.415 acres of land on the basis of the prevailing policy decision.= Hence the bar under the 2008 Policy was inapplicable to the case of Respondent No.7. It is also brought to our notice that a number of plots have been regularized in favour of persons similarly situated to Respondent No.7. Therefore, it cannot be said that Respondent No.7 was showered with any undue benefit.

1
NON-REPORTABLE
IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
Civil Appeal No.2269 of 2018
(Arising out of S.L.P. (Civil) No.8427 OF 2011)
Odisha Industrial Infrastructure
Development Corporation Limited .... Appellant
Versus
Pitabasa Mishra & Ors. ….Respondent
WITH
Civil Appeal No.2270 of 2018
(Arising out of S.L.P. (Civil) No.9478 OF 2011)
Sri Saisankar Associates, Represented by
Proprietor, Shri Satyanarayan Mohanty .... Appellant
Versus
Pitabasa Mishra & Ors. ….Respondents
J U D G M E N T
L. NAGESWARA RAO, J.
 Leave granted in both the Special Leave Petitions.
 These Appeals are filed against the judgment of the High
Court of Orissa dated 24th December, 2010 in Writ Petition (C)
No. 12408 of 2009 filed by Respondent Nos. 1 to 6 by which
the allotment of an industrial plot in the Commercial Estate 
2
at Rourkela in favour of M/s. Sai Sankar Associates (Respondent
No.7) was set aside.
2. For the sake of convenience, the parties would be referred
to as arrayed in Special Leave Petition (Civil) No.8427 of 2011
filed by Odisha Industrial Infrastructure Development
Corporation Limited (for short “the Corporation”/“AppellantCorporation”).

3. M/s. Sai Sankar Associates (Respondent No.7) was an
unauthorized occupant of an extent of 14 decimals of land which
is equivalent to 6300 sq.ft. in the Commercial Estate at Rourkela
and was carrying on a small scale industry since 1996. The
Respondent No.7 made representations dated 28th September,
1996, 27th January, 1999 and 25th July, 2002 seeking regularization
of the industrial plot which was in their unauthorized occupation.
Due to the failure of the Appellant-Corporation in considering the
said representations, Respondent No.7 filed Writ Petition No.
6969 of 2008 in the High Court of Orissa seeking a direction to
regularize the land which was in its occupation. The High Court
by a judgment dated 13th May, 2008 directed the Appellant to
consider and dispose of the representation expeditiously,
3
preferably within a period of three months from the date of
production of the certified copy of the order.
4. Pursuant to the Order passed by the High Court dated
13th May, 2008 in Writ Petition (Civil) No. 6969 of 2008 the
regularization of the industrial plot was considered in the
74th Board Meeting of IDCO held on 20th September, 2008. The
Board approved the proposal to regularize land measuring 6300
sq.ft. on payment of Rs.7,89,350/-. The Respondent Nos. 1 to 6
herein challenged the Order dated 20th September, 2008 by filing
Writ Petition (Civil) No. 12408 of 2009 and sought a direction to
quash the allotment of land made in favour of Respondent No.7.
5. It was submitted on behalf of Respondent Nos. 1 to 6 who
filed the Writ Petition before the High Court that they were
allottees of shops-cum-residences in the Commercial Estate at
Rourkela. They contended that the outright sale in favour of
Respondent No.7 for carrying on Saree Polishing and Dyeing of
Garments and Fabric Unit would not be conducive to their
business activity as the unit of the Respondent No.7 was
environmentally hazardous. It was urged by Respondent Nos.1 to
6 before the High Court that they were entitled for issuance of
notice as provided in sub Section 4 of Section 34 of
4
the Orissa Industrial Infrastructure Development Corporation Act,
1980 (hereinafter referred to as ‘the Act’). They further submitted
that regularization of the industrial plot was not permissible
without regulations being framed under the Act. They further
argued that, in any event, public property could not have been
transferred without conducting a public auction. Finally, it was
submitted on behalf of the Respondent Nos.1 to 6 that the
allotment of 6300 sq.ft. of land was made for a paltry sum of
Rs.7,89,350/- whereas the market value was around
Rs.2,00,00,000/-. The Appellant’s case before the High Court was
that the regularization of 6300 sq.ft. of land was made at the
auction price for a similarly situated plot at the rate of
Rs.54,44,000/- per acre as against the prevailing concessional
industrial rate of Rs.18,21,000/- per acre. The price fixed for the
plot of land which was regularized was in accordance with the
prevalent policy decision of the Appellant. A submission was
made on behalf of the Appellant before the High Court that
Sections 33 and 34 of the Act are not applicable to the
regularization of the industrial plot in question.
6. It was contended on behalf of Respondent No.7 before the
High Court that Respondent Nos. 1 to 6 were also encroachers
5
and were beneficiaries of regularization of the encroachments
made by them in the year 2006 at a concessional rate. Having got
the benefit of the regularization of the encroachments made by
them at a concessional rate, they did not have locus to question
the allotment made in favour of Respondent No.7. It was further
contended that there was no infringement of any legal right of
Respondent Nos. 1 to 6 and the Writ Petition was liable to be
dismissed. The High Court allowed the Writ Petition (Civil)
No.12408 of 2009 and set aside the order dated 20.09.2008
passed by the Appellant-Corporation in favour of Respondent
No.7.
7. Before we proceed further, it would be beneficial to refer to
the relevant provisions of the Act. The Act was promulgated to
provide for the establishment of a Corporation for the
development of industrial infrastructure in the State of Orissa.
The functions of the Corporation as provided in Section 14 of the
Act1
 are to promote and assist in the rapid and

1 Section 14- Functions. - The functions of the Corporation shall be –
(i) generally to promote and assist in the rapid and orderly establishment, growth and development of
industries, trade and commerce in the State; and
(ii) in particular, and without prejudice to the generality of Cl. (i) to(a)
establish and manage industrial estates at places notified by the State Government;
 (b) develop industrial areas notified by the State Government for the purpose and make them available for
undertakings to establish themselves;
(c) undertake schemes or works, either jointly with other corporate bodies or institutions, or with
Government or local authorities, or on an agency basis, in furtherance of the purposes for which the
Corporation is established and all matters connected therewith; (Emphasis supplied)
6
orderly establishment, growth and development of industries,
trade and commerce in the State. Apart from the other functions,
the Corporation is also required to develop industrial areas
notified by the State Government and make them available for
undertakings to establish themselves. Section 15 of the Act2
provides for the general powers of the Corporation one of which
is to allot plots, factory sheds or buildings or part of buildings,
including residential tenements, to suitable persons in the
industrial estates. Chapter VI of the Act deals with acquisition
and disposal of land. In case, the Corporation is unable to
acquire any land by agreement, the State Government may

(d) provide or cause to be provided amenities and common facilities in industrial estates and industrial
areas and construct and maintain or cause to be maintained works and buildings thereof;
(e) make available buildings on hire or sale to industrialists or persons intending to start industrial
undertakings;
(f) construct buildings for the housing of the employees of such industries and employees of the
Corporation.
2 Section 15- General powers of the Corporation:- Subject to the provisions of this Act, the Corporation
shall have power :
(a) to acquire and hold such property, both movable and immovable, as the Corporation may deem
necessary for the performance of any of its activities, and to lease, sell, exchange or otherwise transfer any
property held by it on such conditions as may be deemed proper by the Corporation;
(b) to purchase by agreement or to take on lease or under any form of tenancy any land to erect such
buildings and to execute such other works as may be necessary for the purpose of carrying out its duties
and functions;
(c) to allot plots, factory sheds or buildings or part of buildings, including residential tenements, to suitable
persons in the industrial estates established or developed by the Corporation;
(d) to modify or rescind such allotments, including the right and power to evict the allottees concerned on
breach of any of the terms or conditions of the allotment;
(e) to constitute advisory committees to advise the Corporation;
(f) to engage suitable consultants or persons having special knowledge or skill to assist the Corporation in
the performance of its functions;
(g) to enter into and perform all such contracts as it may consider necessary or expedient for carrying out
any of its functions; and
(h) to do such other things and perform such acts as it may think necessary or expedient for the proper
conduct of its functions and the carrying into effect the purposes of this Act.
[Emphasis supplied]
7
acquire land under the Land Acquisition Act, 1894 on behalf of
the Corporation as if such land were needed for public purpose
as per Section 31 (1) of the Act3
. Section 31 (2) of the Act4
provides for payment of the compensation awarded for
acquisition of land by the Government and all other charges
incurred therein. On such payment, the land shall vest in the
Corporation. Any land belonging to the State Government can
also be placed at the disposal of the Corporation for furtherance
of the objects of the Act according to Section 32 (1) of the Act5
.
Section 32 (2)6
 provides that the land transferred by the State
Government shall be dealt with by the Corporation in accordance
with the regulations made under the Act and directions given by
the State Government in that behalf.

3 Section 31 (1)- Acquisition of land. -Whenever any land is required, by the Corporation for any
purpose of furtherance of the objects of this Act, but the Corporation is unable to acquire it by agreement,
the State Government may, upon an application of the Corporation in that behalf, order proceedings to be
taken under the Land Acquisition Act, 1894 (1 of 1894) for acquiring the same on behalf of the
Corporation as if such lands were needed for a public purpose within the meaning of that Act.
4 Section 31(2)- The amount of compensation awarded and all other charges incurred in the acquisition
of any such land shall be forthwith paid by the Corporation and thereupon, the land shall vest in the
Corporation.
5 Section 31(1)- Transfer of Government lands to the Corporation – (1) For the furtherance of the
objects of this Act the State Government may, upon such conditions as may be agreed upon between the
Government and the Corporation, place at the disposal of the Corporation any land vested in the State
Government.
6 Section 32 (2)- After any such land had been developed by or under the control and supervision of the
Corporation it shall be dealt with by the Corporation in accordance with the regulations made under this
Act and the directions given by the State Government in that behalf.
8
8. Section 33 (1) of the Act7
 permits the Corporation to dispose
of any land acquired by the State Government and transferred to
it, without undertaking or carrying out any development thereon.
The Corporation can also transfer the land after undertaking or
carrying out such development as it thinks fit. The transfer as
mentioned above shall be subject to the terms and conditions as
it considers expedient for securing the purposes of the Act. If the
Corporation proposes to dispose of any land which is surplus to
its requirement by way of sale, the Corporation, as per Section 33
(2) of the Act8
, is obligated to offer the land in the first instance to
the persons from whom it was acquired. Section 33 (3) of the
Act9
 prohibits any disposal of land by way of gift. But, the
Corporation is empowered to dispose of land in any manner

7 Section 33(1)- Disposal of land by the Corporation. - Subject to any directions given by the State
Government the Corporation may dispose of(a)
any land acquired by the State Government and transferred to it, without undertaking or carrying out
any development thereon; or
(b) any such land after undertaking or carrying out such development as it thinks fit.
to such person in such manner and subject to such terms and conditions, as it considers expedient for
securing the purposes of this Act.
8 Section 33(2)- The powers of the Corporation with respect to the disposal of land under sub-S. (1) shall
be so exercised as to secure, so far as practicable, that –
(a) where the Corporation proposes to dispose of by sale any such land which is surplus to its
requirement, the Corporation 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 development and use as the
Corporation may think fit to impose.
(b) persons who are residing or carrying on business or other activities on any such land shall, if they
desire to obtain accommodation on land belonging to the Corporation and are willing to comply with any
requirements of the Corporation as to its development and use 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.
9 Section 33(3)- Nothing in this Act shall be construed as enabling the Corporation to dispose of land by
way of gift, but subject as aforesaid; reference in this Act to the disposal of land shall be construed as
reference to the disposal thereof in any manner whether by way of sale, mortgage, exchange, or lease or
by the creation, of any easement, right or privilege or otherwise.
9
whether by way of sale, mortgage, exchange, lease or by
creation of any easement, right, privilege or otherwise. Section
34 of the Act10 obligates the Corporation to carry out a periodical
review to ensure that the allotment of land is utilized.

10 Section 34- Acquisition of unutilised surplus lands in industrial areas and allotment to other
industries. - (1) With a view to ascertaining whether any plot allotted in an industrial area developed by
the Corporation has been utilised for industrial purposes or not, the Board shall carry out six monthly
review as to how much unutilised area of each plot is capable of sub-division and whether the unutilised
area can be utilised for any other purpose under this Act after sub-division, and shall issue notice to the
plot holders in the industrial area calling upon them to furnish to it relevant information in the
prescribed form and when so called upon each plot holder shall be bound to furnish true and correct
information required within one month from the date of receipt of such notice by him.
(2) For the purpose of enabling the Board to determine whether there is any unutilised portion of any
plot in the industrial area and whether such portion is capable of sub-division so as to make it useful for
any other purpose under this Act after sub-division, it shall be lawful for any officer of the Corporation,
either generally or specially authorised by the Board in this behalf, and for his servants and workmen at
all reasonable hours - (i) to enter upon and survey the plot; (ii) to set out the boundaries of the utilised
portion of the plots; and (iii) to do all other acts necessary for the purposes aforesaid,
(3) If the Board is satisfied that any plot holder has not utilised the maximum area of his plot suitable for
construction of buildings for a period of three years or more from the date on which possession of the
plot was delivered to him by the Board and the utilised portion is capable of subdivision so as to make it
useful for any other purpose under this Act, the Board may, notwithstanding anything contained in any
contract or in any law for the time being in force, issue to the plot holder and all other persons interested
in the plot notice to show cause why such unutilised portion should not be acquired for the purpose of
being utilised for any other purpose under this Act. The Board shall also cause public notice to be given in
the manner laid down in S.46.
(4) When any such notice is issued, the Board shall give a reasonable opportunity of being heard to the
plot holder and other persons interested in the plot and it shall be open to the plot holder or any other
person interested in the plot to appear and object to such resumption on the ground that the unutilised
portion is required by the plot holder himself for the purpose of immediate expansion of his own industry
and that he has already taken effective steps for utilising such portion.
(5) If after giving a reasonable opportunity of being heard, the Board is satisfied that the holder of the
plot has failed to utilise or is not likely to utilise the unutilised portion for industrial purposes within a
reasonable period, and such unutilised portion can be used for any other purpose under this Act, the
Board may, notwithstanding anything contained in any contract or in any law for the time being in force,
for the purpose of enabling the Corporation to properly discharge its functions of promoting rapid
growth and development of industries under this Act on such unutilised portion, resume the unutilised
portion of the land by giving a notice to the holder of the plot. On and from the date of such notice the
unutilised portion of land specified in the notice shall vest absolutely in the Corporation, free from all
encumbrances.
(6) Where any land is vested in the Corporation under the last preceding sub-section, the Board may, by
notice in writing, order any person who may be in possession of the land to surrender or deliver
possession thereof to the Board or any person duly authorised by it in this behalf within thirty days of the
service of the notice.
(7) If any person refuses or fails to comply with an order made under the last preceding sub-section, the
Board may take possession of the land, and may for the purpose use such force as may be necessary.
(8) Where any land is resumed by the Board under this section the Corporation shall pay for such
resumption an amount not exceeding the proportionate amount of premium paid by the plot holder or
his predecessor-in-title claiming under the Corporation in respect of the land so resumed, with interest
thereon at six per cent per annum from the date of payment of the premium, and where the lease is a
rental lease the amount to be awarded shall not exceed an amount equal to three times the net average
yearly proportionate rent payable by the plot holder to the Corporation in respect of the land so resumed.
10
In case the land is unutilized, suitable steps are to be taken by the
Corporation as provided under Section 34. The State
Government has the power to make rules in consultation with the
Corporation under Section 58 of the Act11. The power to make
regulations is dealt with in Section 59 of the Act12 and the terms
under which the Corporation may dispose of land, buildings and

11 Section 58- Power to make rules.- (1) The State Government may, after consultation with the
Corporation in regard to matters concerning it, make rules to carry out the purposes of this Act :
Provided that consultation with the Corporation shall not be necessary on the first occasion of the making
of rules under this section.
(2) In particular and without prejudice to the generality of the foregoing power, such rules may provide
for all or any of the following matters, namely :
(a) the fees and allowances payable to the Directors;
(b) the conditions of appointment and service and the scale of pay of the Managing Director;
(c) the conditions subject to which the Corporation may borrow;
(d) the date by which the annual financial statement and programme of work shall be submitted by the
Corporation to the State Government and the form and manner of preparing such statement;
(e) the manner of maintaining accounts;
(f) the form of, and the details to be given in the annual report;
(g) the fees which may be charged by the Corporation;
(h) the conditions subject to which the Corporation may dispose of land, buildings and amenities;
(i) any other matter which has to be or may be prescribed.
(3) All rules made under this Act, shall, as soon as may be after they are made, be laid before the State
Legislature for a total period of fourteen days which may be comprised in one or more sessions and if
during the said period the State Legislature makes modifications, if any, therein, the rules shall thereafter
have effect only in such modified form, so, however, that such modification shall be without prejudice to
the validity of anything previously done under the rules.
12 Section 59- Power to make regulations. - (1) The Corporation may, with the previous approval of the
State Government make regulations consistent with this Act and the rules made thereunder, the carry out
the purposes of this Act, and without prejudice to the generality of this power, such regulations may
provide for
(a) the time and place of meetings of the Board and the procedure to be followed in regard to the
transaction of business at such meetings;
(b) the conditions of appointment and service and the scales of pay of officers and servants of the
Corporation, other than the Managing Director;
(c) deployment of funds of the Corporation and the officers of the Corporation who may operate its
accounts;
(d) the terms under which the Corporation may dispose of land, buildings and amenities;
(e) the additional terms and conditions subject to which lands and buildings in industrial estates and
industrial areas may be held or used;
(f) the conduct of business of the Executive Committee;
(g) any other matter which has to be or may be provided by regulations.
(2) All regulations made under this Act, shall, as soon as may be after they are made be laid before the
State Legislature for a total period of fourteen days which may be comprised in one or more sessions and
if during the said period the State Legislature makes modifications, if any, the regulations shall thereafter
have effect only in such modified form, so however that such modification shall be without prejudice to
the validity of anything previously done under the regulations.
[Emphasis supplied]
11
amenities can be subject matter of such regulations as per
Section 59 (1)(d). Additional terms and conditions subject to
which land, buildings, industrial estates and industrial areas may
be held or used, can be regulated as per Section 59 (1) (e) by the
Corporation.
9. Shri Jayant K. Bhushan, learned Senior Counsel appearing
for Respondent No.7 submitted that the scope of Sections 31, 32
and 33 of the Act have been misconstrued by the High court.
According to him, the High Court committed an error in applying
Section 33 to the land in question. He submitted that Section 31
deals with acquisition of the land by the State Government at the
request made by the Corporation. Section 33 refers to disposal
of such land which was acquired by the State Government. The
land belonging to the State Government which is transferred to
the Corporation is to be dealt with in accordance with Section 32
of the Act. He relied upon the lease deed executed by the State
Government in favour of the Appellant-Corporation in the year
1986 in which it was categorically mentioned that the land in
issue belongs to Government. Shri Bhushan argued that the High
Court committed an error in holding that regularization was
impermissible in the absence of regulations being made
12
as per Section 32 of the Act. He relied upon the judgments in the
case of Surinder Singh v. Central Government & Ors.,
13;
V. Balasubramaniam v. Tamil Nadu Housing Board,
14; Mysore
State Road Transport Corporation v. Gopinath Gundachar
Char15 in support of his submission that the absence of
regulations does prevent the Corporation to regularize the
industrial plots. He also placed reliance upon Natural Resources
Allocation, In Re, Special Reference No. 1 of 201216 to submit
that auction is not the only mode for transfer of public land.
Shri Bhushan urged that Respondent Nos. 1 to 6 were
beneficiaries of regularization of the encroachments made by
them at concessional rates and that the Writ Petition was not
maintainable as no legal right of theirs was violated. Another
submission made on behalf of the Respondent No.7 is that
regularization of the industrial plots is governed by the policy
decisions of the Appellant-Corporation which were not
challenged by Respondent Nos. 1 to 6. In the absence of any
challenge to the policy decision, the High Court ought not to have
set aside the regularization.

13 (1986) 4 SCC 667
14 (1987) 4 SCC 738
15 (1968) 1 SCR 767
16 (2012) 10 SCC 1
13
10. Mr. Raj Kumar Mehta, counsel for the AppellantCorporation
submitted a synopsis and adopted the submissions
made on behalf of Respondent No.7.
11. Shri Suresh C. Gupta, counsel appearing for Respondent
Nos. 1 to 6 submitted that the Respondent No.7 has encroached
on the entire plot of land and is not entitled to any relief for
regularization. He submitted that the policy of regularization of
industrial plots framed in 2008 does not permit the regularization
of encroachments made by outsiders/trespassers under any
circumstance. In other words, where the entire plot of land is
encroached, regularization is not permissible. As the
regularization of the plot of Respondent No.7 was after 1st
January, 2008, the Respondent No.7 could not have been given
the benefit of regularization. He also submitted that the
Respondent Nos. 1 to 6 are not similarly situated to Respondent
No.7 as the encroachments made by them were of land adjacent
to their allotted plots.
12. On the basis of the contentions urged, the points that arise
for our consideration are:
I. Acquisition and disposal of the land,
II. Regularisation in the absence of regulations,
14
III. Transfer of land without conducting public auction; and
IV. Consideration for the land not commensurate
I. Power of acquisition and disposal of the land:
13. The High Court held that the plot in question was acquired
by the State Government in exercise of the powers conferred
under Section 31 of the Act following the procedure under the
Land Acquisition Act, 1894 on behalf of the Appellant to form
industrial estates in the industrial area. A Deed of Agreement
dated 1st January, 1986 under Section 32 of the Act between the
State of Orissa and the Appellant is placed on record by
Respondent No.7. By the said agreement, Government land
measuring 4.710 acres was given on lease for a term of 99 years
to the Appellant-Corporation for development of infrastructure
for small, medium and large industries. There is no dispute that
the land allotted to Respondent No.7 is part of the said
Government land that was leased out to the Appellant. Hence,
the finding of the High Court that the plot in question was
acquired by the State Government under Section 31 of the Act is
not correct as the land belonged to the Government. The High
Court proceeded to record a finding that the land was transferred
by the Government under Section 32 of the Act and that such land
15
could not have been regularized without regulations being
framed. The High Court further held that the land which was
regularized in favour of Respondent No.7 is surplus land and the
procedure prescribed in Section 33 of the Act ought to have been
followed.
14. The High Court has not appreciated Sections 31, 32 and 33
in their proper perspective. The land acquired by the State
Government at the request of the Corporation is dealt with in
Section 31 and the disposal of such land is governed by Section
33 of the Act. Government land which is transferred to the
Corporation for development in accordance with provisions of
the Act is covered by Sections 32 of the Act. Though there is no
basis, the High Court recorded a finding that the plot in question
was acquired by the Government and thereafter proceeded to
hold that Section 32 is applicable and in the absence of
regulations, the Appellant could not have regularized the
encroachments.
15. The land transferred by the Government under Section 32
shall be dealt with by the Corporation in accordance with the
regulations made under the Act and the directions given by the
State Government in that behalf and the procedure prescribed
16
for disposal of land by the Corporation in Section 33 is not
applicable to Government land. As the land allotted to
Respondent No.7 is Government land which was transferred to
the Appellant, we are of the considered opinion that Section 33 of
the Act is not applicable to the land in question.

II - Regularisation in the absence of regulations:
16. Section 59 of the Act provides for regulations to be made in
respect of disposal of land and buildings by the Corporation.
There is no dispute that no regulations have been made for
disposal of land. The question that arises for our consideration is
whether the Appellant could have regularized the encroachment
in the absence of regulations.
17. The exercise of power by an authority in the absence of
regulations has been subject matter of discussion earlier by this
Court. It will be useful to refer to some of those judgments. In
Mysore State Road Transport Corporation (supra)16, no
regulations were framed by the Corporation under Section
45(2)(c)17 of the Road Transport Corporations Act, 1950
prescribing the conditions of appointment in service and

17 Section 45(2) - In particular, and without prejudice to the generality of the foregoing power, such
regulations may provide for all or any of the following matters, namely:--
(c) the conditions of appointment and service and the scales of pay of officers and servants of the
Corporation other than the Chief, Executive Officer or General Manager and the Chief Accounts Officer;
17
the scales of pay of its officers and servants. It was held by this
Court that until the regulations are framed or directions given by
the Government, the Corporation had the right to appoint officers
and servants as may be necessary for the efficient performance of
its functions on such terms and conditions as it thinks fit.
In U.P. State Electricity Board v. City Board, Mussoorie & Ors.18

this Court considered the scope of Section 46 of the Electricity
(Supply) Act, 194819 which provided that the tariff known as the
Grid Tariff shall be fixed from time to time ‘in accordance with any
regulations made in that behalf’. This Court rejected the
submission that tariff could not be fixed in the absence of
regulations. It was held that the provision did not contemplate

18 (1985) 2 SCC 16
19 Section 46- THE GRID TARIFF. - (1) A tariff to be known as the “Grid Tariff' shall, in accordance with any
regulations made in this behalf, be fixed from time to time by the Board in respect of each area for which a
scheme is in force, and tariffs fixed under this section may, if the Board thinks fit, differ for different areas.
(2) Without prejudice to the provisions of Sec.47, the Grid Tariff shall apply to sales of electricity by the
Board to licensees where so required under any of the First, Second and Third Schedules, and shall, subject
as hereinafter provided, also be applicable to sales of electricity by the Board to licensees in other cases:
Provided that if in any such other case it appears to the Board that, having regard to the extent of the
supply required, the transmission expenses involved in affording the supply are higher than those allowed
in fixing the Grid Tariff, the Board may make such additional charges as it considers appropriate.
(3) The Grid Tariff shall be so framed as to include as part of the charge, and show separately a fixed
kilowatt charges component and a running charges component: Provided that if in respect of any area the
electricity to be sold by the Board is wholly or substantially derived from hydroelectric sources, the
running charges component may be omitted.
(4) The fixed kilowatt charges component in the Grid Tariff may be framed so as to vary with the
magnitude of maximum demand.
(5) Where only a portion of a licensee's maximum demand for the purposes of his undertaking is
chargeable at the Grid Tariff, the price payable for that portion shall not be greater than the average price
which would have been payable had the whole of the said maximum demand of the licensee been
chargeable at the Grid Tariff.
(6) The Grid Tariff may contain provisions for
(a) Adjustment of price having regard to the power factor of supply taken or the cost of, fuel or both;
(b) A minimum charge related to a past or prospective demand of a licensee on the Board.
(7) The Grid Tariff may contain such other terms and conditions, not inconsistent with this Act and the
regulations, as the Board thinks fit.
[Emphasis supplied]
18
that no Grid Tariff could be fixed unless regulations were made.
It was held that the Grid Tariff should be fixed in accordance with
the regulations only if there is any regulation and framing of
regulations cannot be a condition precedent for fixing a Grid
Tariff. It is relevant to note Section 32(2) which is as follows:
“32(2) : After any such land had been developed by or
under the control and supervision of the Corporation it
shall be dealt with by the Corporation in accordance
with the regulations made under this Act and the
directions given by the State Government in that
behalf.”
 The language of Section 32(2) of the Act is in pari materia to
Section 46(1) of The Electricity (Supply) Act, 1948.
18. In Surinder Singh (supra)13 framing of rules regulating the
mode and manner of disposal of urban agricultural property by
sale to displaced persons came up for consideration. Section 8 of
the Displaced Persons (Compensation and Rehabilitation) Act,
1954 provides that the displaced persons shall be paid
compensation as determined under Section 7 thereof ‘subject to
any rules that may be made under this Act’. Interpreting the said
provision, this Court held as follows:
“6. ……Where a statute confers powers on an authority to
do certain acts or exercise power in respect of certain
matters, subject to rules, the exercise of power conferred
by the statute does not depend on the existence of rules
unless the statue expressly provides for the same.
19
In other words framing of the rules is not condition
precedent to the exercise of the power expressly and
unconditionally conferred by the statute. The expression
“subject to the rules” only means, in accordance with the
rules, if any.”
19. It was further held that if the legislative intent was that the
power conferred on the authority under Section 8 could not be
exercised, that intent could have been made clearer by using the
expression ‘except in accordance with the rules framed’
a displaced person shall not be paid compensation by sale of
pooled property.
20. It is clear from the above judgments of this Court that
framing of regulations is not sine qua non for land being dealt
with by the Corporation. On the basis of the judgments of this
Court, it can be safely held that the Appellant has the power to
deal with the land, to develop and promote the object of the Act
even in the absence of regulations.
III- Transfer of land without conducting public auction:
21. The Appellant framed a policy for disposal of lands in
industrial estates/ industrial areas in its 63rd meeting of the
Board of Directors of IDCO on 30th June, 2004. According
to the said policy, encroachments by outsiders could be
regularized under following terms:
20
“3. Existing encroachments by outsiders, who wish to
regularize the same for using the land encroached for
industrial use or for use as an amenity facilitating
industrial growth may be considered subject to the
condition that such regularization does not hamper
overall planning of the IE nor inconvenience units in the
vicinity. Such regularization shall be at the rate per acre
as determined by the last auction for plots/ similarly
placed and a one-time affair and the concerned allottees
shall not be eligible for any further allotment of land in
the said IE in future. No regularization of encroachment
shall be allowed for non-industrial institutional/
commercial use under this policy.”
22. A change in the policy of regularization was made by a
Circular on 23rd February, 2008 by the Appellant. According to
the said Circular, encroachments made by outsiders/ trespassers
shall not be allowed by it under any circumstances.
23. Regularization of encroached land is dealt with by policy
decisions of the Appellant-Corporation which have not been
challenged before any court. The regularization of the plot in
favour of Respondent No.7 has been set aside by the High Court
on the ground that it was done otherwise than by way of public
auction. The High Court found that such action on the part of the
Appellant was impermissible. It is no more res integra that
auction cannot be the only method for disposal of
public property. This Court in Natural Resources Allocation
(supra) held as follows:
21
“146. To summarise in the context of the present
Reference, it needs to be emphasised that this Court
cannot conduct a comparative study of the various
methods of distribution of natural resources and suggest
the most efficacious mode, if there is one universal
efficacious method in the first place. It respects the
mandate and wisdom of the executive for such matters.
The methodology pertaining to disposal of natural
resources is clearly an economic policy. It entails
intricate economic choices and the Court lacks the
necessary expertise to make them. As has been
repeatedly said, it cannot, and shall not, be the
endeavour of this Court to evaluate the efficacy of auction
vis-à-vis other methods of disposal of natural resources.
The Court cannot mandate one method to be followed in
all facts and circumstances. Therefore, auction, an
economic choice of disposal of natural resources, is not a
constitutional mandate. We may, however, hasten to add
that the Court can test the legality and constitutionality of
these methods. When questioned, the courts are entitled
to analyse the legal validity of different means of
distribution and give a constitutional answer as to which
methods are ultra vires and intra vires the provisions of
the Constitution. Nevertheless, it cannot and will not
compare which policy is fairer than the other, but, if a
policy or law is patently unfair to the extent that it falls
foul of the fairness requirement of Article 14 of the
Constitution, the Court would not hesitate in striking it
down.
147. Finally, market price, in economics, is an index of
the value that a market prescribes to a good. However,
this valuation is a function of several dynamic variables: it
is a science and not a law. Auction is just one of the
several price discovery mechanisms. Since multiple
variables are involved in such valuations, auction or any
other form of competitive bidding, cannot constitute even
an economic mandate, much less a constitutional
mandate.
148. In our opinion, auction despite being a more
preferable method of alienation/allotment of natural
resources, cannot be held to be a constitutional
22
requirement or limitation for alienation of all natural
resources and therefore, every method other than auction
cannot be struck down as ultra vires the constitutional
mandate. “
24. In the absence of a finding that the policy of regularization
falls fowl of the fairness requirement under Article 14 of the
Constitution, the allotment of the plot to Respondent No.7 could
not have been set aside by the High Court on the ground that no
public auction was conducted by the Appellant - Corporation.
IV- Consideration for the land not commensurate:
25. The regularization of the plot in favour of Respondent No.7
was in terms of the policy decision of 2004. As per the said policy
decision, the price fetched for a similar plot of land in the auction
conducted at the time of regularization would have to be paid by
the person in whose favour the allotment is made. The Appellant
stated that Rs.7,89,350/- was directed to be paid by the
Respondent No.7 on the basis of the auction which fetched
Rs.54,44,000/- per acre. It was also stated that the concessional
rate at that point of time was Rs.18,21,000/- per acre.
We do not find any fault with the Appellant charging Rs.7,89,350/-
for 0.415 acres of land on the basis of the prevailing policy
decision. It was contended by Respondent Nos. 1 to 6 that the
23
allotment was made after the 2008 policy came into force and in
view of the bar in the said policy of regularization of plots by
authorities, the Respondent No.7 could not have been given the
benefit. Respondent No.7 was seeking regularization since 1996
but his representations were not being considered by the
Appellant-Corporation. Ultimately, the decision of regularization
was taken by the Appellant-Corporation, pursuant to a direction
given by the High Court to consider the representations made by
Respondent No.7. Hence the bar under the 2008 Policy was
inapplicable to the case of Respondent No.7. It is also brought to
our notice that a number of plots have been regularized in favour
of persons similarly situated to Respondent No.7. Therefore, it
cannot be said that Respondent No.7 was showered with any
undue benefit.
26. For the aforementioned reasons, the judgment of the
High Court is set aside and the Appeals are allowed accordingly.

 …................................J.
 [S.A. BOBDE]


 ........................................J.
 [L. NAGESWARA RAO]
New Delhi,
February 19, 2018