The government can change its policies, toppling prior agreements with private parties, provided the policy change is in public interest and guided by reason, the Supreme Court has held in a judgment.
The recent judgment authored by Justice B.R. Gavai said that “in the case of conflict between public interest and personal interest, public interest should prevail… A change in policy by the Government can have an overriding effect over private treaties between the government and a private party, if the same was in the general public interest and provided such change in policy was guided by reason”.
The case concerned the recovery of an additional 64.7% in payment from persons allotted plots by the Yamuna Expressway Industrial Development Authority (YEIDA).
The additional money was meant to pay farmers whose lands were acquired for the development project. It was considered as a “no-litigation incentive” for the farmers.
The farmers, whose lands were acquired by the YEIDA, had started an unrest when they found that their compatriots whose lands were acquired by the New Okhla Industrial Authority for a similar project were paid 64.7% additional compensation.
The farmers’ unrest eventually stalled the YEIDA project as vast stretches of land could not be developed. The allottees had approached YEIDA for a solution to the problem. YEIDA turned to the Uttar Pradesh Government, and subsequently, a high-level committee led by the State Minister of Prisons, Rajendra Chaudhary, was formed to find a solution. The committee had recommended the collection of the additional amount of 64.7% from the plot allottees to pay the farmers.
However, at this point, the allottees, who said they had already paid for the plots, approached the High Court, which held that the change in policy to pay the additional amount was “arbitrary”.
YEIDA appealed to the apex court. Setting aside the High Court decision, Justice Gavai observed that the Chaudhary Committee had found a solution when “there was a hanging sword of the entire acquisition being declared unlawful”.
“The development of the entire project was stalled on account of farmers’ agitation,” the Supreme Court noted.
The Chaudhary Committee had done a wide range of deliberations with stakeholders, including allottees, farmers and YEIDA. The policy decision was made after taking into consideration all relevant factors. It was guided by reason.
“It is a settled position of law that in case of a conflict between public interest and personal interest, public interest will outweigh the personal interest,” the Supreme Court held.
