In a significant judgment, the Supreme Court on Monday quashed the government orders facilitating preferential land allotments to MPs, MLAs, bureaucrats, judges and journalists within the Greater Hyderabad Municipal Corporation limits, saying the distribution of state largesse was "capricious" and "irrational".

A bench comprising Chief Justice Sanjiv Khanna and Justice Dipankar Datta held the policy to be "unreasonable, arbitrary, discriminatory", and violative of Article 14 (right to equality) of the Constitution.

"The allocation of land at basic rates to select privileged groups reflects a 'capricious' and 'irrational' approach. This is a classic case of executive action steeped in arbitrariness, but clothed in the guise of legitimacy, by stating that the ostensible purpose of the policy was to allot land to 'deserving sections of society'," the verdict said.

Shorn of pretence, this policy of the state government, is an abuse of power meant to cater exclusively to the affluent sections of the society, disapproving and rejecting the equal right to allotment of the common citizen and the socio-economically disadvantaged, it added.

"It would not be wrong to say that the doctrine of manifest arbitrariness, as expounded in Shayara Bano v. Union of India is applicable," the judgement said.

Writing a 64-page judgment for the bench, the CJI ruled in favor of public interest, emphasising the policy perpetuated inequality and undermined the principles of substantive equality enshrined in the Constitution.

"When the government allocates land at discounted rates to the privileged few, it engenders a system of inequality, conferring upon them a material advantage that remains inaccessible to the common citizen. This preferential treatment conveys the message that certain individuals are entitled to more, not due to the necessities of their public office or the public good, but simply because of their status," it said.

Referring to the policy, it said the higher echelons of all the three wings of the government -- legislators, bureaucrats, and judges of the Supreme Court and High Courts -- were afforded such preferential treatment.

"Journalists, who are considered the fourth pillar of democracy, have also been included. These four pillars of democracy are expected to act as checks and balances on the arbitrary exercise of the state's power," it said.

However, the distribution of such extraordinary state benefits renders nugatory the very optics of healthy checks and balances within our democratic system, it added.

"To test the facts against the standards of substantive equality, we are of the opinion that judges of the Supreme Court and the High Court, MPs, MLAs, officers of the AIS, journalists, etc., cannot be treated as a separate category for allotment of land at a discounted basic value in preference to others. The object of the policy perpetuates inequality," noted the verdict.

The bench said the core framework of these state policies suffered from the malaise of "unreasonableness and arbitrariness".

"It reeks of colourable exercise of power whereby the policymakers are bestowing valuable resources to their peers and ilk, triggering a cycle of illegal distribution of state resources. The state holds all its resources in trust for its citizens, to be utilised in larger public and social interest. The state, including the three organs -- ? Legislature, Executive and the Judiciary -- are de facto trustees and agents/repositories which function and govern for the benefit of the citizens who are the beneficiaries," it said.

The judgement struck down the 2005 government orders issued by then Andhra Pradesh government, as well as subsequent orders in 2008 that allocated lands at discounted rates to these groups.

The court upheld a 2010 Telangana High Court ruling, rejecting appeals filed by the state government and members of the cooperative societies. The bench held that classifying privileged groups -- ?MPs, MLAs, civil servants, judges, journalists, and others -- as a separate category for land allotment at basic rates was discriminatory and unconstitutional.

The bench therefore directed the lease deeds executed under the quashed orders to be cancelled and as a result the cooperative societies and their members will be refunded the amounts paid, including registration fees and stamp duty, with interest.

Development charges reflected in their accounts and certified by income tax returns will also be refunded with interest, it said, adding the interest rate will be capped at the Reserve Bank of India's prevailing rates.

The future use of the land in question was left to the discretion of the Telangana government in accordance with the law while adhering to the principles of fairness and equality.

The verdict said the arbitrariness inherent in the land allocation policy was further reflected in one of the government orders.

"Such practices (irrational distribution of public assets) foster resentment and disillusionment among ordinary citizens, who perceive these actions as corrupt or unjust, thereby eroding trust in democratic institutions. This policy undermines solidarity and fraternity, reinforcing societal hierarchies rather than actively working to dismantle them," noted the CJI.

The bench said the state's policy had wider economic ramifications as well.

While noting severe financial ramifications for the public exchequer, the top court said, "We are also of the opinion that accredited journalists cannot be treated as a separate class for such preferential treatment." It said the policy differentiates and bestows largesse to an advantaged section or group by resorting to discrimination and denial.

"It bars the more deserving, as well as those similarly situated, from access to the land at the same price. It promotes social-economic exclusion, to favour a small and privileged section/group. The policy does not meet the equality and fairness standards prescribed by the Constitution," the judgment underscored.

The top court went ahead to add, "We would also like to clarify that a policy or law allotting land to public servants may be justifiable provided such allotment is within the confines of Article 14..." The original policy allotted land to cooperative societies comprising various groups, including elected representatives, civil servants, journalists, and judges, under the premise of benefiting "deserving sections of society".

However, PILs challenged the policy, arguing that it perpetuated privilege and violated constitutional principles.