Policy change of governments in ‘public interest’

Recently, the Supreme Court reiterated that change in policy by the Government, if guided by reason and done in public interest, would prevail over private agreements entered between governments and private parties.

Background –

• The case concerned the recovery of an additional 64.7% in payment from persons who were allotted plots by the Yamuna Expressway Industrial Development Authority (YEIDA).
• This 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 those farmers whose lands were acquired by the New Okhla Industrial Development Authority (NOIDA) for a similar project were paid 64.7% additional compensation.
• The farmers’ unrest eventually led to the stalling of the YEIDA project as vast stretches of land could not be developed.

High level committee by the U.P. government –

• The land allottees had approached YEIDA for a solution to the problem.
• Subsequently, the Uttar Pradesh Government formed a high-level committee 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 Allahabad High Court saying that the recommendation of the high-level committee is arbitrary.
• The High Court held that the change in policy to pay the additional amount was “arbitrary”.
• Subsequently, YEIDA challenged the High Court’s judgment by appealing to the Supreme Court.

Supreme Court’s Judgement –

• Setting aside the High Court decision, the Supreme Court said that 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 Court said that in the case of conflict between public interest and personal interest, public interest should prevail.
• The Court reiterated that change in Government policy has an overriding effect over private agreements between Government and a private party, if the same is reasonable and in furtherance of public interest.
• In the present case, the Court reckoned that the policy decision of the government was not only in public interest, but also in the interest of the allottees.