Telangana High Court.
Telangana HC Cancels Free Land Allotment for International Arbitration & Mediation Centre, Hyderabad: Hyderabad – In a significant judgment, the Telangana High Court has struck down the state government’s decision to allot 3.70 acres of prime land in Raidurg village, Hyderabad, for the construction of the International Arbitration & Mediation Centre (IAMC). A Division Bench of Justices K. Lakshman and K. Sujana ruled that the Government Order (GO) sanctioning the land violated established guidelines and the “Government Land Allotment Policy.”
The High Court‘s decision, delivered in response to two public interest litigation (PIL) petitions filed by Koti Raghunatha Rao and A. Venkatarami Reddy, sets aside GO Ms No. 126 dated December 26, 2021, and consequently, the land allotment itself. The land, situated in Hyderabad’s upscale IT corridor, is estimated to be worth hundreds of crores.
The IAMC, notably, was inaugurated in Hyderabad in December 2021 by the then Chief Justice of India (CJI) N.V. Ramana and the then Telangana Chief Minister K. Chandrasekhar Rao. Currently, its board of trustees includes former Supreme Court justices B. Sudershan Reddy and Raveendran, and the incumbent Telangana Chief Minister Anumula Revanth Reddy.
The Core of the Dispute: Free Land to a Private Body
The petitioners argued that the IAMC is a private institution, operating for profit, and therefore, the government’s decision to allot valuable land free of cost represented a massive financial burden on the public exchequer. They contended that such an allotment contradicted the principles governing the distribution of state largesse.
The state government, in its defense, justified the allotment by citing recommendations from a high-level committee constituted by the Central Government in 2017. This committee had underscored the need to promote institutional arbitration in India, suggesting the establishment of centers akin to the Singapore International Arbitration Centre (SIAC), London Court of International Arbitration (LCIA), or the Hong Kong International Arbitration Centre (HKIAC).
The government further explained that the IAMC was formed through a trust deed executed in August 2021 by the then CJI, establishing it as a “public charitable trust” and a “not-for-profit organisation.” A Memorandum of Understanding (MoU) was subsequently signed between the State of Telangana and the IAMC, agreeing to state support, including land allotment, for what was described as a public purpose: providing a world-class mediation and arbitration center for all sections of society.
Justice K Lakshman & Justice K Sujana.
High Court’s Stance on State Largesse and Due Process
After meticulous consideration, the High Court firmly asserted that government largesse cannot be distributed free of cost. The Bench highlighted that the State, as a custodian of natural resources held in public trust, “must ensure it is adequately compensated for parting with natural resources vested in it.”
“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 stated in its ruling. The Court also pointed out that the IAMC was not registered under the Companies Act at the time of allotment, which was a requirement under the 1975 Rules for land alienation to private bodies. Furthermore, it noted the “undue haste” in the allotment process, where a possession certificate was issued even before the terms of allotment were finalized.
Consequently, the High Court set aside the GO related to the free land allotment.
Upholding Financial Aid with Riders
While invalidating the land allotment, the High Court did uphold other related government orders. It affirmed the state’s decision to grant financial assistance of ₹3 crore to the IAMC and the directive for all government departments and public sector undertakings (PSUs) to refer their disputes exceeding ₹3 crore to the Centre. The Court acknowledged that promoting institutional arbitration is a valid policy objective.
However, the Bench imposed crucial conditions on this continued support. It ordered the Telangana government to “review the performance of the IAMC annually and get its accounts audited by a government officer.” The Court also mandated that “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.” This rider indicates the Court’s concern about the Centre’s self-sustainability, especially given its currently low caseload (only 15 arbitration cases and 57 mediation cases as of January 2025, with many being pro-bono).
The judgment signifies a critical judicial intervention in how state resources are allocated, emphasizing transparency, adherence to policy, and accountability, even for initiatives deemed to be of public benefit.
Koti Raghunatha Rao argued his case in person. Senior Advocate Satyam Reddy and advocate K.V. 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 (IAMC) in Rao’s plea, while 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.