The Supreme Court has stayed the orders of the Punjab and Haryana High Court,in which it had taken suo motu notice of “grave violation” of land ceiling laws by real estate companies — including a real estate giant — in Haryana.

Raising eyebrows over the pace at which “companies in Haryana are mushrooming in a month”,the HC had taken suo motu notice and converted the same into a public interest litigation (PIL) on June 2,as first reported by The Indian Express. The proceedings of this PIL was stayed by a division bench comprising Justices J M Panchal and H L Gokhale of the Supreme Court.

The HC had expressed shock over the Haryana government granting licences to companies for thousands of acres of land by committing grave violation of ceiling laws. The petitioner — one of the companies which was made respondent by the court — in a strongly-worded appeal,has termed the basis of the order as “baseless and vague allegations,conjectures and surmises”.

The petitioner,M/s Morgan Builders and Developers Limited,has submitted that such an order has “created an environment of fear and uncertainity for both the developer as well as the thousands of purchasers/lessees in urban areas and this is seriously impeding further development of urban areas in Haryana”. It has demanded a stay on the “roving and fishing enquiry” ordered by the HC.

“If the absurd and illogical interpretation and applicability of the Land Ceiling Act by the high court is treated as a precedent,it would virtually stall all urbanisation in the country and therefore,be completely contrary to public interest,” reads the special leave petition (SLP). The high court,while taking suo motu notice,had held “corporate veil needs to be lifted” so that it can be known “who is the real operator”.

Challenging this direction,the petitioner submitted before the Supreme Court that “the doctrine of lifting of corporate veil is an exception to the aforesaid legal status of a company and should be used in the rarest of cases when the same is clearly shown to be a fraudulent device to contravene the law”. Denying “accusations” of concentration of land,the petitioner has submitted that “the interpretation propounded by the high court would lead to a situation wherein no person is able to obtain a license to develop a residential colony in the outskirts of municipal limits of a city”.

The SLP added: “The high court,while permitting the petitioners to withdraw their petition,grossly erred in passing various other directions which are contrary to facts as well as law. The court has committed an error of law in directing that the said petition be treated as a PIL.”

The stay granted by the Supreme Court also comes as a breather for the Haryana government,which is under scanner for acquisition and release of land.

The case in question

On June 2,the Punjab and Haryana High Court — hitting out at the concentration of valuable land in Haryana in the hands of select few real estate developers — had taken suo motu notice. Unlike ordinary cases where the landowners approach the high court seeking release of their land,15 companies in the present case moved the court. They alleged that despite their having purchased land from the original land owners in Sector 58 to 63 and Sector 65 to 67 in Gurgaon and having obtained licences from the government to construct residential colonies,the Haryana government has initiated acquisition proceedings for the said land. Turning down a request to withdraw their petition filed by the 15 companies,including M/s DLF,seeking release of land in Gurgaon from acquisition initiated by the state,the high court had converted the same into a PIL.