M/S LABHA RAM AND SONS AND ORS. ETC. versus STATE OF PUNJAB AND ORS.

Citation: [1998] 3 S.C.R. 112 · Decided: 30-04-1998 · Supreme Court of India · Bench: M.M. PUNCHHI · Disposal: Dismissed
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Judgment (excerpt)

A 
M/S LABHA RAM AND SONS AND ORS. ETC. 
v. 
STATE OF PUNJAB AND ORS. 
APRIL 30, 1998 
B 
[M.M. PUNCHHI, CJ., K.T. THOMAS AND D.P. WADHWA, JJ.] 
Punjab New Mandi Township (Development and Regulation) Act, 1960: 
C 
Section 3-Expression "or otherwise transferred by auction, allotment 
or otherwise "-Scope of 
Agricultural produce-Mandi township-Tra1*rs-Food grain 
business-Creation of new Mandi Complex-Decision to auction stalls in 
new Mandi Complex-No concession to existing traders-Both existing 
D traders and new traders to compete for stalls in auction-Claim for 
ameliorative relief by existing traders-Held Government has inherent 
obligation to provide all existing licensed dealers sufficient accommodation 
to carry on their trade-Such obligation is not discharged by merely allowing 
existing traders to compete with new traders-Earning of Revenue is not the 
E sole purpose of public auction-For allotment of stalls to existing traders 
Government may fix up rate above the reserve price. 
The appellants were doing business in food-grain for over fifty years 
at the old market areas in Ferozepur District. In 1992 the Punjab Government 
created a r.ew Mandi Complex and decided to auction the stalls in the said 
F -complex. As a result the appellants had to move their business from the 
existing market areas to the new township in order to prevent closure of 
· their business. For the purpose of securing allotment of stalls in the new 
market area existing traders were uot given any concessions but were placed 
on par with new comers as both were to compete in the open auction. The 
appellants unsuccessfully sought ameliorative relief before the Punjab and 
G Haryana High Court. Hence appeals before this Court. 
Allowing the appeals, this Court 
HELD : I. Government has an inherent obligation to provide all the 
licensed dealers sufficient accommodation for carrying on their trade. There 
H. is much force in the contention that merely providing an opportunity to 
112 
LAB HA RAM AND SONS v. ST A TE 
113 
compete with the rest of the public for getting accommodation in the new A 
market, is not sufficient to discharge the inherent obligation of the 
Government to provide the existing traders at the new market area. 
(116-F-G) 
2. The words "or otherwise transferred by auction, allotment or 
otherwise" in Section 3(2) of the Punjab New Mandi Township (Development B 
and Regulation) Act, 1960 are quite wide enough to enable the Government 
to take into consideration various factors including equitable considerations 
for deciding in what manner and on what conditions the lands and plots in 
the new Mandi should be allotted. But such wide powers are not intended 
to be used to the detriment of the victims of the newly created Mandis. It is 
not that the State Government must sell the land or the building by auction C 
without any other option. In the case of sale by public auction the sale price 
shall be the reserve price or the price offered by the highest bidder whichever 
is lighter. In the case of sale by allotment the sale price can be determined 
by the Sate Government from time to time keeping in view the market price 
thereof. While allotment of buildings and plots is made, the State Government D 
has a duty to take into account the handicaps to which existing dealers are 
subjected on account of creation of the new Mandi. It is neither suggested 
that Government should give preference to the erstwhile dealers by providing 
free allotment of buiidings or plots nor to fix a rate which is below the 
reserved price. It is open to the Government to fix up any rate above the 
reserved price for such licensed dealers, of course such fixation should not E 
be at unreasonable rates. (117-C-F) 
3. Land is acquired under the provisions of the Land Acquisition laws 
for establishing new Mandi township. Land so acquired is developed, plots 
are carved out and shops and flats are built thereon. Plots as such may be 
disposed of or shops and other construction thereon can be made for use of F 
the trading. Hence the land for establishment of new Mandi is not to· generate 
Revenue for the State. It may be a laudable object for the State to earn 
revenues in the process but that could not be the sole or even the main 
purpose of acquiring land. (118-8-C) 
Mis Prem Chand Trilok Chand v. State of Haryana, CA No. 3122 of G 
1991 decided by Supreme Court on 7.8. 1991, affirmed. 
Chint Ram Ram Chandv. State of Punjab, (l996) 9 SCC 33
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