A bench of justices H L Dattu and C K Prasad also pulled up former Maharashtra Chief Minister Vilasrao Deshmukh for allotting the land in 2004, saying the CM cannot bend or bypass rules to give away government land.
"One cannot be treated as blue-eyed boy for which chief minister can bend or bypass rules to give away the land of the state," the bench said.
The apex court further said that they there is lack of transparency in the allotment of land as many CMs prior to Deshmukh had not cleared the project.
"The state government has given land to its blue-eyed boy for a paltry sum of money," the bench said. "You are a great film maker, but there are greater film makers also. Why you have been chosen? There must be transparency," the bench observed.
Senior advocate Mukul Rohatgi appearing for Ghai, pleaded that more than Rs 50 crore has already been invested in the institute, Whistling Woods and it should not be destroyed and submitted that he (Ghai) should at least be granted lease on the property. The bench, however, was not convinced and said that he can participate in the bidding process for the property.
The apex court had earlier issued notices and sought response within four weeks from the petitioners on whose plea the high court had passed the verdict directing Ghai to return the land alloted for his film institute to the state government.
The high court's order had come on a PIL by Rajendra Sontakke and four other agriculturists of Latur and Osmanabad districts alleging "gross abuse of power" by Deshmukh in allotting the land.
The apex court had also issued notices to the Maharashtra government and the Maharashtra Film, Stage and Cultural Development Corporation along with Ghai's Mukta Arts, which were parties to the public interest litigation (PIL) in the high court.
The land was alloted to Ghai's institute pursuant to a May 30, 2004 joint venture agreement signed between his Mukta Arts and the Maharashtra Film, Stage and Cultural Development Corporation (MFSCDC).
The high court had noted that the joint venture was signed without any formal resolution passed by the Board of Directors of MFSCDC, without any valuation of the land in question and without following any rules or procedure.
The high court had also referred to a CAG report which stated that the land ought to have been valued at Rs 31.20 crores as opposed to the Rs three crores valuation done by MFSCDC.
The high court had also directed Ghai and Whistling Woods to vacate 14.5 acre of land immediately which shall be resumed by the state government and the remaining 5.5 acres, where the institute is constructed, would be taken over by the government on July 31, 2014, after all the ongoing courses at the film institute are completed.
The high court had also restrained Whistling Woods from granting admissions to students for courses which go beyond 2014.