The Telangana High Court recently cancelled the state government's decision allotting land near Hyderabad for the construction of the International Arbitration & Mediation Centre (IAMC) [Koti Raghunatha Roy v the State of Telangana and Others]..A Division Bench of K Lakshman and K Sujana said that the Government Order (GO) allotting the land to IAMC violates the guidelines and the ‘Government Land Allotment Policy”.“GO Ms No 126 dated 26.12.2021 is set aside and consequently, the allotment of land bearing Plot No. 27 admeasuring Ac. 3.70 in Sy. No. 83/1, Raidurg village, Sherilingampally mandal, Raga Reddy District in favour of Respondent No. 4 i.e., the IAMC is also set aside,” the Bench ordered..Notably, IAMC was inaugurated in Hyderabad by the then Chief Justice of India (CJI) NV Ramana and the then Telangana Chief Minister K Chandrasekhar Rao in December 2021. Presently, it has ex-Supreme Court justices B Sudershan Reddy and Raveendran, and Telangana Chief Minister Anumula Revanth Reddy in its board of trustees. .The Court passed the order while dealing with two public interest litigation (PIL) petitions filed by Koti Raghunatha Rai and A Venkatarami Reddy challenging allotment of land, the financial aid of ₹3 crore as well a direction to all government department and public sector undertakings (PSUs) to refer their disputes above ₹3 crore to the IAMC.It was argued that the IAMC is a private institution run for profit, and yet the government has allotted land worth hundreds of crores to it free of cost.The petitioner argued that the state government’s decision would cost the public exchequer huge sums of money..The state government justified its decision, arguing that a high-level committee constituted by the Central Government had submitted its recommendations in 2017 to promote institutional arbitration in India.The committee suggested that there is a need for an institution similar to that of Singapore International Arbitration Centre (SIAC), London Court of International Arbitration (LCIA) or the Hong Kong International Arbitration Centre (HKIAC) in India, and, therefore, the IAMC was formed through a trust deed in August 2021, executed by the then CJI, the government argued.It stated that following this trust deed, a Memorandum of Understanding (MoU) was entered into between the State of Telangana and the IAMC, whereby it was agreed that the State would support the IAMC by allotting land.The government further said that IAMC is a public charitable trust and is a ‘not for profit organisation’ and the allotment of land was for a public purpose, like providing world-class mediation and arbitration centre for all sections of society..After considering the case, the High Court stated that the distribution of government largesse cannot be provided at no cost and that the State must ensure it is adequately compensated for parting with natural resources vested in it and held in public trust.“Unless the purpose of allotment is greater and such allotment is to an institution or person who earns no profit, free allotment of government largesse cannot be justified,” the Bench said.Therefore, it set aside the GO, giving land to the IAMC.The Court upheld the orders granting financial assistance to the Centre and the decision to refer commercial disputes over ₹3 crore to it. However, the Bench ordered the government to review the performance of the IAMC annually and get its accounts audited by a government officer.“Any release of funds after the lapse of five (5) years as mentioned in the MoU dated 27.10.2021 shall be subject to the performance of the IAMC/Respond,” it added. .Koti Raghuntha Rao argued his case in person. Senior Advocate Satyam Reddy and advocate KV Rajasree appeared for the petitioner A Venkatarami Reddy.The State of Telangana was represented by Advocate General A Sudershan Reddy. Senior Advocate D Prakash Reddy and advocate Mallipedi Abhinay Reddy represented Respondent No. 4 in Rao’s plea. Senior Advocate G Vidya Sagar and advocate K Udaya Sri appeared for Respondent No 5. In Reddy’s plea, Respondent No 5 was represented through Senior Advocate Vikram Pooserla and advocate Mallipedi Abhinay Reddy. .[Read Judgement]
