SECTION 10 TPA NOT APPLICABLE TO GOVT LAND ALLOTMENT RESTRICTIONS: SUPREME COURT:

On May 14, the Supreme Court clarified that Section 10 of the Transfer of Property Act, 1882 (TPA), which renders absolute restraints on alienation void, does not apply to government land allotments. The Court reasoned that such allotments are not inter vivos or commercial transactions but are made in the public interest. Accordingly, the Court upheld the Telangana government's authority to impose conditions on land use and to resume land in cases of misuse. It set aside a High Court decision that had treated the allotment to the Respondent as a sale governed by the TPA.

The bench of Justice Dipankar Datta and Justice Manmohan considered a case involving the 2001 allotment of 3.01 acres of land in Medak district to a trust by the state government for charitable purposes. The allotment was subject to specific conditions, including exclusive use for charitable activities and completion of construction within two years. However, instead of complying, the trust subdivided the land into plots, sold them to private individuals, and concealed the original terms through a fraudulent General Power of Attorney (GPA) executed in 2011.

In response, the Telangana government issued a resumption order in 2012, reclaiming the land due to breach of allotment conditions. The High Court later quashed this order in 2022, holding that it violated Section 10 of the TPA by imposing an absolute restraint on alienation. Challenging this ruling, the State approached the Supreme Court.

In its judgment authored by Justice Manmohan, the Supreme Court held that government allotments are fundamentally different from private sales and are meant to promote public welfare. As such, they are governed by statutory land rules, not the TPA. These rules authorize the State to impose and enforce conditions on land use and allow resumption in cases of violation. The Court ruled that the Respondent Trust's failure to comply with the terms justified the State's resumption of the land and reinstated the government's action.

“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.”, the court observed.

The Court allowed the appeal, stressing that when the state government allocates land for public interest, it retains the right to seek resumption of the land if the conditions of the allotment are breached, as such allotments cannot be classified as a sale.