State Must Act As A Model Litigant: Bombay High Court Imposes ₹5 Lakh Costs On Maharashtra For Forcing Contractor Into Decade-Long Litigation
Emphasising that the Government is a "model litigant" and not an ordinary party, the Court held that needless litigation funded by public money cannot be permitted to continue unchecked.
Justice Kamal Khata, Bombay High Court
The Bombay High Court has imposed costs of ₹5 lakh on the State of Maharashtra after finding that a contractor was unnecessarily dragged into litigation for nearly ten years over a penalty demand that was contrary to settled law and founded on a complete non-application of mind.
The Court observed that the State, being the largest litigant in the country, bears a special responsibility to avoid needless litigation and cannot behave like a private litigant driven by adversarial considerations. The Court further held that governmental authorities must obtain proper legal advice and act in conformity with binding judicial precedents before initiating or defending proceedings.
A Bench of Justice Kamal Khata observed: "The State is today the single largest litigant, and the public exchequer bears the costs or burden of every needless contest. The Supreme Court has repeatedly emphasized that the Government is 'no ordinary party’ but must function as a model litigant – meeting just or honest claims and not defeating lawful entitlements through technical pleas or obstinate resistance."
Advocate Shilpa Kapil, along with Advocate Shruti Bhatt, appeared for the petitioner. Additional Government Pleader Jyoti Chavan appeared for the State authorities.
Background
The petitioner, a construction and infrastructure company, had been awarded a contract by the Directorate of Construction Services and Estate Management under the Department of Atomic Energy for construction works within the IIT Bombay campus. The work order specifically required surplus excavated material to be transported and dumped within identified areas of the IIT campus.
Despite the material admittedly remaining within the campus, the Sub-Divisional Officer issued a show-cause notice alleging unauthorised excavation of minor minerals and subsequently imposed a penalty of ₹54,08,811 under Section 48(7) of the Maharashtra Land Revenue Code, 1966. The penalty was affirmed by the appellate authorities, leading to multiple rounds of litigation.
The petitioner contended that the excavated earth had never been removed outside the IIT campus and had merely been shifted within the campus for levelling purposes in accordance with contractual requirements. It further argued that Section 48(7) had no application to such activity.
Court's Observations
The Court found merit in the petitioner's challenge and held that the entire basis of the proceedings initiated by the authorities was legally unsustainable. The Bench observed that the authorities had wrongly assumed that the movement of excavated material from one survey number to another within the same IIT campus attracted liability under Section 48(7) of the Maharashtra Land Revenue Code.
The Court noted that none of the authorities had examined whether the survey numbers formed part of the same campus and had failed to appreciate that the excavated material never left the premises of IIT Bombay. The Bench held:
"The mere transfer of excavated material from one survey number to another could not, by itself, furnish a ground for imposing a penalty. Survey numbers are assigned primarily for identification and revenue assessment. The concerned authorities could not have overlooked the material fact that the entire land had been allotted to and was in possession of IIT."
The Court further found that the show-cause notice itself suffered from a fundamental jurisdictional defect. It recorded that the notice purported to invoke Section 29(4) of the "Mumbai Minor Minerals Act, 1955", despite no such enactment or provision existing in law. The Bench observed:
"The impugned show-cause notice was thus issued by invoking a non-existing enactment and a non-existent statutory provision."
The Court held that the notice failed to disclose the actual statutory basis of the proposed action and did not explain how movement of excavated material within the same campus could constitute unauthorised extraction, removal or disposal of a minor mineral. Consequently, the notice and all subsequent orders founded upon it were held to be vitiated by non-application of mind.
Examining the broader conduct of the authorities, the Court observed that the matter could have been resolved at the threshold had the authorities sought legal advice or properly examined the applicable statutory provisions. The Bench remarked:
"The situation has arisen solely on account of the needlessly adversarial approach adopted by the SDO and all concerned authorities."
The Court expressed concern over the State's failure to file any reply in the proceedings for more than eight years and criticised the continued defence of orders that were contrary to settled legal principles. The Bench observed:
"Defending orders that are contrary to settled law serves neither the interest of the State nor that of the public. It unnecessarily burdens the Courts and compels the persons affected by such orders to incur substantial expenditure merely to vindicate their lawful rights."
Emphasising the obligations of governmental authorities as model litigants, the Court referred to several Supreme Court decisions and observed that State litigation policy must be conciliatory rather than combative. The Court held:
"These decisions underscore that State litigation policy must be conciliatory rather than combative or adversarial, that wasteful litigative expenditure is itself a public wrong, and that governments and statutory authorities cannot raise frivolous or unjust objections, nor behave like private litigants driven by profit or hostility."
Having found that the petitioner had been compelled to contest avoidable litigation for nearly a decade, the Court concluded:
"Be that as it may, having regard to the fact that the Petitioner was compelled to pursue this litigation for nearly a decade; the substantial legal expenditure incurred in engaging attorneys and counsel; and the need to address the continuing institutional indifference which, despite repeated judicial exhortations over four decades, has resulted in such avoidable proceedings of this nature, costs quantified at ₹5 lakhs are imposed upon the Respondent No.1 – State. The costs are intended to be realistic and compensatory, while also serving as a deterrent against the recurrence of such conduct."
The Court further left it open to the State to identify officers responsible for initiating and continuing the litigation and to consider recovery of the costs from such officers.
Conclusion
Holding that the penalty proceedings initiated against the petitioner were contrary to law and founded on a complete non-application of mind, the Bombay High Court allowed the writ petition, quashed the impugned orders and demand notices, and imposed costs of ₹5 lakh on the State of Maharashtra.
The Court further directed the Deputy Secretary, Revenue and Forest Department, to place on record the measures adopted or proposed to prevent recurrence of similar litigation and emphasised the need for authorities to adopt a fair, facilitative and non-adversarial approach while dealing with citizens.
Cause Title: IVRCL Limited (Formerly IVRCL Infrastructure & Projects Ltd.) v. State of Maharashtra & Ors.