Supreme Court upholds Telangana High Court decision that free allotment of land to IAMC is ‘unsustainable’

The Supreme Court has refused to intervene in a Telangana High Court judgment which set aside the free-of-cost allotment of land to the International Arbitration & Mediation Centre (IAMC), an institution whose deed was authored by the then Chief Justice of India in 2021.

A Bench of Justices Dipankar Datta agreed with the High Court that gratuitous distribution of natural resources was both “unsustainable and contrary to the procedure”.

Dismissing the special leave petitions filed by the IAMC against the High Court decision of June 2025, the Supreme Court simply said in a short order, “we are not inclined to interfere with the impugned judgment(s) and order(s) of the High Court”.

The Telangana government had argued in the High Court that the IAMC was a public charitable trust created to promote institutional arbitration in India. It was India’s answer to the Singapore International Arbitration Centre, the London Court of International Arbitration or the Hong Kong International Arbitration Centre, the State government said. A Memorandum of Understanding had been entered into between the State and the IAMC, whereby it was agreed that the State would support the IAMC by allotting land.

The State had highlighted that the board of trustees included Supreme Court Judges and the Chief Minister and Law Minister of Telangana. The State had contended in the High Court that the budgetary allotment by the Telangana government was transparent.

“Matters involving allotment and distribution of state largesse cannot be done free of cost. Governments shall ensure that they are adequately compensated for parting with natural resources vested in them and held by them 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 allotment of subject land free of cost to the IAMC is unsustainable and contrary to procedure,” a Division Bench of the High Court had concluded.

The High Court had found it noteworthy that the possession certificate for the land was issued in favour of the IAMC even before formulating and communicating the terms of allotment.

‘Hasty decision’

“Such hasty decisions do not bode well and often result in the exercise of power contrary to the procedure. Discretionary exercise of power shall not only be fair and transparent but also should be seen to be fair and transparent,” the High Court had observed.

It had further noted that the land allotment policy of 2012 had mandated that property could be allotted only on market value. Free allotment of land was contemplated only in favour of State government departments and below-poverty-line families.

The High Court had, however, found no arbitrariness in the State government’s decision to provide annual financial assistance of ₹3 crore to the IAMC, but noted that despite this aid and free office space, the institution had not been able to sustain itself.

“Initial support to the IAMC is justified. However, continuous and perpetual financial assistance to such institutions may not be financially viable and prudent for the State government,” the High Court had noted.

It had directed the State government to review the performance of the IAMC annually and get its accounts audited by the Principal Accountant General (Audit), Telangana. It had suggested that any release of funds to the IAMC after the five-year period mentioned in the MoU of October 2021 should be subject to the performance of the centre.

The High Court had also sounded a note of caution about the State government’s decision to refer all its disputes worth over ₹3 crore to the IAMC for arbitration. Though noting that it did not want to intervene in a matter of policy, the High Court had asked the State government to ensure that the cost of arbitration through the IAMC was not causing a significant burden on the public exchequer. If that were so, the High Court had advised the State to alter the policy.