Rajasthan High Court – Jaipur
State Of Rajasthan vs Rajasthan Leather Industries Ltd on 30 April, 2026
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HIGH COURT OF JUDICATURE FOR RAJASTHAN
BENCH AT JAIPUR
D.B. Special Appeal Writ No. 850/2025
In
S.B. Civil Writ Petition No.14646/2021
Rajasthan Leather Industries Ltd., Having Its Registered Office At Pucca
Bandha, Tonk Through Its Authorized Signatory Chairman Cum Managing
Director, Shri Deepak Saini Son Of Shri Chotey Lal Saini, Aged About 37
Years, R/o 690, Bhola Nagar, Kotla Mubarakpur, New Delhi- 110003
----Appellant
Versus
1. State Of Rajasthan, Through Principal Secretary To Government,
Revenue Department, Government Secretariat, Jaipur.
2. Secretary, Department Of Industries, Government Secretariat,
Jaipur.
3. Secretary, Public Enterprises, Jaipur
4. Commissioner, Industries, Government Of Rajasthan, Jaipur
5. Tehsildar, Tonk.
----Respondents
Connected With
D.B. Special Appeal Writ No. 168/2026
In
S.B. Civil Writ Petition No.14646/2021
1. State Of Rajasthan, Through Principal Secretary To Government,
Revenue Department, Government Secretariat, Jaipur.
2. Secretary, Department Of Industries, Government Secretariat,
Jaipur.
3. Secretary, Public Enterprises, Jaipur
4. Commissioner, Industries, Government Of Rajasthan, Jaipur
5. Tehsildar, Tonk.
----Appellants
Versus
Rajasthan Leather Industries Ltd., Having Its Registered Office At Pucca
Bandha, Tonk Through Its Authorized Signatory Chairman Cum Managing
Director, Shri Deepak Saini Son Of Shri Chotey Lal Saini, Aged About 37
Years, R/o 690, Bhola Nagar, Kotla Mubarakpur, New Delhi- 110003
----Respondent
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For Appellant(s) : Mr. Kamlakar Sharma, Sr. Adv.
assisted by Ms. Alankrita Sharma
For Respondent(s) : Mr. G.S. Gill, AAG assisted by
Ms. Shikha Sharma, AAAG and
Ms. Rashmi Kaushik
Mr. Basant Singh Chhaba, AAG
assisted by Mr. Hardik Singh and
Ms. Mansi Sharma
Mr. S.S. Naruka, AAG assisted by
Mr. Sachin Singh Rathore and
Mr. Anshuman Singh
HON'BLE THE ACTING CHIEF JUSTICE MR. SANJEEV PRAKASH SHARMA
HON'BLE MRS. JUSTICE SHUBHA METHA
Judgment
Date of conclusion of arguments : 24/03/2026
Date on which judgment was reserved : 24/03/2026
Whether the full judgment or only
the operative part is pronounced : Full judgment
Date of pronouncement : 30th/04/2026
(Per Hon'ble The Acting Chief Justice)
REPORTABLE
Facts
1. By way of the present special appeals (writs), Rajasthan Leather
Industries Limited and the state government assailed the order dated
12.05.2025 passed by the learned Single Judge, whereby the writ petition
preferred by the appellant-company (writ petitioner) was partly allowed.
The writ petition came to be disposed of by the learned Single Judge with
the following observations:
"11.Considering the aforesaid material aspect of the
matter so also the opinion given by the Advocate
General as well as the subsequent decision taken by the
Ministry of the concerned Department, the instant writ
petition stands disposed of granting liberty to the
petitioner to use and develop land in question for the
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purpose of establishing Agro Based Food Park. The
petitioner would be at liberty to diversify its portfolio
but the petitioner would not be allowed to sale/alienate
the property in question without permission of the
respondents.
12. In case, the petitioner feels aggrieved by any of the
actions of the respondent-State, the petitioner would be
at liberty to approach the Arbitrator for settlement of
dispute in terms of the agreement dated 12.11.1992.
13.Stay application as well as all applications (pending,
if any) stand disposed of.
2. While the learned Single Judge permitted the appellant to diversify his
business by setting aside the restriction imposed in that regard, the other
condition restraining the appellant from selling or alienating the property in
question was maintained and the appellant has been precluded from selling
or otherwise alienating the said property without prior permission of the
respondents.
3. The facts relevant for the adjudication of the present appeal are that the
state government acquired the land ad measuring 193 bighas vide order no
1595 dated 31.07.1971 under the Rajasthan Land Acquisition Act 1953 for
industrial purposes for M/s Rajasthan State Tanneries which was
incorporated on 22.11.1971 as a State Government undertaking under the
Companies Act, 1956 having initial authorised capital of Rs 1,00,00,000/-
divided in 10 lakhs equity shares of Rs 10 each. The certificate of
incorporation number 1381 of 1971/72 was issued by the Registrar of
Companies. Upon acquisition, the possession of the entire land was handed
over to the government company as per the certificate dated 16.10.1973
issued by the office of the Collector, Tonk. The land was entered in revenue
records in the namer of M/s Rajasthan State Tanneries Limited in the year
1977. Subsequently, M/s Rajasthan State Tanneries Limited ceased its
operations as it ran into continued losses. Accordingly, the sate government
by cabinet approval dated 17.05.1988 took a decision to privatise the
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company by transfer of entire shareholding and invited tender in this
regard. The state government issued the tender notice in the year 1992 for
change of management by transfer of shareholding.
4. Notably, Clause (j) of the said agreement expressly entitled the writ
petitioner to diversify and expand its business activities, with the object of
promoting the growth of the company and generating employment
opportunities.
5. Despite repeated requests made by the writ petitioner, the land in
question continued to remain recorded in the name of Rajasthan State
Tanneries Ltd. as agricultural land even after it being transferred to the writ
petitioner company.
6. Thereafter, a meeting was convened on 13.06.2008, which was chaired
by the Hon'ble Industries Minister. The writ petitioner objected to the
certain decisions which were taken in the said meeting as being wholly
illegal, which subsequently led to the filing of the writ petition by the
petitioner. In the meeting, the following decisions were taken:
"(1) Unit representative would submit detailed project
report to the Industries Department within seven days.
(2) Detailed action plan report of the proposed project
in which it should be disclosed that in how much days
collective Mechanized Automatic Animal Slaughtering
House would be established and production would be
started.
(3) Issuance of no objection certificate for
establishment of slaughtering house should be ensured
from Municipal authorities and Pollution Control Board.
(4) Permission from Revenue Department, Government
of Rajasthan should be obtained to use the land for
industrial purposes should be obtained as the land of
State Tanneries is recorded in the name of State
Government i.e. Rajasthan State Tanneries Ltd.
(5) Permission to sell the above said land would not be
granted by the State Government and permission
would be obtained to use the land for commercial
purposes. With the conditions NOC should be granted
to open mutation in the name of Tonk Tanneries Ltd."
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7. Mutation of the land in favour of the writ petitioner and its conversion
from agricultural to non-agricultural use became necessary as The failure to
effect the conversion created substantial impediments for the writ
petitioner company in carrying on its business operations. However, despite
repeated requests, no steps were taken by the concerned authorities in this
regard.
8. Vide letter dated 05.03.2009, the Principal Secretary, Revenue
Department directed the District Collector, Tonk, to record the land in the
name of the writ petitioner company. Pursuant thereto, the District
Collector, Tonk, vide communication dated 02.04.2009, directed the
Tehsildar to take necessary steps in this regard. Consequently, the Patwari
sanctioned the mutation in favour of the writ petitioner company.
9. However, while effecting such mutation, two conditions/restrictions,
namely, (i) restriction on diversification of business, and (ii) restriction on
sale/alienation of the land, were imposed, which were without authority of
law and in clear violation of original agreement as at the time of transfer no
such conditions existed.
10. The writ petitioner also obtained a legal opinion from Hon'ble Justice
B.P. Singh, former Judge of the Supreme Court of India, wherein it was
opined that the aforesaid conditions were without any legal authority.
Thereafter, several further representations, the matter was referred to the
learned Advocate General, who, vide opinion dated 22.02.2012, also opined
that the restrictions imposed on the use of land were not supported by law,
particularly in light of Sections 10 and 11 of the Transfer of Property Act,
1882, and Section 133 of the Rajasthan Land Revenue Act, 1956.
11. That on 21.05.2015, one of the Directors of the writ petitioner company
submitted a representation to the Hon'ble Revenue Minister assailing the
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aforesaid arbitrary conditions. Pursuant thereto, a report was called for
from the District Collector, Tonk, vide communication dated 30.07.2015.
The District Collector, in turn, sought a report from the Sub-Divisional
Officer, who directed the Tehsildar to furnish a factual report.
12. In compliance thereof, the Tehsildar submitted a report stating that the
land stood duly mutated in the name of Tonk Tanneries, and made
reference to letters dated 05.03.2009 and 20.03.2009, which did not
stipulate any such conditions. However, in the covering letter dated
07.12.2015, reliance was placed upon an alleged order dated 02.04.2009
as the basis for imposing the aforesaid restrictions, purportedly in the
interest of the State. After this several other representations were also
submitted.
13. That one of the Directors of the writ petitioner company submitted an
application under Section 90A of the Rajasthan Land Revenue Act, 1956 on
01.03.2019 seeking permission for establishment of an Agro Food Park.
Pursuant thereto, the Commissioner, Nagar Parishad, Tonk, vide letter
dated 02.08.2019, informed the Director, Local Bodies, that the subject
land had been earmarked for industrial use in terms of the Master Plan,
2031. Thereafter, the Chief Town Planner approved the layout plan on
16.08.2019, which was subsequently approved by the Nagar Parishad in its
SPC meeting held on 18.09.2019.
14. In furtherance thereof, the writ petitioner submitted a representation
dated 17.09.2019 to the Commissioner, Industries, seeking issuance of No
Objection Certificate and approval of the project. The Commissioner,
Industries, vide communication dated 09.10.2019, sought a report in the
matter, wherein it was reiterated that the land was not subject to any such
restrictions. The Nagar Parishad also supported the proposal by
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recommending issuance of separate pattas and requested approval for
establishment of the agro-based industry.
15. As the conditions were imposed at ministerial level, the matter was
again placed before the Minister for removal of the conditions. However, no
decision was taken.
16. Consequently, after exhausting all available remedies and
representations, which yielded no result, the writ petitioner was
constrained to file the writ petition, being aggrieved by the inaction of the
State authorities as well as the illegal and arbitrary conditions imposed by
the State Government, including the endorsement made by the Patwari in
the revenue records.
Arguments
A. Submissions on Behalf of Appellant
17. It is submitted on behalf of the appellants that the learned Single Judge
failed to properly appreciate that the writ petitioner company was
aggrieved by the manifest illegality, arbitrariness, and colourable exercise
of power on the part of the respondents, whereby conditions restraining the
writ petitioner from sale/alienation of the land as well as from diversifying
its business were imposed. The said conditions, having been incorporated
in the revenue record by the Patwari at the instance of the Minister, were
wholly without jurisdiction and beyond the authority vested in the Patwari
as well as the State Government. It is further submitted that the specific
challenge in the writ petition was to the lack of authority in law of the
respondents to impose such conditions; however, merely on account of the
fact that, during the pendency of the writ petition, the restriction pertaining
to diversification was relaxed by the Minister, the learned Single Judge
proceeded to dispose of the writ petition without adjudicating upon the
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validity and legality of the remaining condition restraining sale/alienation of
the property, which continues to operate to the prejudice of the appellants.
18. It is further submitted that the learned Single Judge erred in observing
that the petitioner would not be permitted to sell or alienate the property in
question without prior permission of the respondent-State, which
observation is ex facie contrary to settled principles of law. The learned
Advocate General, in his opinion, had categorically opined that the
transferee is entitled to enjoy the property without any such restrictions, in
view of Sections 10 and 11 of the Transfer of Property Act, 1882. It is
submitted that the restrictions imposed at the instance of the Minister, and
subsequently reflected in the revenue record, are not traceable to any
statutory provision and are wholly without authority of law; consequently,
the continuation and endorsement of such restrictions is arbitrary, illegal,
and liable to be set aside. Furthermore, It is being vehemently argued by
the appellant that company has not fulfilled or discharged its liabilities, and
it is also denied that company remained non functional for 33 years and
because of imposition of two arbitrary conditions, the company was not
able to to set up any commercial business as permission had to be taken
from State Government but the State government did not approve any of
the requests. Initially also tannery was being run by the appellant for 4
years till the area got marked as a green belt and only eco friendly industry
was allowed to bet established. Also, the imposition of conditions by the
respondent state was neither statutory or policy-based and the transfer
was not an allotment or a grant, it was a full fledged transfer of ownership
by transfer of 100% shareholding which was approved by Cabinet vide
order no. 169/94 dated 6/10/1994. It is also submitted that decision of the
Hon'ble minister regarding establishment of Agro-food park was drawn on
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3.8.23 and the file was sent to Additional Chief Secretary, Industries
Department for passing necessary orders for implementation of the orders
of Hon'ble Minister but the additional Chief Secretary did not pass any
order and thereafter the note sheet annexed by the respondents in their
reply was drawn which seems to be be malafide and motivated.
19. It is submitted that the learned Single Judge failed to appreciate that
upon complete transfer of ownership, the State Government had divested
itself of all rights, title, interest, and management control over the
property, and therefore had no authority or justification to impose any
conditions subsequently in the year 2008, particularly after having divested
itself of all liabilities as early as in the year 1995. It is further submitted
that even assuming, without admitting, that such conditions had been
imposed at the time of transfer, the same would, in any event, be void and
unenforceable in view of Sections 10 and 11 of the Transfer of Property Act,
1882, which prohibit imposition of absolute restraints on alienation and
enjoyment of property.
20. It is submitted that the imposition of the aforesaid restrictions is wholly
arbitrary and contrary to the binding terms of the agreement dated
12.11.1992, pursuant to which the State Government transferred 100%
shareholding of the undertaking, and the subsequent approval of the
Cabinet dated 06.10.1994 culminated in complete privatization and
cessation of all control of the State Government over the said entity. It is
further submitted that the writ petitioner entered into the agreement on
the basis of express contractual terms, which did not envisage or impose
any restriction on the future use, diversification, or alienation of the
property. The subsequent imposition of such conditions, dehors the
agreement, defeats the legitimate expectation of the writ petitioner and
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amounts to a unilateral alteration of contractual terms, thereby violating
the well-settled doctrine of sanctity of contract. It is also submitted that no
retrospective conditions could have been imposed at the stage of mutation
entries, which are merely fiscal in nature and do not confer or alter
substantive rights, and therefore the impugned action of imposing
restrictions at such a stage is wholly illegal and unsustainable in the eyes of
law.
21. It is further submitted that the selective and discriminatory imposition
of the aforesaid restrictions upon the writ petitioner, while similarly situated
entities have not been subjected to such conditions, is arbitrary and
violative of Article 14 of the Constitution of India, as the impugned action
lacks any reasonable classification or intelligible differentia and does not
bear any rational nexus with the object sought to be achieved. It is
submitted that the imposition of the aforesaid conditions at the stage of
mutation is contrary to the provisions of the Rajasthan Land Revenue Act,
1956, which do not confer any power upon the State Government or its
authorities to impose substantive conditions while effecting changes in
revenue records, as mutation proceedings are merely fiscal in nature and
intended for recording possession and title for revenue purposes, and
cannot be utilised as a mechanism to alter or curtail substantive rights.
22. It is further submitted that the learned Single Judge erred in relegating
the petitioner to the remedy of arbitration, despite the fact that the
arbitration clause contained in the agreement is limited in its scope to
disputes arising under or in relation to the terms of the said agreement.
The present dispute does not emanate from any contractual disagreement
between the parties, but rather pertains to the imposition of arbitrary and
illegal conditions by the respondents dehors the agreement, and therefore
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the direction to avail the remedy of arbitration is misconceived and
unsustainable, as the controversy raised is essentially one involving the
exercise of statutory and constitutional powers by the State authorities,
which cannot be adjudicated within the confines of a contractual arbitration
clause.
23. It is submitted that the learned Single Judge committed a manifest
error in law in failing to adjudicate upon the validity and legality of the
condition restraining alienation of the property, despite the same being
specifically challenged in the writ petition, and without undertaking any
analysis or assigning reasons, proceeded to observe that the writ petitioner
would not be permitted to sell or alienate the property. Such an
observation, rendered without any reasoned consideration, is contrary to
settled principles of law and vitiates the impugned order, as it effectively
upholds a restriction affecting valuable proprietary rights without examining
its legality or the authority under which it was imposed.
24. Lastly, it is submitted that the writ petitioner has been consistently
deprived of its right to utilise its own land for lawful industrial purposes,
and the continued and unjustified refusal on the part of the State
Government has the effect of amounting to a constructive expropriation of
the petitioner's property rights. Such action, though not amounting to
formal acquisition, effectively strips the petitioner of the beneficial use and
enjoyment of its property, and is therefore ex facie violative of the
petitioner's constitutional right to property guaranteed under Article 300A
of the Constitution of India, as no person can be deprived of property save
by authority of law, which is wholly absent in the present case.
25. In support of his submissions, learned counsel cited the following
judgements:
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(I) Sawarni vs Inder Kaur and Others.1
(II) Jitendra Singh vs State of Madhya Pradesh and Ors. 2
(III) Western Coalfields Ltd vs Special Area Development
Authority, Korba and Another3
(IV) Heavy Engineering Mazdoor Union vs State of Bihar and
Ors.4
(V) Rustom Cavasjee Cooper vs Union of India5
B. Submissions on Behalf of the Respondents
26. Learned counsel for the respondents submits that all the allegations,
averments, contentions, and assertions made in the writ petition are
emphatically denied. It is submitted that the present writ petition has been
preferred by the petitioner being aggrieved by the decision taken in the
meeting dated 13.06.2008, chaired by the Hon'ble Minister, as well as the
conditions subsequently incorporated in the mutation order dated
02.04.2009; however, the said actions are in accordance with law and do
not warrant any interference by this Hon'ble Court. Furthermore, it is
submitted that neither were the decisions arbitrary but rather were taken
to ensure compliance with the original agreement dated 12.11.1992 and to
protect the purpose for which the land, originally owned by a state
enterprise, was transferred and that the conditions imposed were
necessary corollaries to the overall objective of disinvestment, i.e., the
revival of the closed unit and providing employment to the local residents.
This decision was also necessitated by the non-compliance of the appellant
to the contractual terms. Therefore, the grant of NOC for mutation was
conditional upon adherence to these conditions and the transfer of land was
not an outright sale but rather a conditional transfer of land for public
1 1996 (6) SCC 223
2 2021 SCC OnLine 802
3 (1982) 1 SCC 125
4 (1969) 1 SCC 765
5 (1970) 1 SCC 248
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purpose (for which bar on alienation was necessary to ensure that the
same was not alienated without meeting the public purpose for which it
was transferred). Furthermore, such restrictions would not fall foul of
Section 10 of the Transfer of Property Act 1882 since these conditions are
not one placed by the transferor but are statutory restrictions and
consequence of non-compliance with the terms of the original allotment as
well as the Rajasthan Land Revenue Act 1956. Therefore, such public law
restrictions fall outside the ambit of the private law principle enshrined
under Section 10 of the Act of 1882. Section 11 of the said act is also
inapplicable here as any restrictions or enforcement action is
legislative/executive and not a private contractual restraint. In this regard,
they have relied on a decision of the Apex Court in The State of
Telangana and Others vs Dr. Pasupuleti Nirmala Hanumantha Rao
Charitable Trust6 wherein it was held as under:
"23. This Court is of the view that the Appellant-State
had allotted land to public trust for public purpose. In
such a situation, the State cannot be put in the normal
classical inter vivos party's position as public interest is
supreme and must prevail. This Court is also of the
opinion that Rules, 1975 and the Board of Revenue
Standing Orders operate in a completely distinct space
and are not eclipsed by Section 10 of the TPA."
27. It is further submitted that as per the Jamabandi of revenue village
Mehganv for the Samvat years 2071-2074, Khasra No. 296 measuring
48.3974 hectares, situated at Village Mehganv, Patwar Halka Dhola Kherda,
Tehsil Tonk, District Tonk, stands recorded in the name of M/s Tonk
Tanneries Pvt. Ltd. (now Rajasthan Leather Industries Ltd.), and the
revenue entries clearly stipulate that the land cannot be sold without prior
permission of the State Government and that any commercial or other use
would require approval from the competent authority. It is also reflected
that the nature of the land is recorded as Ghair Mumkin Naala, Ghair
6 Civil Appeal No. 5321/2025
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Mumkin Chahi, Ghair Mumkin Paal, Ghair Mumkin Road, Ghair Mumkin
Rasta, and Ghair Mumkin Tanneries, which itself justifies regulatory
oversight and control. It is submitted that Mutation Order No. 652 came to
be passed strictly in compliance with Order No. 1338 dated 02.04.2009
issued by the District Collector, Tonk, as well as the corresponding order
passed by the Tehsildar, Tonk, and therefore the mutation entries were
effected in due compliance of lawful directions issued by competent
authorities and cannot be said to be arbitrary or without jurisdiction. It is
further submitted that the Deputy Secretary (State Enterprises
Department) had written to the district collector, Tonk to save the assets of
Rajasthan State Tanneries Ltd. from being destroyed. The letter mentioned
that the company was not make any efforts to re-established the
manufacturing unit but rather efforts were made to destroy the land, plants
and assets of this unit. Therefore, the letter requested ensuring that the
present management does not sell this land to anyone, does not use it for
any work except leather work, there is no change in the revenue record
and the assets arent destroyed. In this regard, the opinion given by the
Advocate General is advisory in nature and cannot supersede decisions
taken by the government.
28. Learned counsel further submits that, as a matter of fact, no tannery or
any industrial activity is presently being carried out on the subject land,
and in the absence of any ongoing industrial use, the petitioner cannot
claim that any immediate or irreparable prejudice has been caused so as to
invoke the extraordinary jurisdiction of this Hon'ble Court. The objective
behind the transfer of the land was the revival of the sick industrial unit,
re-establishment of dairy operations and ensuring employment to
retrenched or displaced workers. However, the appellant failed to revive the
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unit and provide employment, nor have they invested any funds towards
restarting the operations. Furthermore, it is submitted that the industry
was not functional for over 33 years. Owing to such non-compliance, the
state government could not transfer its remaining equity as per the MoU.
The failure of the appellant to fulfil the conditions of the MoU means it
never took full effect. In this regard the defense of Coivd-19 taken for non-
performance of contractual obligations is invalid as such non-performance
substantially predates the pandemic.
29. Learned counsel further submits that the land was exclusively acquired
for industrial purpose. While the petitioner was permitted to diversify its
operations as per the agreement dated 12.11.1992, this was intended to
facilitate the expansion of industrial activities, primarily related to leather
and associate products and to generate employment for the local
population. This permission to diversify does not allow the petitioner to sell
or alienate the land which would defeat the purpose of original acquisition
of land. In this regard, it is also submitted that the Nagar Parishad's
jurisdiction is limited to physical planning aspects and such approval cannot
supersede the superior contractual and administrative conditions imposed
by the state government at the time of conditional land transfer.
30. Learned counsel also submits that while the land was erroneously
recorded as agricultural, this was a defect in the revenue records. It is
submitted that the land was acquired for and transferred as industrial land
and that the request for conversion was merely a step to rectify the
administrative error in the revenue records. The erroneous entry does not
grant the petitioner the right to utilize the land for non-industrial purposes
or to sell or alienate it, which remains contrary to the initial acquisition and
subsequent agreement conditions. Further, it is submitted that the fact that
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the land was recorded as agricultural land despite being used for industrial
purposes necessitated the petitioner to undertake proper procedure for
conversion of land use from agricultural to non-agricultural (as outlined by
the Commerce Department's letter dated 30.06.2008). Mutation and land
use conversion are separate statutory processes and the petitioner failed to
complete the latter as per the relevant rules. It is further submitted that
revenue records (including entry of mutation) carry a presumption of
correctness unless successfully rebutted in a manner prescribed by law,
which the appellant has failed to do.
31. Learned counsel further submits that disputes involving a public law
element and exercise of sovereign or administrative power are not arbitrate
under the Arbitration and Conciliation Act 1996. This is because, an
arbitrator, being a creature of contract and private law, cannot decide
issues requiring the interpretation and enforcement of constitutional or
public mandates such as the validity of administrative action or the
correction of state revenue records. The proper forum for such challenge is
through a writ court or the specific revenue courts/authorities established
by statute.
32. Learned counsel also submits that deprivation of property was strictly
in accordance with law as mandated by article 300A and was done under
the authority of acts like The Land Acquisition Act 1894, Companies Act
2013, SICA. The objections of the interested parties were heard and duly
disposed of.
33. Learned counsel further submits that this Hon'ble Court, while
exercising jurisdiction under Article 226 of the Constitution of India, is
guided by well-settled self-imposed limitations and does not ordinarily
undertake an elaborate fact-finding exercise, and the issues raised by the
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petitioner involve disputed questions of fact which require detailed
examination of evidence and are therefore not amenable to adjudication in
writ jurisdiction. Furthermore, owing to the above-mentioned non-
compliance with the foundational terms of the MoU.
34. It is further submitted that an efficacious and alternative statutory
remedy is available to the petitioner for redressal of its grievances, and
without exhausting such remedies, the petitioner has directly approached
this Hon'ble Court, which is impermissible in law; on this ground alone, the
writ petition deserves to be dismissed. Learned counsel submits that the
petitioner has failed to establish its locus standi to maintain the present
writ petition, as sufficient documentary evidence has not been placed on
record to substantiate its claim of ownership or entitlement over the land in
question, and at the same time the petitioner seeks to challenge the
conditions attached thereto, which is an inconsistent stand not permissible
in law.
35. It is submitted that the contention of the petitioner regarding violation
of Article 14 is wholly misconceived, as it is a settled principle that absolute
equality is neither practicable nor required, and so long as the classification
adopted by the State is reasonable and based on intelligible differentia
having a rational nexus with the object sought to be achieved, the same
cannot be interfered with in exercise of writ jurisdiction. It is further
submitted that the conditions imposed upon the land are in furtherance of
public interest and regulatory requirements, and the State is well within its
powers to regulate the use and transfer of land in larger public interest; the
petitioner cannot claim unfettered rights contrary to such regulatory
framework.
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36. It is also submitted that the jurisdiction under Article 226 of the
Constitution is extraordinary and discretionary in nature and is to be
exercised sparingly, and this Hon'ble Court does not sit as an appellate
authority to correct mere errors of fact or law unless there is manifest
illegality or gross injustice, which is conspicuously absent in the present
case. It is submitted that there is no violation of any fundamental right or
statutory provision as alleged by the petitioner, and the actions of the
respondents are in consonance with law and have been taken after due
consideration of the material available on record, and therefore cannot be
termed as arbitrary or illegal.
37. Learned counsel reiterates that the petitioner was under a legal
obligation to first avail the alternative remedies available under the
statutory framework before invoking the writ jurisdiction of this Hon'ble
Court, and failure to do so renders the petition liable to be dismissed. It is
finally submitted that the entire writ petition is misconceived, misleading,
and based on incorrect and unsubstantiated facts, and has been filed with
an oblique motive, amounting to an abuse of the process of law, seeking to
obtain reliefs without any legal foundation; the same therefore deserves to
be dismissed with exemplary costs.
38. On the issue of diversification, in their cross Special Appeal Writ 7, the
Respondents placed reliance on clause (j) of the agreement and the MoA to
submit that the land could have been subjected to any other use by the
appellant-company for the purposes of expansion and diversification. It was
also stated that while mutating the land in favour of the appellant-
company, the Tehsildar imposed two conditions, i.e., state government will
not accord approval for the sale of this land and their permission is
required for other commercial use.
7 DB Special Appeal Writ No. 168/2026
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39. It is further stated in the Special Appeal Writ that the judgement dated
12.05.2025 is contrary to law as the learned single judge has not properly
construed clause (j) of the agreement dated 12.11.1992, a perusal of
which, clearly demonstrates that the company can expand its operations or
product lines to include more variety but not to make use of the land for
any other commercial activities or to sell or alienate the same.
Furthermore, the learned single judge failed to appreciate the fact that the
MoU dated 12.11.1992 imposed certain conditions (revival of industry
within stipulated time, employment generation, recommencement of
operations in previously closed units, regularisation of the industry in
complying with all statutory obligations and discharging all liabilities of the
company including payment of outstanding dues), none of which have been
fulfilled by the company for more than 33 years and hence no benefit or
concession can be extended to the respondent company, particularly when
the state government never granted any exemption or concession to it from
the terms of company shareholding transfer, which are still in force and
binding on the company.
40. It has been further stated in the said writ that despite repeated
reminders to ensure compliance, the company has failed to do so. It was
also argued that the learned single judge failed to consider the fact that the
land in question is situated in a strategically important and prime location
and no other suitable land is available in the vicinity and the same is
needed for industrial development and public purposes. Therefore, if the
company has no intention of reviving the industry, then the land can be
better utilised for other public and industrial purposes.
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41. It is also stated in the abovementioned writ that that clause (p) of the
agreement clearly stipulated that in the event of any disputes arising at any
stage in relation to any aspect of the agreement or its interpretation, the
same shall be referred to the sole arbitrator and that Section 5 of the
Arbitration and Conciliation Act 1996 bars judicial intervention in matters
governed by the said part. In this regard, the Hon'ble Supreme Court in
Bisra Stone Lime Company Ltd. and Another vs Orissa State
Electricity Board and Another8 has categorically held that the High Court
may refuse to exercise its jurisdiction if there exists a valid arbitration
clause. Furthermore, as this alternate remedy was available, a writ petition
was not maintainable, for which reliance was placed on a decision of the
Hon'ble Supreme Court in A.V. Venkateswaran, Collector of Customs,
Bombay vs Ramchand Sobhraj Wadhwani and Another 9.
42. It was further argued that the writ petition suffers from inordinate
delay as the mutation was sanctioned in 2009 whilst the writ petition was
filed in 2021. Reliance in this regard was placed on a decision of the Apex
Court in Mrinmoy Maity vs Chhanda Koley and Others 10 wherein the it
was held that ordinarily, inordinate delays would be fatal to the litigants
case.
43. It was also pointed out that the learned single judge has failed to
consider that in the writ petition, the company has not challenged the order
of the district collector which is a quasi judicial order but rather it has
challenged the action of the Patwari which is an executive order which is
consequential in the form of compliance of the order of the district collector.
In this regard, it was argued that it is settled law that no writ of certiorari
can be issued against an executive action.
8 1976 (2) SCC 167
9 1961 SCC OnLine SC 16
10 2024 (15) SCC 215
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Issues for Determination
1. Whether a Writ petition is maintainable in this case?
2. Whether any conditions could have been imposed subsequent to signing
of the agreement dated 12.11.1992?
3. Whether mutation proceedings can be used to impose substantive
restrictions affecting proprietary rights?
4. Whether relegation to arbitration was justified in the facts of the present
case?
Analysis and Discussion
A. Maintainability of the Writ Petition
44. The facts and circumstances of the present case unequivocally indicate
that the impugned actions of the respondents are arbitrary and
discriminatory, and therefore violative of Article 14 of the Constitution of
India. The material on record reflects that the conditions in question have
been imposed selectively upon the appellants, while similarly situated
entities have not been subjected to any such restrictions, without there
being any intelligible differentia or rational nexus with the object sought to
be achieved.
45. Further, the effect of the impugned conditions is such that it
substantially impairs the appellants' ability to use, enjoy, and deal with
their property in a lawful manner. This then goes counter to the arguments
made by the Respondents of non-operationalization of the industry as such
conditions itself serves as a roadblock to operating the manufacturing unit.
This amounts to an unjustified interference with the appellants' right to
property, guaranteed under Article 300A of the Constitution of India, as the
deprivation is not backed by any valid authority of law. The restrictions,
therefore, operate not merely as regulatory measures, but as an effective
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denial of the beneficial enjoyment of the property, rendering the action of
the respondents constitutionally unsustainable.
46. The scope of Article 300-A was examined in K.T. Plantation (P) Ltd.
v. State of Karnataka11, wherein the Apex Court held that:
166. Article 300-A, when examined in the light of the
circumstances under which it was inserted, would
reveal the following changes:
1. Right to acquire, hold and dispose of property has
ceased to be a fundamental right under the
Constitution of India.
2. Legislature can deprive a person of his property only
by authority of law.
3. Right to acquire, hold and dispose of property is not
a basic feature of the Constitution, but only a
constitutional right.
4. Right to property, since no more a fundamental
right, the jurisdiction of the Supreme Court under
Article 32 cannot be generally invoked, aggrieved
person has to approach the High Court under Article
226 of the Constitution.
168. Article 300-A proclaims that no person can be
deprived of his property save by authority of law,
meaning thereby that a person cannot be deprived of
his property merely by an executive fiat, without any
specific legal authority or without the support of law
made by a competent legislature. The expression
"property" in Article 300-A confined not to land alone,
it includes intangibles like copyrights and other
intellectual property and embraces every possible
interest recognised by law.
169. This Court in State of W.B. v. Vishnunarayan and
Associates (P) Ltd. [(2002) 4 SCC 134] , while
examining the provisions of the West Bengal Great
Eastern Hotel (Acquisition of Undertaking) Act, 1980,
held in the context of Article 300-A that the State or
executive officers cannot interfere with the right of
others unless they can point out the specific provisions
of law which authorises their rights.
170. Article 300-A, therefore, protects private property
against executive action. But the question that looms
large is as to what extent their rights will be protected
when they are sought to be illegally deprived of their
properties on the strength of a legislation. Further, it
was also argued that the twin requirements of "public
purpose" and "compensation" in case of deprivation of
property are inherent and essential elements or
ingredients, or "inseparable concomitants" of the power
of eminent domain and, therefore, of List III Entry 42,
as well and, hence, would apply when the validity of a
statute is in question.
11 (2011) 9 SCC 1
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47. A further example of such arbitrariness is the fact that the minutes of
the meeting dated 13.06.2008 do not show anything to indicate that the
objections raised by the appellant were considered prior to imposing such
conditions, which is arbitrary. In this regard, it is important to note that one
of the cardinal principles of administrative law is to ensure that
administrative action taken fairly and after giving due consideration to the
objections raised by those who will be affected by such decisions. A similar
stance was taken by the Apex Court in Basudev Dutta vs State of West
Bengal and Ors.12 which held that:
"12.2. It is settled law that every administrative or
quasi-judicial order must contain the reasons. Such
reasons go a long way in not only ensuring that the
authority has applied his mind to the facts and the law,
but also provide the grounds for the aggrieved party to
assail the order in the manner known to law. In the
absence of any reasons, it also possesses a difficulty
for the judicial authorities to test the correctness of the
order or in other words, exercise its power of judicial
review......."
48. Furthermore, on the aspect of deprivation of property, the Hon'ble
Supreme Court recently in Samiullah vs State of Bihar and Ors. 13
observed that:
"36. A requirement of rules, regulations or even law
that impedes or restrains easy and effective transfer of
property will be illegal as it has the direct effect of
"depriving of property" to that extent, and such delays,
caused due to unreasonable and arbitrary restrictions,
impinge the right to hold and dispose of property. We
therefore hold that the prescription of mentioning and
production of jamabandi allotment or holding allotment
as a precondition for registration of a legally presented
document under impugned sub-rules 19(xvii) and
(xviii) is arbitrary and illegal and as such, liable to be
set aside."
Therefore, the conditions imposed vide the meeting dated 13.06.2008
which restrain such ''easy and effective transfer'' can be said to be illegal.
12 2024 SCC OnLine SC 3616
13 (2026) 1 SCC 475
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49. On the issue as to whether the writ petition was maintainable in the
present case, and whether the appellants-writ petitioners were justified in
invoking the extraordinary jurisdiction of this Hon'ble Court under Article
226 of the Constitution of India in a contractual matter, the same has been
settled by a judgment of the Hon'ble Supreme Court in Rajasthan State
Industrial Development & Investment Corporation v. Diamond &
Gem Development Corporation Ltd.14, wherein it was held as under:
"21. It is evident from the above that generally the
Court should not exercise its writ jurisdiction to enforce
the contractual obligation. The primary purpose of a
writ of mandamus is to protect and establish rights and
to impose a corresponding imperative duty existing in
law. It is designed to promote justice (ex debito
justitiae). The grant or refusal of the writ is at the
discretion of the court. The writ cannot be granted
unless it is established that there is an existing legal
right of the applicant, or an existing duty of the
respondent. Thus, the writ does not lie to create or to
establish a legal right, but to enforce one that is
already established. While dealing with a writ petition,
the court must exercise discretion, taking into
consideration a wide variety of circumstances, inter
alia, the facts of the case, the exigency that warrants
such exercise of discretion, the consequences of grant
or refusal of the writ, and the nature and extent of
injury that is likely to ensue by such grant or refusal.
22. Hence, discretion must be exercised by the court
on grounds of public policy, public interest and public
good. The writ is equitable in nature and thus, its
issuance is governed by equitable principles. Refusal of
relief must be for reasons which would lead to injustice.
The prime consideration for the issuance of the said
writ is, whether or not substantial justice will be
promoted. Furthermore, while granting such a writ, the
court must make every effort to ensure from the
averments of the writ petition, whether there exist
proper pleadings. In order to maintain the writ of
mandamus, the first and foremost requirement is that
the petition must not be frivolous, and must be filed in
good faith. Additionally, the applicant must make a
demand which is clear, plain and unambiguous. It must
be made to an officer having the requisite authority to
perform the act demanded. Furthermore, the authority
against whom mandamus is issued, should have
rejected the demand earlier. Therefore, a demand and
its subsequent refusal, either by words, or by conduct,
are necessary to satisfy the court that the opposite
party is determined to ignore the demand of the
14 (2013) 5 SCC 470
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applicant with respect to the enforcement of his legal
right. However, a demand may not be necessary when
the same is manifest from the facts of the case, that is,
when it is an empty formality, or when it is obvious
that the opposite party would not consider the
demand."
50. In an earlier decision, the Hon'ble Supreme Court in ABL
International Ltd. v. Export Credit Guarantee Corpn. of India Ltd. 15
held as under:
"52. On the basis of the above conclusion of ours, the
question still remains why should we grant the reliefs
sought for by the appellants in a writ petition when a
suitable efficacious alternate remedy is available by
way of a suit. The answer to this question, in our
opinion, lies squarely in the decision of this Court in the
case of Shrilekha Vidyarthi [(1991) 1 SCC 212 : 1991
SCC (L&S) 742] wherein this Court held: (SCC pp. 235-
37, paras 20-22 & 24)
The requirement of Article 14 should extend even in
the sphere of contractual matters for regulating the
conduct of the State activity. Applicability of Article 14
to all executive actions of the State being settled and
for the same reason its applicability at the threshold to
the making of a contract in exercise of the executive
power being beyond dispute, the State cannot
thereafter cast off its personality and exercise
unbridled power unfettered by the requirements of
Article 14 in the sphere of contractual matters and
claim to be governed therein only by private law
principles applicable to private individuals whose rights
flow only from the terms of the contract without
anything more. The personality of the State, requiring
regulation of its conduct in all spheres by requirements
of Article 14, does not undergo such a radical change
after the making of a contract merely because some
contractual rights accrue to the other party in addition.
It is not as if the requirements of Article 14 and
contractual obligations are alien concepts, which cannot
coexist. The Constitution does not envisage or permit
unfairness or unreasonableness in State actions in any
sphere of its activity contrary to the professed ideals in
the preamble. Therefore, total exclusion of Article 14 --
non-arbitrariness which is basic to rule of law -- from
State actions in contractual field is not justified. This is
more so when the modern trend is also to examine the
unreasonableness of a term in such contracts where
the bargaining power is unequal so that these are not
negotiated contracts but standard form contracts
between unequals.
Unlike the private parties the State while exercising its
powers and discharging its functions, acts indubitably,
as is expected of it, for public good and in public
15 (2004) 3 SCC 553
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interest. The impact of every State action is also on
public interest. It is really the nature of its personality
as State which is significant and must characterize all
its actions, in whatever field, and not the nature of
function, contractual or otherwise, which is decisive of
the nature of scrutiny permitted for examining the
validity of its act. The requirement of Article 14 being
the duty to act fairly, justly and reasonably, there is
nothing which militates against the concept of requiring
the State always to so act, even in contractual matters.
This factor alone is sufficient to import at least the
minimal requirements of public law obligations and
impress with this character the contracts made by the
State or its instrumentality. It is a different matter that
the scope of judicial review in respect of disputes falling
within the domain of contractual obligations may be
more limited and in doubtful cases the parties may be
relegated to adjudication of their rights by resort to
remedies provided for adjudication of purely
contractual disputes. However, to the extent, challenge
is made on the ground of violation of Article 14 by
alleging that the impugned act is arbitrary, unfair or
unreasonable, the fact that the dispute also falls within
the domain of contractual obligations would not relieve
the State of its obligation to comply with the basic
requirements of Article 14. To this extent, the
obligation is of a public character invariably in every
case irrespective of there being any other right or
obligation in addition thereto. An additional contractual
obligation cannot divest the claimant of the guarantee
under Article 14 of non-arbitrariness at the hands of
the State in any of its actions."
51. Subsequently, on the aspect of issuance of writs, the Hon'ble
Supreme Court in Joshi Technologies International Inc. v. Union
of India16 held that:
"70.7. Writ can be issued where there is executive
action unsupported by law or even in respect of a
corporation there is denial of equality before law or
equal protection of law or if it can be shown that action
of the public authorities was without giving any hearing
and violation of principles of natural justice after
holding that action could not have been taken without
observing principles of natural justice."
52. In light of the above discussion, we find the present writ petition to
be maintainable.
B. Imposition of Conditions Post Signing of Agreement Dated
12.11.1992
16 (2015) 7 SCC 728
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53. Regarding the contention pertaining to violation of Sections 10 and 11
of the Transfer of Property Act 1882, it would be apposite to first quote the
same:
"10. Condition restraining alienation.-Where
property is transferred subject to a condition or
limitation absolutely restraining the transferee or any
person claiming under him from parting with or
disposing of his interest in the property, the condition
or limitation is void, except in the case of a lease where
the condition is for the benefit of the lessor or those
claiming under him:
Provided that property may be transferred to or
for the benefit of a women (not being a Hindu,
Muhammad or Buddhist), so that she shall not have
power during her marriage to transfer or charge the
same or her beneficial interest therein.
11. Restriction repugnant to interest created.-
Where, on a transfer of property, an interest therein is
created absolutely in favour of any person, but the
terms of the transfer direct that such interest shall be
applied or enjoyed by him in a particular manner, he
shall be entitled to receive and dispose of such interest
as if there were no such direction.
[Where any such direction has been made in
respect of one piece of immoveable property for the
purpose of securing the beneficial enjoyment of
another piece of such property, nothing in this section
shall be deemed to affect any right which the transferor
may have to enforce such direction or any remedy
which he may have in respect of a breach thereof.]"
54. From a perusal of agreement dated 12.11.1992, it is apparent that no
condition was imposed at the time of transfer of the land. What was said in
clause (j) was that the plant and machinery are to be used for the
manufacture of leather and leather goods with liberty granted to the
appellant to expand and diversify into areas which are useful for the
company and for generating employment for the local population (as far as
possible). The restrictions on alienation were subsequently imposed by the
state government vide the meeting dated 13.06.2008, mentioning that sale
of the said land would not be permitted by the state government and grant
of NOC will be basis the conditions laid down in the said meeting.
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55. A condition imposed unilaterally, in absence any statutory provision
permitting the same and in violation of the statutory provisions mentioned
above, particularly subsequent to signing of the agreement of 12.11.1992
is void. In the context of unilateral modification of contract, the Hon'ble
Supreme Court in Kanwar Raj Singh (D) Through Legal
Representatives vs Gejo (D) Through Legal Representatives and
Ors.17 observed as under:
"13. The corrections unilaterally made by the first
defendant after the execution of the sale deed without
the knowledge and consent of the purchaser will have
to be ignored. Only if such changes would have been
made with the consent of the original plaintiff, the
same could relate back to the date of the execution. It
is not even the first defendant's case that the
subsequent correction or interpolation was made before
its registration with the consent of the original plaintiff.
Therefore, in this case, what will operate is the sale
deed as it existed when it was executed."
56. On the above mentioned issue, the Hon'ble Supreme Court in Delhi
Development Authority and Anr. vs Joint Action Committee, Allottee
Of SFS Flats And Ors.18 had held as under:
"66. The stand taken by DDA itself is that the
relationship between the parties arises out of the
contract. The terms and conditions therefor were,
therefore, required to be complied with by both the
parties. Terms and conditions of the contract can
indisputably be altered or modified. They cannot,
however, be done unilaterally unless there exists any
provision either in contract itself or in law. Novation of
contract in terms of Section 60 of the Contract Act
must precede the contract-making process. The parties
thereto must be ad idem so far as the terms and
conditions are concerned. If DDA, a contracting party,
intended to alter or modify the terms of contract, it was
obligatory on its part to bring the same to the notice of
the allottee. Having not done so, it, relying on or on
the basis of the purported office orders which are not
backed by any statute, new terms of contract could (sic
not be) thrust upon the other party to the contract. The
said purported policy is, therefore, not beyond the pale
of judicial review. In fact, being in the realm of
contract, it cannot be stated to be a policy decision as
such."
17 (2024) 2 SCC 416
18 (2008) 2 SCC 672
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57. Before proceeding further, it would be apposite to refer to Sections 90-
A and 102 of the Rajasthan Land Revenue Act 1956 which reads as under:
"[90-A.] Use of agricultural land for non-
agricultural purpose -
.....
(3) The State Government shall, after making or
causing to be made due inquiry in the prescribed
manner, either refuse the permission applied for or
grant the same subject to the prescribed terms and
conditions.
………
102. Power of Government to allot land for
purposes other than agricultural as well as on
special terms – Notwithstanding anything hereinforce
contained, the State Government shall have power to
allot land for the purpose of an industry or for any
purpose of public utility on such conditions as it deems
fit.”
58. The discretion exercisable by the state government (mentioned above)
to impose conditions for allotment of land can be said to be encapsulated
within the terms stipulated in the agreement, which itself does not provide
for further discretion to the state for subsequent and unilateral addition of
conditions. In this regard, the Apex Court in State of Madhya Pradesh vs
Sew Construction Limited and Ors.19 held as under:
“23. In the context of discretion, we may reiterate this
principle. The rights and duties of the parties to the
contract subsist or perish in terms of the contract itself.
Even if a party to the contract is a governmental
authority, there is no place for discretion vested in the
officers administering the contract. Discretion, a
principle within the province of administrative law, has
no place in contractual matters unless, of course, the
parties have expressly incorporated it as a part of the
contract. It is the bounden duty of the court while
interpreting the terms of the contracts, to reject the
exercise of any such discretion that is entirely outside
the realm of the contract.”
59. A perusal of the agreement between the appellant and the state
government show that the entire shareholding of the appellant-company
was transferred to the now appellants. This would include the property
used to operate the manufacturing unit. While the agreement did stipulate
expansion and modernisation of the unit, it did not include any express
19 (2022) 17 SCC 370
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prohibition on the alienation of the property. In this regard, recently, the
Apex Court in Annaya Kocha Shetty (Dead) through Lrs vs Laxmibai
Narayan Satose Since Deceased through Lrs. and Ors. 20 provided the
following guidance on the interpretation of deeds:
“17. The guide to the construction of deeds and tools
adopted can broadly be summarised as follows:
17.1 The contract is first constructed in its plain,
ordinary and literal meaning. This is also known as the
literal rule of construction.
17.2 If there is an absurdity created by literally
reading the contract, a shift from literal rule may be
allowed. This construction is generally called the golden
rule of construction.
17.3 Lastly, the contract may be purposively
constructed in light of its object and context to
determine the purpose of the contract. This approach
must be used cautiously.
18. The construction of a deed is “generally speaking,
a matter of law.” However, when there is an ambiguity
in the deed, determining its meaning is a mixed
question of fact and law. This concept is encapsulated
by sections 91 and 92 of the Evidence Act, 1872.
18.1 Section 91 of the Evidence Act, 1872 denotes that
a deed constitutes the primary evidence of the terms to
which the parties are to adhere. Whereas section 92 of
the Evidence Act, 1872 forbids any contradictions or
variations in a written document by extrinsic evidence.
However, there are exceptions outlined in the proviso
to section 92, that allow variations from this general
rule…….”
60. This usage of the surrounding context to interpret a contract was also
recently mentioned by the Apex Court in General Secretary,
Vivekananda Kendra vs Pradeep Kumar Agarwalla and Ors. 21,
wherein it was observed that:
“19. If the words in a contract/deed are clear, there is
very little the courts must do in the construction of the
contract in determining the intention of the parties. In
furtherance of determining the intention, the deed
must be read as a whole to ascertain the true meaning
of its clauses, and the words of each clause should be
interpreted harmoniously. This intention must be
derived directly from the plain and ordinary meaning of
the text itself. Furthermore, these words should be
understood exactly as the intended parties would
commonly use them. The covenants must be applied
precisely as written, neither diluted into irrelevance nor20 2025 SCC OnLine SC 758
21 2026 SCC OnLine SC 316
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[2026:RJ-JP:16733-DB] (31 of 41) [SAW-850/2025]stretched beyond their original scope. If the
construction of the contract/deed, through its words
and context, does not provide the court with the
parties’ intention, the court may have regard to the
circumstances surrounding its creation and the subject-
matter to which it was designed and intended to
apply.”
61. From a reading of the above, it is clear that when a contract is
executed between parties, it is assumed to be the final and complete
understanding reached and agreed to between such parties and therefore
serves as an exclusion to extrinsic evidence [see decision of the Apex Court
in Roop Kumar vs Mohan Thedani 22 (also subsequently referred to by
the Apex Court in V. Anantha Raju and Anr. vs T.M. Narasimhan and
Ors.23)]. However, an exception to the above is when a contract is silent on
something, a court can imply certain terms [though such power is limited
to certain grounds (as enumerated by the Apex Court in Adani Power
(Mundra) Limited vs Gujarat Electricity Regulatory Commission and
Ors.24)]:
“24. It could thus be seen that it is more than well
settled that the clauses in the agreement ought to be
given the plain, literal and grammatical meaning of the
expression used in the same. No doubt, that the courts
will also try to gather as to what intention the parties
wanted to give them. As has been held by Ranjan
Gogoi, J. (as his Lordship then was) the principle of
business efficacy could be invoked only if by a plain
literal interpretation of the term in the agreement or
the contract, it is not possible to achieve the result or
the consequence intended by the parties acting as
prudent businessmen. This test requires that a term
can only be implied, if it is necessary to give business
efficacy to the contract, to avoid such a failure of
consideration that the parties cannot as reasonable
businessmen have intended. If the contract makes
business sense without the term, the courts will not
imply the same. It is amply clear that courts can imply
a clause only if it is found that the plain and literal
meaning given to the expression used in the terms is
not in a position to make out the intention of the
parties. Reading an unexpressed term in an agreement
would be justified on the basis that such a term was
always and obviously intended by and between the
22 (2003) 6 SCC 595
23 (2021) 17 SCC 165
24 (2019) 19 SCC 9
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[2026:RJ-JP:16733-DB] (32 of 41) [SAW-850/2025]parties thereto. An unexpressed term can be implied if
and only if the court finds that the parties must have
intended that term to form part of their contract. It is
not enough for the court to find that such a term would
have been adopted by the parties as reasonable men if
it had been suggested to them. It must have been a
term that went without saying, a term necessary to
give business efficacy to the contract, a term which,
although tacit, forms part of the contract. As held in
Nabha Power Ltd. [Nabha Power Ltd. v. Punjab SPCL,
(2018) 11 SCC 508 : (2018) 5 SCC (Civ) 1] , for
invoking the business efficacy test and carving out an
implied condition, not expressly found in the language
of the contract, the following five conditions will have
to be satisfied: (SCC p. 540, para 49)
(1) Reasonable and equitable;
(2) Necessary to give business efficacy to the contract;
(3) It goes without saying i.e. the Officious Bystander
Test;
(4) Capable of clear expression; and
(5) Must not contradict any express term of the
contract.”
62. When it comes to interpreting commercial contracts in general, while
applying of tests like the Officious Bystander Test, the standard of
‘reasonableness’ to be applied is not an abstract one but rather of a person
with similar knowledge, information and skill. Furthermore, deviation from
the text of the agreement to rely on other sources for interpretation of the
contract must be done sparingly. This is because, certainty and
predictability is key in commercial transactions. When parties enumerate
their common understanding of the terms and conditions in the form of an
agreement, they do so to avoid any confusion or vagueness with regards to
the rights and obligations of each party, thereby ensuring seamless
execution of the agreement. This becomes particularly crucial for time
sensitive transactions where delays can frustrate the agreement itself.
Regarding interpretation, as good commercial practice, parties can include
an ‘interpretation clause’ in their contracts which encompasses things like
definitions, objectives, accepted commercial practices, etc. This will help
resolve issues like multiple possible interpretations of a word and also
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[2026:RJ-JP:16733-DB] (33 of 41) [SAW-850/2025]
ensure contextual interpretation of words depending on which part of the
agreement they are mentioned in. This will aid in reducing ambiguity when
interpreting contracts. However, it is important to note that mere omission
of a term generating some uncertainty which can be cured would not render
a contract void. Rather, only when the above fails, then such agreements
are void under Section 29 of the Indian Contract Act 1872. The same is
reproduced below:
“29. Agreements void for uncertainty.-
Agreements, the meaning of which is not certain, or
capable of being made certain, are void.”
63. Now, we shall examine each of these conditions individually:
(a) Regarding the first condition, in light of the judgements delivered
in Kanwar Raj Singh (D) Through Legal Representatives
(supra) and Delhi Development Authority (supra) read with the
statutory restrictions imposed under Sections 10 and 11 of the Act
of 1882, the first condition is not satisfied.
(b) Regarding the second condition, it is first important to
understand the objective behind entering into this agreement. For
this, the tools provided in Annaya Kocha Shetty (Dead) through
Lrs (supra) can be utilised. The literal and golden rules of
interpretation would not be useful here as the condition under
consideration, i.e., bar on alienation does not find any written
expression, including through any terminology which can be utilised
to infer such a condition. Therefore, this case calls for purposive
interpretation, i.e., understanding the contract ”in light of its object
and context” to identify the objective behind the same. A perusal of
the facts of the case shows that the reason behind sale of the
company was the losses it had incurred. This has also been reflected
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[2026:RJ-JP:16733-DB] (34 of 41) [SAW-850/2025]in the preamble of the agreement, wherein it is mentioned that a
substantial monetary amount is required to revive the company,
which the state government is not in a position to provide for. This
is the reason why the agreement mentions the appellant to take
over the liabilities. The preamble also shows the objective of the
agreement to be revival of the company. While determining the
intention of the parties using the method given in General
Secretary, Vivekananda Kendra (supra) and Annaya Kocha
Shetty (Dead) through Lrs (supra), i.e., collective reading of the
agreement, would therefore lead us to conclude that the intention
was to ensure continued operations of the manufacturing unit and
welfare of the local community. Therefore, not permitting
investment in the manufacturing unit through alienation of land
would go contrary to the business efficacy of the contract as it
would hinder the operationalization of the manufacturing unit itself.
(c) Regarding the third condition, the Apex Court in Enercon
(India) Limited and Ors. vs Enercon GMBH and Anr. 25 observed
that:
“91. Dr Singhvi has rightly submitted that the
unworkability in this case is attributed only to the
machinery provision. And the arbitration agreement,
otherwise, fulfils the criteria laid down under Section 44
of the Indian Arbitration Act, 1996. Given that two
arbitrators have been appointed, the missing line that
“the two arbitrators appointed by the parties shall
appoint the third arbitrator” can be read into the
arbitration clause. The omission is so obvious that the
court can legitimately supply the missing line. In these
circumstances, the Court would apply the officious
bystander principle, as explained by MacKinnon, L.J. in
Shirlaw v. Southern Foundries (1926) Ltd. [(1939) 2
KB 206 : (1939) 2 All ER 113 (CA), on appeal from
1937 S 1835] , to interpret the clause. In Shirlaw
[(1939) 2 KB 206 : (1939) 2 All ER 113 (CA), on
appeal from 1937 S 1835] , it was held that: (KB p.
227)
25 (2014) 5 SCC 1
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[2026:RJ-JP:16733-DB] (35 of 41) [SAW-850/2025]“… ‘prima facie that which in any contract is left to be
implied and need not be expressed is something so
obvious that it goes without saying; so that, if, while
the parties were making their bargain, an officious
bystander were to suggest some express provision for
it in their agreement, they would testily suppress him
with a common “Oh, of course!”‘”
In construing an arbitration clause, it is not necessary
to employ the strict rules of interpretation which may
be necessary to construe a statutory provision. The
court would be well within its rights to set right an
obvious omission without necessarily leaving itself open
to the criticism of having reconstructed the clause.”
Therefore, from a discussion in the second condition, it is
apparent that the agreement was entered into for the purpose of
the company’s revival and continued operations. Therefore, any
condition, like restriction on alienation of land, which hinders such
an objective, cannot be said to form an obvious part of the
agreement.
(d) Regarding the fourth condition, the test here is to ascertain
whether such a term can be clearly expressed from a perusal of the
agreement and using the tools provided in Annaya Kocha Shetty
(Dead) through Lrs (supra) and General Secretary,
Vivekananda Kendra (supra). From statement of the relevant
facts discussed for the second test, it is apparent that non-alienation
of the land cannot be said to be a valid condition, factoring in the
context in which the agreement was entered into as well as its terms
and conditions.
(e) Regarding the fifth condition, while the point pertaining to bar on
alienation of property was not expressly mentioned and therefore
such a subsequent bar did not contradict an ”express term”, the
meeting dated 13.06.2008 did impose a bar on usage of the land for
commercial purposes without prior approval of the state government
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[2026:RJ-JP:16733-DB] (36 of 41) [SAW-850/2025]
which is directly contradictory to clause (i) of the agreement dated
12.11.1992 which mentions that:
“(i) Transferee will embark upon the scheme for
expansion/modernisation of the unit in accordance with
the latest proposals dated 23.7.92 submitted by it to
the Principal Secretary, State Enterprises. In the
process, transferee will bring share capital amounting
to $ 3,00,000 along with interest free loan amounting
to $ 4,35,000 and make working capital arrangements
as per projections. The production will commence
within 5 months of handing over.”
Therefore, the fifth condition is not satisfied.
64. Thus, after the agreement has been entered into and the property
having been handed over, the state government lost its right on the land
and the factory in toto. There was no occasion therefore for the state
government to hold a meeting on 13.06.2008 and impose subsequent
restrictions on the subsequent owners of the land as the state government
did not have any power to intervene or interfere with the affairs of the
leather company who could use their property, machines, etc. for
expanding or to diversify into different sectors. Furthermore, a perusal of
the other part of the agreement empowers them to mortgage the land to
get loans and therefore, we find that the restrictions on alienation issued by
the state government itself are per say illegal and come within the four
corners of being declared void ab initio. The power exercised by the state
government is a colourable exercise of power and would be in violation of
Articles 14 and 19 for imposing unnecessary restrictions. Therefore, in
absence of an express contractual prohibition, the appellants cannot be
said to be restricted from alienating the property. Basis the above
discussion, the artificial barriers created in full enjoyment of their property
are not sustainable in law.
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[2026:RJ-JP:16733-DB] (37 of 41) [SAW-850/2025]
C. Mutation and Title Rights
65. Mutation entries, as also argued by the learned counsel for the
appellant, merely record changes to the revenue records and do not grant
or restrict title to any property. Prior to discussing the judicial
pronouncement on the same, it would be apposite to refer to Sections 90-A
and 102 of the Rajasthan Land Revenue Act 1956 (mentioned above).
66. Such a condition, however, cannot fall foul of the statutory provisions
enshrined under the central Act of 1882 mentioned above. Regarding
mutation entries, the law has been settled by the Apex Court in Jitendra
Singh vs State of Madhya Pradesh and Ors. 26, wherein the following
was observed:
“7. Right from 1997, the law is very clear. In the case
of Balwant Singh v. Daulat Singh (D) By Lrs., reported
in (1997) 7 SCC 137, this Court had an occasion to
consider the effect of mutation and it is observed and
held that mutation of property in revenue records
neither creates nor extinguishes title to the property
nor has it any presumptive value on title. Such entries
are relevant only for the purpose of collecting land
revenue. Similar view has been expressed in the series
of decisions thereafter.”
Therefore, restrictions on exercise of the rights of a title holder, like
bar on alienation of the land cannot be one of the conditions precedent to
grant NOC for mutation as has been imposed vide the meeting dated
13.06.2008. The same is also done in absence of any power granted under
the Act of 1956.
D. Relegation To Arbitration
67. The question that arises for consideration is whether the learned Single
Judge was justified in relegating the appellants-writ petitioners to the
remedy of arbitration. Upon a careful examination of the nature of the
dispute, it becomes evident that the controversy does not arise out of the
terms of the agreement or their interpretation, but rather pertains to the
26 2021 SCC OnLine SC 802
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[2026:RJ-JP:16733-DB] (38 of 41) [SAW-850/2025]
imposition of subsequent conditions by the State. Such action, having a
direct bearing on the rights of the appellants, cannot be said to be confined
to the realm of private law so as to oust the jurisdiction of this Court under
Article 226 of the Constitution of India.
68. It is well settled that the existence of an alternative remedy, including
arbitration, does not operate as an absolute bar to the exercise of writ
jurisdiction, particularly where the impugned action is alleged to be
arbitrary, unreasonable, or violative of constitutional or statutory
provisions. In this context, the Hon’ble Supreme Court in Harbanslal
Sahnia v. Indian Oil Corporation Ltd. 27 wherein the Apex Court has
authoritatively laid down the well-recognised exceptions to the rule of
alternative remedy. The relevant extract from the said judgment is
reproduced hereinbelow:
“7. So far as the view taken by the High Court that the
remedy by way of recourse to arbitration clause was
available to the appellants and therefore the writ
petition filed by the appellants was liable to be
dismissed is concerned, suffice it to observe that the
rule of exclusion of writ jurisdiction by availability of an
alternative remedy is a rule of discretion and not one of
compulsion. In an appropriate case, in spite of
availability of the alternative remedy, the High Court
may still exercise its writ jurisdiction in at least three
contingencies: (i) where the writ petition seeks
enforcement of any of the fundamental rights; (ii)
where there is failure of principles of natural justice; or
(iii) where the orders or proceedings are wholly without
jurisdiction or the vires of an Act is challenged. (See
Whirlpool Corpn. v. Registrar of Trade Marks [(1998) 8
SCC 1] .) The present case attracts applicability of the
first two contingencies. Moreover, as noted, the
petitioners’ dealership, which is their bread and butter,
came to be terminated for an irrelevant and non-
existent cause. In such circumstances, we feel that the
appellants should have been allowed relief by the High
Court itself instead of driving them to the need of
initiating arbitration proceedings.”
69. Further reliance can also be placed on ABL International Ltd.
(supra), wherein it has been held that even in contractual matters, a writ
27 (2003) 2 SCC 107
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[2026:RJ-JP:16733-DB] (39 of 41) [SAW-850/2025]
petition would be maintainable where the State or its instrumentality acts
in an arbitrary manner or in violation of Article 14.
70. In the present case, the grievance of the appellants is not directed
against any contractual stipulation, but against the unilateral imposition of
conditions affecting their proprietary rights, which are alleged to be without
authority of law. In such circumstances, the dispute clearly involves a
public law element and cannot be relegated to arbitration, which is confined
to adjudication of disputes arising out of the contract. The approach
adopted by the learned Single Judge, therefore, in directing the appellants
to avail the remedy of arbitration, does not appear to be in consonance
with the settled principles governing the exercise of writ jurisdiction.
71. We also notice a contradiction between the first and second replies
given by different respondents. In the reply submitted by respondents 1
and 5 to the writ petition, it was mentioned that:
“7. That the alternate and efficacious remedy for the
purpose of challenging the impugned orders lies before
the competent forum as per the prevailing laws which
have not been availed by the present petitioner and
this writ petition has been directly filed by them before
the Hon’ble High Court. As such on the ground of
availability of alternate and efficacious remedy, the
present writ petition is liable to be dismissed.”
Whereas, in the reply submitted by respondents 2-4 to the writ
petition, it was mentioned that:
“L. The contents of grounds L are Respondent submits
that the present dispute, concerning the validity of a
state/statutory action or a question of title/revenue
record correction under the Land Revenue Act, is a
matter of public law. Disputes involving a public law
element and the exercise of sovereign or administrative
power are not arbitrable under the Arbitration and
Conciliation Act, 1996. An Arbitrator, being creature of
contract and private law, cannot decide issues requiring
the interpretation and enforcement of constitutional or
public law mandates, such as the validity of
administrative actions or the correction of state
revenue records. The proper forum for such a challenge
is the Writ Court (High Court) or the specific Revenue
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[2026:RJ-JP:16733-DB] (40 of 41) [SAW-850/2025]Courts/Authorities established by the statute, not an
arbitral tribunal. Therefore, this ground is essentially an
acknowledgement that the dispute is not one fit for
arbitration.”
Findings
72. In view of the above discussion, we answer the questions framed as
follows:
(a) The present writ petition is maintainable
(b) The restriction on the right to alienate property is not inferable on
the terms of the agreement
(c) The attempt to unilaterally modify the terms of the agreement
dated 12.11.1992 vide meeting dated 13.06.2008 is illegal
(d) Restrictions on exercise of the rights of a title holder, like bar on
alienation of the land cannot be one of the conditions precedent to
grant NOC for mutation
(e) The manner in which the decision was taken in the meeting dated
13.06.2008 is arbitrary and violative of Article 14
(f) The decision dated in the meeting dated 13.06.2008 restricts the
”easy and effective transfer” of the property and therefore is illegal as
per Samiullah (supra)
73. In view of the above findings, analysis and discussion, we allow the DB
Special Appeal Writ No.850/2025, Rajasthan Leather Industries Limited vs
State of Rajasthan and Others, setting aside the judgement and order
dated 12.05.2025 passed by the learned Single Judge whereby he restricts
the sale and alienation of the property in question and usage for other
purposes.
74. D.B. Special Appeal Writ No.168/2026, State of Rajasthan and Others
vs Rajasthan Leather Industries Limited is dismissed, both on merits as
well as barred by limitation.
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[2026:RJ-JP:16733-DB] (41 of 41) [SAW-850/2025]
74. No order as to costs.
75. All pending application(s) are disposed of.
(SHUBHA METHA),J (SANJEEV PRAKASH SHARMA),ACTING CJ
Gaurav/
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