MIDC Allotment Exception: Bombay High Court Affirms Legality of Direct, Concessional Allotments for Educational Amenities

Introduction

On 20 August 2025 the Bombay High Court (Chief Justice Alok Aradhe and Justice Sandeep V. Marne) delivered a pivotal decision in Bhrastachar Nirmoolan Sangathana Mumbai & Anr. v. State of Maharashtra & Ors., dismissing a Public Interest Litigation (PIL No. 155 of 2006) that challenged the legality of several land allotments made by the Maharashtra Industrial Development Corporation (MIDC) to politically connected educational trusts and other entities. The petitioners alleged favoritism, absence of public auction, and allocation at “throw-away prices”. The Court held that where a statutory scheme expressly authorises allotment on application and on concessional terms, the absence of auction is not per se unconstitutional, and any challenge must be directed against the enabling regulations themselves.

Summary of the Judgment

1. The Court confirmed that the MIDC Disposal of Land Regulations, 1975 (DLR 1975) permit two modes of disposal—public auction or individual application (Reg. 4).
2. Educational institutions fall within the statutorily earmarked 5 % “amenity area” in every industrial layout; the Board’s resolutions charging 50 % of the industrial rate for such institutions were never impugned.
3. Because neither the DLR 1975, the Development Control Regulations (DCR) nor the Board’s rate-fixing resolutions were challenged, individual allotments made in consonance with those instruments could not be annulled.
4. The Court distinguished general jurisprudence favouring auction (e.g. Akhil Bharatiya Upbhokta Congress) on the ground that those cases did not involve a specific statutory permission to allot on application.
5. Finding no mala fides or diversion of land from the declared public purpose (allottees had already built functioning educational campuses), the Court refused to invalidate the allotments or to disturb the status quo.
6. It nonetheless cautioned MIDC to act if any allottee changes use unauthorisedly in the future.

Detailed Analysis

1. Precedents Cited and Their Influence

Akhil Bharatiya Upbhokta Congress v. State of M.P. (2011) 5 SCC 29
– Established that largesse cannot be distributed arbitrarily and normally requires a transparent process.
– Petitioners relied on paras 65–67; Court distinguished it by pointing out that there the State acted sans statutory authority, whereas MIDC has explicit regulatory sanction.
CIDCO v. Platinum Entertainment (2015) 1 SCC 558
– Re-affirmed the need for fairness and publicity even when rules allow allotment on application.
– Court accepted the principle but noted that CIDCO case involved same person obtaining three plots by stratagem; no comparable abuse was shown here.
Indian Oil Corp. v. Shashi Prabha Shukla (2018) 12 SCC 85
– Stressed that public authorities hold property in trust; misuse invites judicial correction.
– Court used the case to emphasise that, absent proof of misuse, judicial intervention is unwarranted.
Kasturi Lal Lakshmi Reddy v. State of J&K (1980) 4 SCC 1
– Recognised the State’s freedom to negotiate directly when industrialisation/public interest so demands, provided actions are bona fide.
– The Bench treated Kasturi Lal as the closest factual parallel and relied on it to uphold MIDC’s policy choice.

2. Core Legal Reasoning

Statutory primacy: Section 64 of the MIDC Act allows the State to frame regulations; the DLR 1975, validly made under that section, expressly give MIDC discretion to allot by application. Therefore, what might be arbitrary in a vacuum becomes lawful under a specific legislative mandate.
Doctrine of severability of challenge: A PIL cannot challenge individual allotments without impeaching the very provisions that authorise them. Since the petitioners did not attack Regs 4, 6, 8, 10, & 11 or the Board’s resolutions (1991-2004), the Court treated the statutory framework as presumed valid.
Public purpose nexus: Education is expressly listed in DCR 33 as an “amenity”. Allottees had demonstrably built colleges, hospitals, or herbal gardens in line with sanctioned purpose. The public-purpose continuum thus remained intact.
Absence of demonstrated mala fides: Allegations of political connection, by themselves, did not prove extraneous considerations or undervaluation beyond the concession authorised by policy.
Acquiescence and lapse of time: Many allotments dated back to 2004–2006; large infrastructures now exist, and thousands of students depend on them. Applying the equitable principle against unsettling long-standing positions, the Court declined relief.

3. Anticipated Impact of the Judgment

Regulatory Clarity: Confirms that where a statutory corporation’s regulations permit non-auction allotments, courts will give them primacy unless regulations themselves are ultra vires.
PIL Strategy Shift: Future public-interest challengers must aim at the enabling instruments (DLR, DCR, Board Resolutions) rather than individual allotments alone.
Policy Autonomy: Industrial development agencies across India may view this judgment as judicial endorsement of concessional, purpose-oriented allotment schemes, provided transparency is maintained and no extraneous favours are shown.
Educational Infrastructure: Reinforces a pathway for quick establishment of educational amenities in emerging industrial belts, potentially boosting skilling of local workforce.
Boundary Lines: The Court carefully left open the possibility of intervention where mala fides or misuse of land is proven—signalling that statutory discretion is not unfettered.

Complex Concepts Simplified

Amenity Area (5 % rule): In every MIDC industrial layout, 5 % of the land must be reserved for public facilities—schools, fire stations, etc. Educational trusts thus legitimately fit in this slice.
Premium Lease: A long-term lease (often 95 or 99 years) where an upfront lump-sum (“premium”) is paid instead of annual ground rent.
Concessional Rate: A price lower than the market/industrial rate, fixed by policy to encourage socially beneficial uses. Here, 50 % of prevailing industrial rate for educational plots, and 10 % for playgrounds.
Direct Application Mode: A statutory route allowing an interested entity to apply individually without competing auction; lawfulness depends on there being an enabling provision and absence of discrimination.
Mala fides: Legal shorthand for “bad faith”; decisions taken for an improper purpose, with bias, or for personal gain can be struck down even if procedures appear correct.

Conclusion

The decision delineates a significant boundary between the constitutional mandate of fairness in distribution of state largesse and the operational latitude conferred by sector-specific statutes. By upholding MIDC’s concessional allotments, the Court:

Validated the legislative choice reflected in the DLR 1975 and associated Board policies;
Affirmed that absence of auction is not automatically unconstitutional where the statute envisages alternative modes;
Illustrated that systemic challenges must target the rule-making source, not merely its downstream applications;
Sent a cautionary note that statutory discretion remains reviewable for mala fide or misuse.

Going forward, public authorities must still ensure transparent, reasoned decision-making, but they are entitled to rely on their regulations unless and until those regulations are struck down. For litigants and policymakers alike, the judgment offers a roadmap: challenge the framework, not just the outcome, if genuine reform is the objective.