Introduction
In a development underscoring the importance of judicial propriety and constitutional accountability in the distribution of State resources, Justice Satish Chandra Sharma of the Supreme Court of India recused himself from hearing a plea filed by the International Arbitration and Mediation Centre (IAMC). The plea challenges a Telangana High Court judgment that quashed the State Government’s decision to allot prime government land in Hyderabad to IAMC free of cost.
The Supreme Court directed that the Special Leave Petition (SLP) be listed before a bench of which Justice Sharma is not a member. While the recusal order itself was brief, the case raises larger legal questions concerning judicial recusal, conflict of interest, public trust doctrine, and limits on State largesse.
Background of the Dispute
The dispute originates from a Government Order (G.O. Ms. No. 126 dated December 26, 2021) issued by the Telangana Government, by which a parcel of land located at Raidurg village in Ranga Reddy District, Hyderabad, was allotted to IAMC without any monetary consideration.
The International Arbitration and Mediation Centre was established in 2021 with the objective of promoting institutional arbitration and mediation in India. The centre came into existence during the tenure of Justice N.V. Ramana as the Chief Justice of India, lending it institutional significance. However, the free allotment of land with high commercial value sparked legal scrutiny and public interest litigation.
A challenge was mounted before the Telangana High Court, contending that the State’s decision violated constitutional principles governing the allocation of public property and amounted to arbitrary distribution of State largesse.
Telangana High Court’s June 2025 Verdict
In June 2025, the Telangana High Court struck down the land allotment, holding that the decision to part with valuable government land free of cost was unsustainable in law.
Key Findings of the High Court
The High Court made the following crucial observations:
- Government land is a public resource held by the State in trust for its citizens.
- The State cannot alienate such land without adequate consideration, except in exceptional circumstances serving a clear and compelling public purpose.
- The doctrine of public trust mandates fairness, transparency, and accountability in the distribution of State largesse.
- Merely characterising an institution as non-profit does not automatically justify free allotment of land.
The Court relied on well-settled Supreme Court jurisprudence which holds that allocation of public property must conform to Article 14 of the Constitution, ensuring non-arbitrariness and equality.
What the High Court Upheld
Importantly, while setting aside the land allotment, the High Court did not interfere with other policy decisions of the State Government. It upheld:
- The grant of ₹3 crore as financial assistance to IAMC, and
- The State’s decision directing its departments and public sector undertakings to refer disputes exceeding ₹3 crore to IAMC for arbitration.
The Court held that these decisions fell within the domain of government policy and did not warrant judicial interference.
IAMC’s Appeal Before the Supreme Court
Aggrieved by the quashing of the land allotment, IAMC approached the Supreme Court by way of a Special Leave Petition (Civil) Diary No. 67000/2025, titled The International Arbitration and Mediation Centre v. Koti Raghunatha Rao & Ors.
When the matter came up before a bench comprising Justice Dipankar Datta and Justice Satish Chandra Sharma, Justice Sharma chose to recuse himself from hearing the case.
The bench recorded in its order:
“The special leave petitions may be listed before a Bench of which one of us (Satish Chandra Sharma, J.) is not a member.”
Following the recusal, the Supreme Court directed that the SLP be placed before another appropriate bench.
Significance of Judicial Recusal
Judicial recusal is a critical component of judicial ethics and fairness, ensuring that justice is not only done but also seen to be done. While the order does not specify reasons for recusal, the Supreme Court has consistently held that even a reasonable apprehension of bias is sufficient for a judge to step aside.
In State of West Bengal v. Shivananda Pathak and Supreme Court Advocates-on-Record Association v. Union of India, the Court has emphasised that recusal safeguards public confidence in the judiciary.
In the present case, the recusal prevents any perception of conflict and preserves the institutional integrity of the Supreme Court, particularly in a matter involving public resources and a nationally significant institution.
Constitutional Principles Governing State Largesse
The IAMC land allotment dispute squarely engages constitutional doctrines relating to State largesse and allocation of natural resources.
Public Trust Doctrine
Under the public trust doctrine, the State holds natural resources—including land—as a trustee for the people. The doctrine restricts the State from disposing of such resources arbitrarily or gratuitously.
The Supreme Court has repeatedly held that:
- Public resources must be allocated in a fair, transparent, and non-discriminatory manner.
- Even where allocation is not through auction, the State must demonstrate adequate justification and public interest.
Article 14 and Non-Arbitrariness
The distribution of State property is subject to Article 14, which prohibits arbitrariness. Any decision to allot land free of cost must satisfy:
- A clear public purpose, and
- A rational nexus between the purpose and the means adopted.
The Telangana High Court’s ruling reflects this constitutional position by holding that free allotment cannot be the norm, especially when land has substantial market value.
Broader Implications of the Case
The IAMC case has implications beyond the immediate parties:
- Government Policy: It signals stricter judicial scrutiny of decisions involving free allotment of public land.
- Institutional Arbitration: While promoting arbitration is a legitimate objective, it cannot override constitutional safeguards.
- Judicial Accountability: The recusal reinforces the judiciary’s commitment to transparency and ethical conduct.
- Future Allotments: States may now be required to provide stronger justification and compensation mechanisms when allocating land to institutions.
Conclusion
The Supreme Court’s decision to list IAMC’s plea before a different bench following Justice SC Sharma’s recusal highlights the judiciary’s adherence to ethical standards and constitutional discipline. At the heart of the dispute lies a fundamental question: Can the State part with valuable public land free of cost, even for institutions serving public purposes?
As the Supreme Court prepares to hear IAMC’s challenge, the outcome is likely to further clarify the contours of the public trust doctrine, State largesse, and constitutional accountability. The case serves as a reminder that while institutional development is important, it must always operate within the bounds of constitutional principles.
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