A) ABSTRACT / HEADNOTE

The Supreme Court of India in The State of Telangana & Ors. v. Dr. Pasupuleti Nirmala Hanumantha Rao Charitable Trust dealt with a significant question relating to the nature of government land alienation and the applicability of Section 10 of the Transfer of Property Act, 1882. The issue centered on whether the District Collector’s alienation order dated 08.02.2001 constituted a sale or a conditional allotment, and whether restrictions imposed under the statutory scheme were valid or void under Section 10 TPA. The case emanated from the High Court’s ruling, which had held the transaction as a sale on market value, thereby granting the Trust absolute ownership rights, free from restrictions.

The Supreme Court, however, reversed the High Court’s interpretation. It held that the land in question was government poramboke land, and the Trust had only received a conditional allotment under the statutory scheme framed by the Telangana Land Revenue Act and the Alienation of State Lands Rules, 1975. The Court emphasized that allotments under such schemes were distinct from ordinary private sales, as they were guided by considerations of public purpose and were enforceable through specific conditions. Thus, the applicability of Section 10 TPA was excluded in such cases, as the State cannot be equated to a private party in an inter vivos transaction.

Further, the Court observed that the Trust had fraudulently violated the allotment conditions by cutting a colony named Eden Orchard on the land and selling plots to third parties. Such conduct was termed a “fraud on the statute.” The Supreme Court reaffirmed that alienations under statutory schemes must strictly adhere to public interest and cannot be converted into private profiteering ventures. Consequently, the appeal was allowed, and the High Court’s order was set aside.

Keywords: Allotment of land; Government land; Conditional alienation; Section 10 TPA; Public purpose; Fraud on statute; Charitable trust; Colony development.

B) CASE DETAILS

C) INTRODUCTION AND BACKGROUND OF JUDGEMENT

The present case arose from the dispute between the State of Telangana and a charitable trust over the alienation of government land situated in Medak district. The controversy traced its origin to an allotment order dated 08.02.2001 passed by the District Collector, Medak, under the powers conferred by G.O.Ms. No.635 dated 02.07.1990. The land, originally classified as poramboke land in 1989, was conditionally allotted to the Trust for charitable purposes. The conditions included (i) utilization for the purpose allotted, (ii) completion of construction within two years, and (iii) plantation of trees. The allotment expressly stipulated resumption in case of breach.

Despite these clear terms, the Trust subsequently claimed absolute ownership over the land, asserting that since it paid market value, the alienation was tantamount to a sale. The High Court of Telangana, both at the Single Judge and Division Bench levels, accepted this contention, holding that restrictions placed by the State were void under Section 10 of the TPA, 1882. The High Court reasoned that once land was sold at market value, the State had no authority to impose conditions restraining its enjoyment.

The State of Telangana, aggrieved by this interpretation, preferred the present appeal before the Supreme Court. The State contended that the alienation was not a sale but an allotment under a statutory scheme, subject to conditions enforceable in public interest. The case thus brought into sharp focus the interplay between statutory allotments of public land, conditions attached thereto, and the principles of property transfer under the Transfer of Property Act, 1882.

The dispute also acquired a larger dimension when evidence surfaced that the Trust had executed a General Power of Attorney in 2011, leading to the development of a residential colony named Eden Orchard, contrary to the original allotment conditions. The question before the Court, therefore, was not merely interpretative but involved assessing whether such conduct amounted to a fraud on statute and whether public purpose conditions can be overridden by private claims under Section 10 TPA.

D) FACTS OF THE CASE

The material facts are pivotal in appreciating the Supreme Court’s ruling. The land in question, measuring Ac. 3.01 guntas in Survey No.72/31 at Chinnathimmapur village, Mulugu Mandal, Medak district, was government poramboke land as per the 1989 revenue records. The respondent, a charitable trust named Dr. Pasupuleti Nirmala Hanumantha Rao Charitable Trust, applied for allotment of land for its activities.

Acting on the Trust’s request, the District Collector, Medak, by proceedings dated 08.02.2001, allotted the land under the authority of G.O.Ms. No.635 (Revenue), dated 02.07.1990 read with the Telangana Alienation of State Lands and Land Revenue Rules, 1975. The alienation letter mandated three conditions: (i) the land shall be used only for the purpose allotted, (ii) construction work must be completed within two years, and (iii) trees shall be planted in open spaces. It further clarified that violation of these conditions would entitle the government to resume the land without compensation.

In subsequent years, the Trust corresponded with government authorities, affirming compliance with these conditions. In its reply dated 29.11.2011, the Trust stated that classrooms and sheds had been built and the land was being used for the purpose of allotment. However, evidence revealed that the Trust executed a General Power of Attorney in June 2011, whereby it authorized a private individual to deal with the land. The GPA concealed the conditional nature of the allotment and described the Trust as the absolute owner. Thereafter, the GPA holder developed the land into a colony named Eden Orchard, subdivided into plots, and sold some parcels to third parties.

This led the State to initiate resumption proceedings on 19.01.2012, citing violation of allotment conditions. The Trust challenged the resumption before the High Court, arguing that it had purchased the land at market value and therefore held absolute ownership. The High Court accepted this argument and struck down the resumption order, holding that restrictions imposed were void under Section 10 TPA. This prompted the State to appeal before the Supreme Court.

E) LEGAL ISSUES RAISED

i. Whether the alienation of land by the District Collector, Medak, Government of Andhra Pradesh, vide order dated 08.02.2001, constituted a sale or an allotment/alienation under a statutory scheme?

ii. Whether any conditions were imposed pursuant to the alienation of land by the Government of Andhra Pradesh, and if so, whether such conditions were binding on the Respondent-Trust?

iii. Whether the imposition of such conditions or restrictions by the State Government on alienated land was violative of Section 10 of the Transfer of Property Act, 1882?

iv. Whether the conduct of the Respondent-Trust in executing a General Power of Attorney and cutting a residential colony on the allotted land amounted to a fraud on the statute?

v. Whether the High Court erred in treating the transaction as a sale and in striking down the State’s power to resume land for breach of allotment conditions?

F) PETITIONER / APPELLANT’S ARGUMENTS

i. The counsels for the Appellant-State submitted that the impugned judgments of the High Court were legally unsustainable, as they ignored the statutory scheme governing alienation of government lands. The State relied on Section 25 of the Telangana Land Revenue Act, which empowers the Commissioner/Collector to assign land for public benefit, and on Rules 5 and 6 of the Telangana Alienation of State Lands and Land Revenue Rules, 1975. These provisions mandated that every alienation of government land, whether for religious, educational, or charitable purposes, must be conditional, with a clear stipulation that the land could be resumed without compensation upon breach of conditions.

ii. The Appellant further contended that G.O.Ms. No.635, dated 02.07.1990, merely enabled District Collectors to alienate government lands on payment of market value, but the alienation continued to be conditional, governed by statutory provisions and Board Standing Orders. Reliance was placed on Board Standing Order 24, which specified that grants of state land must always contain conditions restricting use to the allotted purpose, with a right of resumption in case of infringement. Thus, the allotment in 2001 could not be construed as an outright sale deed.

iii. The Appellant emphasized that the Trust itself had repeatedly admitted that the allotment was conditional. In its correspondence dated 29.11.2011 and in its writ petition, the Trust affirmed compliance with the conditions. Therefore, the High Court’s finding that no specific purpose was prescribed was factually incorrect.

iv. It was argued that Section 10 of the Transfer of Property Act, 1882 was inapplicable to allotments under a statutory scheme. Section 10 applies only to inter vivos transfers between private parties. The State, while alienating land under statutory rules, is not in the position of a private party but is discharging its sovereign duty to regulate public resources for public purposes. The Appellant placed reliance on Ramana Dayaram Shetty v. International Airport Authority of India (1979) 3 SCC 489, Natural Resources Allocation, In Re (2012) 10 SCC 1, and Manohar Lal Sharma v. Principal Secretary (2014) 9 SCC 516, where the Supreme Court emphasized that state largesse must be allocated for public benefit and not treated as private transactions.

v. The Appellant also drew attention to the General Power of Attorney dated 18.06.2011 executed by the Trust, wherein it falsely projected itself as the absolute owner and concealed the allotment conditions. The GPA holder subsequently developed a residential colony, “Eden Orchard,” and sold plots to third parties, in gross violation of allotment terms. The Appellant argued that this amounted to a fraud on the statute, as public land allotted for charitable purposes was diverted to private commercial exploitation.

vi. It was thus submitted that the High Court erred in equating the allotment with a sale, and its reliance on Section 10 TPA was misplaced. The resumption order of 19.01.2012 was validly passed in exercise of the government’s power to enforce allotment conditions.

G) RESPONDENT’S ARGUMENTS

i. The counsels for the Respondent-Trust argued that the subject land was sold by the Government after following the due procedure prescribed under G.O.Ms. No.635 dated 02.07.1990. The Trust paid the market value for the land, and therefore, the alienation was a sale and not a concessional allotment. Once market value was paid, the State ceased to have any ownership rights, and the Trust became the absolute owner.

ii. The Respondent further contended that the only general condition imposed in the alienation order was that the land “would be utilized only for the purpose for which it was allotted.” However, the order did not specify the precise purpose of allotment. In the absence of such clarity, the condition could not be enforced against the Trust. The Respondent argued that any condition imposing restrictions on the enjoyment of property was void under Section 10 of the TPA, which prohibits absolute restraints on alienation.

iii. It was also submitted that the resumption order dated 19.01.2012 was passed without giving the Trust an opportunity of hearing and was therefore violative of the principles of natural justice. The Trust urged that the resumption was arbitrary and disproportionate, especially since it had invested funds in construction.

iv. The Respondent invoked Section 10 TPA to argue that the conditions imposed by the Government were in the nature of restraints on alienation and were therefore void. The High Court correctly held that once the land was sold at market value, the Government could not restrict its use.

v. Lastly, the Respondent requested that if the Supreme Court was inclined to interfere, the matter should be remanded back to the High Court for fresh adjudication, particularly on the issue of violation of natural justice.

H) RELATED LEGAL PROVISIONS

i. Telangana Land Revenue Act, 1317 Fasli (ss.25, 172) – empowering the Collector to assign lands for public benefit and framing of rules for alienation of government lands.

ii. Telangana Alienation of State Lands and Land Revenue Rules, 1975 (rr.5, 6) – prescribing conditions of alienation, including usage restrictions and right of resumption.

iii. Board Standing Orders, Order 24 – mandating that grants of state land should always include restrictive conditions and right of resumption without compensation.

iv. G.O.Ms. No.635 dated 02.07.1990 – authorizing Collectors to alienate government lands on payment of market value subject to conditions.

v. Transfer of Property Act, 1882, Section 10 – declaring void any condition in a transfer restraining alienation.