Full Judgment Text
2025 INSC 791
REPORTABLE
IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
Civil Appeal Nos. ________ / 2025
(Arising out of SLP (C) Nos. 31887-88/2017)
Kamla Nehru Memorial Trust & Anr. …Appellants
Versus
U.P. State Industrial Development
Corporation Limited & Ors.
… Respondents
JUDGEMENT
SURYA KANT, J.
Leave Granted.
2. These appeals have been preferred by the Kamla Nehru Memorial
Trust ( KNMT ) against the final common judgment and order dated
29.05.2017 passed by the High Court of Allahabad at Lucknow Bench
( Impugned Order ), whereby it upheld the cancellation of allotment of
Signature Not Verified
Digitally signed by
land admeasuring 125 acres situated in the Utelwa Industrial Area,
NITIN TALREJA
Date: 2025.05.30
17:00:32 IST
Reason:
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Jagdishpur, District Sultanpur, Uttar Pradesh ( Subject Land ) by the
Uttar Pradesh State Industrial Development Corporation ( UPSIDC ).
3. The crux of the dispute pending before us relates to the legality of the
decision of cancellation of allotment of the Subject Land by UPSIDC.
However, it would be apropos to discuss the factual matrix before
delving into the analysis pertaining to the alleged procedural
irregularities in the cancellation of allotment of the Subject Land.
A. F ACTS
4. In this vein, the sequence of events has been briefly adduced as
follows:
4.1. KNMT is stated to be a charitable trust incorporated in the year 1975.
It resolved in March, 2003 to purchase land for the purpose of
floriculture. Accordingly, on 10.07.2003, KNMT submitted an
application and deposited earnest money amounting to INR 62,600/-
for allotment of the Subject Land for the aforesaid purpose.
4.2. UPSIDC, in an uncharacteristically swift manner, accepted the
application of KNMT and allotted the Subject Land vide allotment
letter dated 18.09.2003 ( Allotment Letter ). The allotment was made
conditional upon compliance with certain terms, the relevant
provisions of which are reproduced below:
Page 2 of 29
xxx xxx xxx
“
3. You shall deposit at this office an amount of Rs.
12,02,187.50. (Earnest Money of Rs. 62,500.00 has been
adjusted) towards reservation money in respect of the
above plot latest by 18-10-2003. This amount (together with
Earnest money) is approximately equal to 10 percent of the
total premium of the plot at the provisional rate of Rs. 25.00
per sq. mtr. and locational charges @ Rs. Nil per sq. mtr. for
first five acres and is subject to adjustment according to
actual measurement of the plot. If the above amount falls
short of the amount equal to 10 percentage of the total
premium according to actual measurement, the balance will
be deposited by you within seven days of the receipt of
demand from us.
If the payments are not made as stipulated above this
allotment will stand automatically cancelled/and the whole
amount of the Earnest Money deposited by you will stand
forfeited to this corporation, even if the area of the plot either
exceeds or is less than the area of 20% or less of the area
applied for. However, if the area of the land allotted either
exceeds the area applied for or falls short of the applied for
by an area more than 20% of it, the Earnest Money will not
be forfeited if this allotment is not accepted, provided
intimation is sent to us in this respect by the date stipulated
above.
Note: - the premium herein is provisional and is liable to be
enhanced in accordance with the provisions of Licence
Agreement/Lease Deed.
xxx xxx xxx
5. The remaining 90% of the provisional premium shall have
to be paid by you in 8 equal half yearly installments each
of which will be due for payment on 1st day of January and
1st day of July each year. The first installments of each
payment will fall due for payment on 01.01.2006. The
second and subsequent installments of the premium will fall
due on 1st day of July and 1st day of January each year.
An interest at 15.00% per annum shall be charged on the
outstanding (balance) premium with effect from the date of
allotment and will be payable along with installments of
premium as stipulated in clause 3 above subject to a rebate
of 3.00% per annum and payment on or before the
prescribed date and if there are no arrears of dues. The
amount of the balance premium and the interest due on it
from time to time shall remain first charge on the land and
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the building and machinery erected thereon till it is (they
are) paid in full.
Note: - the premium mentioned herein is provisional and is
liable to be enhanced in accordance with the provisions of
licence agreement/Lease Deed .
xxx xxx xxx
9. The plot has been allotted on as it is where it is basis and
leveling etc, if any, is to be undertaken by you at expenses.
You will pay to the U.P. State Industrial Development
Corporation Ltd. Within 30 days from the date of the
demands made by this corporation from time to time such
recurring fee in the nature of service and/or maintenance
charges as determined by this corporation. In case of
default you will be liable to pay interest @15.00% p.a. on
the amount due .
xxx xxx xxx
13. You will have to take over possession of the land
executing the lease deed within 30 days from the date of
inviting you to do so or within 3 months from the date of this
letter whichever is earlier.”
[Sic]
4.3. After allotment, KNMT inspected the Subject Land and asserted that
it was encroached upon by third parties, seeking demarcation by the
relevant State Authorities. Simultaneously, KNMT defaulted in paying
the ‘reservation money’ by the prescribed date of 18.10.2003.
Responding to this default, UPSIDC, vide communication dated
04.11.2003, granted an extension until 17.11.2003 for payment along
with interest, while clearly stipulating that non-compliance would
result in automatic cancellation of the allotment.
4.4. KNMT deposited the reserve amount through two demand drafts
dated 17.11.2003 and requested that UPSIDC not levy any interest
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until physical possession of the Subject Land was granted to it.
UPSIDC, vide letter dated 11.12.2003, categorically rejected the
aforesaid request by stating that the same was violative of its policy.
Thereafter, UPSIDC afforded KNMT a three-day window to provide its
unconditional consent to preserve the validity of the allotment.
4.5. Subsequently, KNMT, admittedly, vide letter dated 15.12.2003,
responded to UPSIDC’s communication, confirming payment of the
interest amount while simultaneously expressing discontent
regarding the levy of such interest and requested UPSIDC to
reconsider its decision. Ultimately, after multiple correspondences,
this issue was finally resolved vide letter dated 07.01.2004, whereby
KNMT accepted the conditions of the Allotment Letter. Appellant No.
2 (official of KNMT) thereafter explicitly agreed to the original terms
and conditions, including to deposit the reservation amount along
with requisite interest, for completion of allotment of the Subject
Land. Concurrently, it bears emphasis that KNMT wrote several
letters seeking demarcation and handing over of possession of the
Subject Land after the removal of alleged encroachments. However,
no action was allegedly taken in respect of these communications.
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4.6. Soon thereafter, vide letter dated 21.02.2004, UPSIDC apprised KNMT
of a policy change, whereby KNMT was directed to execute the lease
deed prior to delivery of possession. Accordingly, KNMT was required
to furnish the necessary documents and make requisite payments for
the execution of the lease deed within 15 days, failing which UPSIDC
cautioned that it would proceed with cancellation of allotment of the
Subject Land.
4.7. Notably, the Allotment Letter required KNMT to make payments in a
scheduled manner. KNMT nonetheless failed to pay the instalments
and requested rescheduling of the same vide letter dated 11.03.2005.
UPSIDC, in response, assured them of consideration of their request
and, in the , directed them to pay the lease rent and also to
interim
provide the necessary documents for the execution of the lease deed.
4.8. UPSIDC, on 01.07.2005, approved the request for rescheduling the
payment and directed KNMT to pay the total amount of INR
1,44,27,313/- in ten instalments over a period of 5 years along with
15% interest starting from the date of issuance of the aforesaid letter,
which reads as follows:
“Please refer your undated letter on the above subject by
which you requested to reschedule the total amount of your
plot and sought permission to pay the first installment in
July 2005. In this connection, you are informed that
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according to your request, the approval of the headquarter
has been issued to reschedule the total amount of
Rs.1,44,27,313=10 paise to be paid in 10 six monthly
installments including 15°/o interest and the first
installments of 10% amounting to Rs. 14,42,731=35 paise
is payable by 01.07.2005. The balance 90 % amount is to
be paid in six monthly (a) further installments including the
interest. You are therefore requested to please arrange to
deposit the first installment of the amount of Rs.
14,42,731=35 paise as early as possible.”
[ Sic ]
4.9. However, KNMT failed to adhere to the aforesaid schedule as well and,
having defaulted in payment, UPSIDC issued a notice dated
14.12.2005, thereby mandating it to deposit a sum of INR
39,76,404.85/- (inclusive of interest and the previous pending
amount). KNMT, conversely, continued to request UPSIDC to
handover possession and to reconsider the decision to levy interest.
4.10. Following the continued non-compliance, UPSIDC issued a final
notice dated 13.11.2006, calling upon KNMT to deposit an amount of
INR 68,49,869.20/- as well as to submit the necessary documents for
execution of the lease deed. The notice stipulated a deadline of 10
days, failing which the allotment of the plot would be cancelled as per
the terms of the Allotment Letter. The relevant portion of the notice is
as follows:
“…. Now last and final notice is hereby given to you to
please submit an amount of Rs. 68,49,869.20 accrued upto
30.6.2006 and submit the desired documents within TEN
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DAYS from the date of this letter failing which allotment of
plot shall be cancelled as per Clause No. 15(a) & (b) of
allotment letter dated 18.9.03 and the money deposited by
you shall stand forfeited.”
4.11. In response, KNMT, without making the payment, vide letter dated
04.12.2006, repeated its earlier request to hand over the possession
of the land after demarcation and sought removal of the
encroachment. UPSIDC replied on 13.12.2006, stating that
possession of the land could only be handed over after execution of
the sale deed. The letter also underscored KNMT’s failure to deposit
the requisite documents for execution of the lease deed or any amount
except the reserve amount since 2003. In this light, UPSIDC finally
declined KNMT’s representation. The letter dated 13.12.2006
elucidated that:
“In this regard, it is informed you that the above said land
was allotted to you in September, 2003 thereafter you have
deposited only 10°/o amount of allotment. Later on in the
year, 2005 the re-schedulement was made on your request,
but despite that no payment has been made by you till
today, only writing for marking. As per the rules of the
Corporation, the possession of the land can be given after
due payment and execution of lease deed. Neither you have
made payment nor have submitted the requisite documents
of lease deed. You have only taking time by way of
unnecessary correspondence.
You had been requested to get execute the lease deed after
making due payment so that the possession can be given to
you. But, the aforesaid actions, you by not making the
payment of dues and execution of lease deed, you want to
evade the matter by making unnecessary correspondences.
Hence, the representation submitted by you is declined.”
[ Sic ]
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4.12. Feeling aggrieved, KNMT assailed the letter dated 13.12.2006 before
the High Court through Writ Petition No. 349/2007 (MB) ( First Writ ).
Meanwhile, the allotment of the Subject Land was cancelled vide the
order dated 15.01.2007, which was also challenged by KNMT by
amending the First Writ Petition.
4.13. The High Court, vide interim order dated 13.02.2007, restrained
UPSIDC from making any fresh allotment of the Subject Land.
4.14. Ultimately, the High Court disposed of the First Writ vide order dated
27.05.2009 with a direction to restore the allotment in favour of
KNMT, subject to certain conditions, including completion of all
formalities in accordance with the Allotment Letter and revalidation
of demand drafts.
4.15. Aggrieved, UPSIDC challenged the order dated 27.05.2009 before
this Court vide SLP (C) No. 14680/2009, wherein the matter was
remitted back to the High Court with the following observations:
“It is apparent from the impugned order that the
respondents challenged the cancellation order dated
January 15, 2007 by filing a petition for amendment in the
writ petition. Admittedly, the Court, without discussing the
validity of the order dated January 15, 2007, decided the
matter in favour of the respondents and directed to restore
the allotment and revalidate the demand drafts of
‘91,27,139.65 and to execute the lease deed in favour of the
respondents.
Page 9 of 29
Learned counsel for the parties accept that the High Court
ought to have given reasons regarding validity of the order
of cancellation dated January 15, 2007 before passing the
impugned order.
In the circumstances, we are of the view that the case
should be remitted to the Division Bench of the High Court
for its decision on merits.
We, accordingly, allow this appeal, set aside the impugned
judgment and order dated May 27, 2009, and remit the case
to the Division Bench of the High Court for its decision on
merits expeditiously.”
4.16. It is pertinent to note that, in the interregnum , UPSIDC allotted the
Subject Land to M/s Jagdishpur Paper Mills Ltd i.e. Respondent No.3,
which was challenged by KNMT before the High Court through
another Writ Petition bearing Misc. Bench No. 11055/2013 ( Second
Writ
). The High Court therein directed the parties to maintain status
quo with regard to the Subject Land. UPSIDC challenged the said
interim order dated 27.11.2013 by means of SLP (C) No. 7952/2014
wherein vide order dated 07.04.2017, this Court directed the High
Court to expeditiously adjudicate both the Writ Petitions filed by
KNMT.
4.17. Consequently, the High Court heard the matter and, vide the
Impugned Order, upheld the cancellation of the allotment of Subject
Land. In doing so, the High Court held that:
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i) KNMT failed to follow the stipulations of the allotment as it did
not adhere to the payment schedule;
ii) The explanation for delayed payment provided by KNMT, though
reasonable, failed to form part of the terms and conditions of
allotment. In other words, strict adherence to the payment
schedule was necessary; and
iii) UPSIDC rightly cancelled the allotment of Subject Land by
complying with the terms of The Manual for Marketing and
Management of Industrial Areas ( Manual ), specifically citing
Clause 3.04 (vii), which postulates that:
“(vii) If an allottee has not paid the dues despite three
consecutive legal notices, the Regional Manager shall be
required either to cancel the allotment or send his
recommendation for issue of Recovery Certificate.”
4.18. It is in this factual backdrop that the aggrieved KNMT is before this
Court. It must further be noted that, during the pendency of the
instant appeals, this Court, vide order dated 17.11.2017, stayed the
operation of the Impugned Order.
ONTENTIONS OF THE PARTIES
B. C
Page 11 of 29
5. We have heard Learned Senior Counsels for the parties at a
considerable length and meticulously perused the documents
submitted on record.
6. Mr. Maninder Singh, Learned Senior Counsel appearing on behalf of
KNMT made the following contentions:
a. The High Court erred in its conclusion that KNMT failed to make
payment of the allotment price as per the schedule. On the
contrary, UPSIDC failed to transfer the physical possession of the
Subject Land and merely continued to demand the outstanding
amount without fulfilling its reciprocal contractual obligations.
KNMT wrote several letters requesting to deliver possession.
However, UPSIDC continued to make excuses and used the
outstanding dues as a cloak for not handing over possession of
the Subject Land to KNMT. In other words, UPSIDC allegedly
frustrated the contract.
b. UPSIDC’s refusal to demarcate the Subject Land contravenes the
provisions contained in the Allotment Letter. It was thus
emphasized that UPSIDC was not in a position to handover the
physical possession as the farmers were still holding the Subject
Land and continued to cultivate it for agricultural purposes.
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c. Pursuant to the High Court’s directions dated 27.05.2009, KNMT
duly deposited the due amount with UPSIDC, which has
remained unutilized for more than ten years. Evidently, KNMT
duly abided by both the terms of the Allotment Letter as well as
the directions given by the High Court.
d. The High Court erroneously interpreted Clause 3.04 (vii) of the
Manual, which stipulates that UPSIDC must give three legal
notices to defaulters. In the instant case, UPSIDC sent only one
such notice dated 13.11.2006. UPSIDC, therefore, failed to abide
by the conditions prescribed in the Manual, and the cancellation
order suffers from procedural infirmities. In other words, the
cancellation of allotment is procedurally flawed and legally
untenable, as it disregarded both the mandatory notices as
contemplated under the Manual as well as the fundamental
principle of reciprocal contractual obligations, where possession
and demarcation ought to have preceded demands for full
payment.
7. Per contra , Mr. K.K. Venugopal and Mr. Atmaram N.S. Nadkarni,
Learned Senior Counsels, represented UPSIDC and canvassed the
following submissions:
Page 13 of 29
a. UPSIDC provided ample opportunities for KNMT to make
payment as per the terms and conditions of the allotment.
However, KNMT chose to delay payment for more than six years
from the date of allotment on false, misleading and specious
grounds. Moreover, KNMT could not honour its commitment even
after UPSIDC, taking a lenient view, rescheduled the payment
terms. Furthermore, despite the High Court’s directions dated
12.03.2007, KNMT paid only the outstanding principal amount
without any interest or additional fees for restoration.
b. The procedure outlined in Clause 3.04 of the Manual was duly
adhered to by UPSIDC through notices dated 14.12.2004,
1.07.2005, 14.12.2005, and 13.11.2006. Strangely,
notwithstanding the rejection of its request for waiving of interest,
KNMT repeatedly implored UPSIDC to reconsider the same rather
than making payment towards the allotment price.
c. The allegations regarding the non-demarcation and
encroachment on the Subject Land are false and vexatious. The
Allotment Letter issued to KNMT itself contained the site plan
along with precise measurements and the area of land in the plot.
Furthermore, to the satisfaction of KNMT, UPSIDC had
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demarcated the Subject Land on 03.03.2005, which was duly
acknowledged by KNMT in its letter dated 11.03.2005.
d. UPSIDC had charged the interest in consonance with the terms
of the Allotment Letter accepted by KNMT. In this regard, a
pointed reference was made to Clauses 3 and 5 of the Allotment
Letter, whereunder the method of computation of interest on the
outstanding balance was duly provided.
e. Lastly, KNMT itself has admitted the non-payment of dues before
this Court. Further, the current market value of the Subject Land
is valued in the range of more than a hundred crores. In these
circumstances, the instant appeal is wholly without merit and
ought to be dismissed.
SSUES
C. I
8. Having considered the rival contentions advanced by the parties, it is
evident that the central issue concerns the legality of the cancellation
of allotment by UPSIDC. Given the nature of the dispute and the
competing interpretations regarding procedural compliance, we find it
appropriate to examine the following issues:
i) Whether UPSIDC is responsible for frustrating the performance
of the allotment contract?
Page 15 of 29
ii) Whether the cancellation of allotment of the Subject Land was
procedurally defective and legally untenable?
D. A NALYSIS
D.1 I SSUE N O .1: Whether UPSIDC is responsible for frustrating the
performance of the allotment contract.
9. Although the issue in these Appeals revolves around the cancellation
of allotment by UPSIDC, we deem it necessary first to address the
KNMT’s plea pertaining to the alleged frustration of the contract. To
clarify, these contentions concern the purported non-demarcation,
alleged encroachment, and non-delivery of possession of the Subject
Land by UPSIDC. For our analysis, we must collocate these instances
against the factual matrix as well as the terms of allotment to
conclusively ascertain the plausibility of frustration of the contract.
10. Firstly , on a careful scrutiny of the record, we find that though KNMT
addressed multiple communications to UPSIDC alleging non-
demarcation of the Subject Land, such communications were,
however, ex-facie an afterthought. We say so for the reason that the
site plan appended with the Allotment Letter has described precise
measurements and all other relevant details pertaining to the Subject
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Land. That apart, the allotment was made on an ‘as it is where it is’
basis.
11. In any case, UPSIDC demarcated the Subject Land on 03.03.2005 to
the satisfaction of KNMT, and the latter also acknowledged such
factum vide letter dated 11.03.2005, which reads as under:
“It is to inform that the demarcation of the said land has
been made on 03.03.2005 by the department, which I
agree. Please inform the value of the stamp papers required
for the execution of the registry of the said land, so that I
may get the lease deed of the said land executed, so that
further work may be proceeded.”
12. There is thus no merit in the contention that KNMT suffered any
prejudice due to the purported non-demarcation of the Subject Land.
13. Secondly , in so far as the encroachment at the site is concerned, the
affidavits filed by UPSIDC enumerate details of the 276 Khasra
numbers constituting the Subject Land. UPSIDC has further clarified
that possession of the said land was duly taken after completing the
acquisition process, which included payment of compensation to the
landowners. These averments are duly supported with documentary
proof. We, therefore, find that the allegation of encroachment is thus
devoid of any merit.
Page 17 of 29
14. Lastly , we must consider whether UPSIDC erred in not handing over
possession of the Subject Land despite several requests made by
KNMT. In this regard, Clause 2.15 of the Manual, which deals with
the delivery of possession of plots, proves instructive. It provides that:
“2.15. POSSESSION OF PLOTS
(i) The date of Possession of Plots shall be fixed by the
Regional Manager after registration of Lease Deed itself.
(ii) That date so fixed shall be intimated to the lessor
alongwith the second copy of the lease deed and the
concerned Junior Engineer for necessary action on their part
through a letter.
(iii) Effort shall be made to hand over possession within 15
days of the registration of the lease deed as far as
practicable.
(iv) If the lessee fails to take possession even after issuance
of two letters, legal notice of the same may be issued and
action may be taken accordingly.”
15. It may be seen that UPSIDC was obligated to hand over possession
only after registering the lease deed, which was a mandatory
condition. The Clause categorically stipulates that the Regional
Manager shall fix the date of possession only ‘after registration of
Lease Deed itself’, thereby creating a sequential condition wherein
registration must precede possession.
16. That being so, it becomes pellucid that the insistence of UPSIDC to
furnish requisite documents for registration of the lease deed was both
legitimate and in conformity with the prescribed procedure. Since
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KNMT failed to furnish the necessary documents in a timely manner,
it is itself to blame for the non-delivery of possession.
17. Our examination of all three contentions raised by KNMT reveals that
none of the alleged acts—non-demarcation, removal of encroachment,
or non-delivery of possession—constitute conduct that would
frustrate the performance of the allotment terms. On the contrary, the
record demonstrates that UPSIDC acted in accordance with
prescribed procedures and as per the terms of allotment. In contrast,
KNMT failed to fulfil its obligations, particularly regarding the timely
submission of documents required for executing the lease deed. The
foundation upon which KNMT forges its argument of frustration thus
crumbles.
D.2 Issue No.2: Whether the cancellation of allotment of the Subject
Land was procedurally defective and legally untenable.
18. Adverting to the alleged illegality in the cancellation of allotment by
UPSIDC, KNMT relies on Clause 3.04 of the Manual, which prescribes
the procedure to address defaults by allottees. The relevant Clause in
this regard is reproduced in totality below for ease of analysis:
“ 3.04 ACTION AGAINST DEFAULTERS
In case payment is not received by 31st January/31st July
legal notice shall be issued to the defaulting
allottees/licences/lessees in the following manner.
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(i) The Regional Manager shall ensure that the legal notice
in all the defaulting cases are issued by 10th February and
10th August.
(ii) A separate file shall be opened in every Regional Office
in which the Dealing Assistant and concerned officer shall
give a certificate that notice to all defaulting allottees have
been issued. This certificate shall be verified by the Regional
Manager.
(iii) The legal notice shall be sent by Registered Post with
A/D and appropriate entry in the Legal Notice Register shall
be made. The legal notice shall be issued in terms of the
allotment letter/licence agreement/lease deed and the
period by which the payment is required shall also be
strictly in accordance with the terms of allotment
letter/licence agreement/lease deed.
(iv) After the expiry of the period of legal notice and
confirmation of its service it shall be the responsibility of the
Dealing Assistant to process the file within 15 days. The
same shall then be put up before the Regional Manager for
his orders and instruction for cancellation or otherwise.
(v) If the Regional Manager decides not to cancel the
allotment of plot and the next due date of payment of
instalment of premium/interest has fallen, then another
legal notice shall be issued in the manner specified above.
(vi) After the expiry of the legal notice, if no payment is
received it shall be the responsibility of the concerned officer
to put up the file to the Regional Manager and obtain his
orders about cancellation of allotment or issuance of
Recovery Certificate or otherwise.
(vii) If an allottee has not paid the dues despite three
consecutive legal notices, the Regional Manager shall
be required either to cancel the allotment or send his
recommendation for issue of Recovery Certificate.
However, if Regional Manager feels that further time should
be accorded, he shall do so with the approval of Head Office
only.
(viii) List of defaulters for amount exceeding Rs.20,000/-
may be published in newspaper in the month of
February/September at least once in a year, after obtaining
approval of Head Office.”
[ Emphasis Supplied ]
Page 20 of 29
19. A bare perusal of the above-reproduced provision reveals a well-
defined procedure prescribed to address defaults by allottees. During
arguments, KNMT placed considerable emphasis on sub-clause (vii),
contending that UPSIDC had failed to issue the stipulated three
consecutive legal notices. KNMT nevertheless conceded that the notice
dated 13.11.2006 could be considered a ‘legal notice’ within the
meaning of the aforesaid Clause. Per contra , UPSIDC maintains that
the previous correspondence dated 14.12.2004, 01.07.2005, and
14.12.2005 also substantially satisfied the ingredients of a ‘legal
notice’ as contemplated under the Manual.
20. It seems to us that this issue ought to be examined through the prism
of administrative law principles the contractual powers of the
vis-à-vis
State. While it is well-settled that land allotment authorities such as
UPSIDC possess the inherent right to cancel allotments upon violation
of stipulated conditions, this Court has consistently emphasized that
judicial intervention in matters concerning land revocation should be
1
circumscribed to ensure adherence to procedural safeguards. This
paradigm underscores the administrative autonomy vested in such
1
Dilip Singh and Ors v. State of Haryana and Ors., (2019) 11 SCC 422, paragraph 22.
Page 21 of 29
authorities while safeguarding allottees’ rights through procedural
fairness.
21. As already elucidated, KNMT relies upon Clause 3.04 (vii) of the
Manual to assert that non-issuance of the requisite legal notices by
UPSIDC resulted in procedural illegality. In this light, it becomes
incumbent upon us to ascertain whether the correspondence issued
by UPSIDC satisfies the threshold requirement of ‘three consecutive
legal notices’ as mandated under the said provision and,
consequently, whether the cancellation of allotment was procedurally
sound. To resolve this issue, we must determine the essential
characteristics that embody a ‘legal notice’ within the contemplation
of the Manual.
22. It may be recapitulated that the notice dated 13.11.2006 has been
understood as a ‘legal notice’ by both sides. Upon comparative
analysis of the communications, particularly those dated 14.12.2004
and 14.12.2005, we find that these bear substantial similarity with
the notice dated 13.11.2006. It is beyond our comprehension as to
what prejudice has really been caused to KNMT merely because these
notices are not captioned as legal notices.
Page 22 of 29
23. It further appears to us that the expression ‘legal notice’ connotes an
unambiguous communication along with legal consequences to a
noticee who is alleged to be in default. Illustratively, the essential
elements of a legal notice would include:
a. It should contain a clear and concise set of facts which convey
the information leading to the relevant circumstances. This
element is also fulfilled when reference is made to any earlier
communications issued between the concerned parties;
b. It should convey the intimation of any impending legal obligation
or breach committed by any party;
c. It should convey the intention of the party issuing the
communication to hold the other party liable to appropriate legal
action or charge; and
d. The communication in toto must be unambiguous and should not
mislead or suppress material information. If issued under a
Statute, it must comply with the relevant requirements
prescribed therein as well.
24. If the communications dated 14.12.2004, 14.12.2005, and
13.11.2006 are juxtaposed to the abovementioned ingredients, we
Page 23 of 29
have no reason to doubt that these constitute valid ‘legal notices’ and
thus, UPSIDC has duly complied with the process envisaged under
Clause 3.04(vii) of the Manual.
25. We may hasten to add at this stage that the dues for the Subject Land,
allotted in 2003, remained unpaid despite multiple communications
spanning several years. KNMT not only failed to make timely
payments but also sought unwarranted concessions, including waiver
of interest and rescheduling of dues. This persistent non-compliance
establishes KNMT as a chronic defaulter, while the continued
attempts to seek waiver evince a deliberate strategy to avoid payment
obligations. UPSIDC’s action in treating KNMT as a defaulter was,
therefore, both justified and necessary to preserve the integrity of the
allotment process. Allowing such deliberate defaults to persist
unchecked would undermine the entire framework of land allocation
and set a detrimental precedent.
26. For the reasons stated, we are satisfied that the cancellation of
allotment by UPSIDC is fully justified and in accordance with law.
E. I NVOKING T HE P UBLIC T RUST D OCTRINE IN T HE A LLOCATION OF
R ESOURCES .
Page 24 of 29
27. The prolonged litigation initiated by KNMT has spanned over fifteen
years, unnecessarily burdening the judicial system and impeding the
efficient functioning of public authorities. Such protracted disputes
highlight the need for more stringent initial evaluation processes to
prevent chronic defaults.
28. While we have upheld the cancellation due to KNMT’s default, the
circumstances reveal systemic concerns in the original allocation
process. UPSIDC allotted the Subject Land to KNMT within merely two
months of application, raising questions about the thoroughness of
the evaluation. Furthermore, during the pendency of this dispute,
UPSIDC demonstrated remarkable alacrity in considering alternative
allotments to M/s. Jagdishpur Paper Mills Ltd.
29. We, therefore, consider it necessary to examine whether UPSIDC’s
procedure for industrial land allotment meets standards of
administrative propriety, particularly in light of the Public Trust
Doctrine ( Doctrine ) mandating that public resources be managed
with due diligence, fairness, and in conformity with public interest.
30. The Doctrine emanates from the ancient principle that certain
resources (seashores, rivers and forests) are so intrinsically important
to the public that they cannot be subjected to unrestricted private
Page 25 of 29
control. Rooted in Roman law and incorporated into English common
law, this Doctrine recognizes that the Sovereign holds specific
2
resources as a trustee for present and future generations.
31. In the Indian context, the Doctrine has evolved to encompass public
resources meant for collective benefit, reflecting the constitutional
mandate under Article 21. As held in Natural Resources Allocation
In re, while the Doctrine does not impose an absolute prohibition on
transferring public trust property, it subjects such alienation to
stringent judicial review to ensure legitimate public purpose and
3
adequate safeguards.
32. When a substantial tract of industrial land is allocated without a
comprehensive evaluation, it raises critical questions about
adherence to these principles. The Doctrine requires that allocation
decisions be preceded by a thorough assessment of public benefits,
beneficiary credentials, and safeguards ensuring continued
compliance with stated purposes.
33. The allocation of 125 acres of industrial land to KNMT without a
competitive process fundamentally violated the Doctrine, which
2
M.C. Mehta v. Kamal Nath, (1997) 1 SCC 388, para 24-25.
3
(2012) 10 SCC 1.
Page 26 of 29
demands proper procedure and substantive accountability in public
4
resource allocation. UPSIDC ought to have considered verifiable
evidence of economic benefits, employment generation potential,
environmental sustainability, and alignment with regional
development objectives to demonstrate that the decision serves the
collective benefit. The failure to adopt transparent mechanisms not
only deprived the public exchequer of potential revenue—as evidenced
by the substantial appreciation in the value of such a large tract of
land—but also created a system where privileged access supersedes
equal opportunity. This betrays the fiduciary relationship between the
State and its citizens.
34. Having upheld the cancellation due to KNMT’s chronic default, we
observe that the hasty allotment followed by years of litigation
exemplifies systemic deficiencies in the allocation process. This
necessitates comprehensive directions to ensure that future
allocations uphold principles of transparency and accountability,
thereby preventing prolonged disputes while ensuring that public
resources genuinely promote industrial development and economic
growth.
4
Centre for Public Interest Litigation v. Union of India, (2012) 3 SCC 1, para 94-96.
Page 27 of 29
ONCLUSION AND IRECTIONS
F. C D
35. In light of our detailed examination of the contentions raised by the
parties, the comprehensive analysis of the factual and legal matrix
and the resultant conclusions, we uphold the cancellation of the
allotment by UPSIDC.
36. The actual allotment or any offer thereof made by UPSIDC in favour
of M/s Jagdishpur Paper Mills Ltd (Respondent No.3) for the Subject
Land is also declared to be illegal, contrary to public policy and is
consequently annulled. However, if any earnest money or any
payment has been received from the said prospective allottee, the
same is directed to be refunded along with interest at the rate granted
by the Nationalized Banks.
37. The appeals are accordingly dismissed with no order as to costs.
38. However, considering the broader implications for the transparent
allocation of public resources and the need to strengthen
administrative accountability in industrial land distribution, we deem
it appropriate to issue the following directions:
i) The State Government of Uttar Pradesh and UPSIDC are directed
to ensure that any such allotment in the future be made in a
Page 28 of 29
transparent, non-discriminatory and fair manner by ensuring
that such allotment process fetches maximum revenue and also
achieves the larger public interest like industrial development
priorities, environmental sustainability, and regional economic
objectives; and
ii) The Subject Land shall also be allotted strictly in accordance with
the procedure as illustrated in direction ( i ) above.
39. Ordered accordingly. Pending applications, if any, also stand disposed
of in the above terms.
…..........................J.
(SURYA KANT)
………….………………..........................J.
(NONGMEIKAPAM KOTISWAR SINGH)
NEW DELHI;
Dated: May 30, 2025
Page 29 of 29
REPORTABLE
IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
Civil Appeal Nos. ________ / 2025
(Arising out of SLP (C) Nos. 31887-88/2017)
Kamla Nehru Memorial Trust & Anr. …Appellants
Versus
U.P. State Industrial Development
Corporation Limited & Ors.
… Respondents
JUDGEMENT
SURYA KANT, J.
Leave Granted.
2. These appeals have been preferred by the Kamla Nehru Memorial
Trust ( KNMT ) against the final common judgment and order dated
29.05.2017 passed by the High Court of Allahabad at Lucknow Bench
( Impugned Order ), whereby it upheld the cancellation of allotment of
Signature Not Verified
Digitally signed by
land admeasuring 125 acres situated in the Utelwa Industrial Area,
NITIN TALREJA
Date: 2025.05.30
17:00:32 IST
Reason:
Page 1 of 29
Jagdishpur, District Sultanpur, Uttar Pradesh ( Subject Land ) by the
Uttar Pradesh State Industrial Development Corporation ( UPSIDC ).
3. The crux of the dispute pending before us relates to the legality of the
decision of cancellation of allotment of the Subject Land by UPSIDC.
However, it would be apropos to discuss the factual matrix before
delving into the analysis pertaining to the alleged procedural
irregularities in the cancellation of allotment of the Subject Land.
A. F ACTS
4. In this vein, the sequence of events has been briefly adduced as
follows:
4.1. KNMT is stated to be a charitable trust incorporated in the year 1975.
It resolved in March, 2003 to purchase land for the purpose of
floriculture. Accordingly, on 10.07.2003, KNMT submitted an
application and deposited earnest money amounting to INR 62,600/-
for allotment of the Subject Land for the aforesaid purpose.
4.2. UPSIDC, in an uncharacteristically swift manner, accepted the
application of KNMT and allotted the Subject Land vide allotment
letter dated 18.09.2003 ( Allotment Letter ). The allotment was made
conditional upon compliance with certain terms, the relevant
provisions of which are reproduced below:
Page 2 of 29
xxx xxx xxx
“
3. You shall deposit at this office an amount of Rs.
12,02,187.50. (Earnest Money of Rs. 62,500.00 has been
adjusted) towards reservation money in respect of the
above plot latest by 18-10-2003. This amount (together with
Earnest money) is approximately equal to 10 percent of the
total premium of the plot at the provisional rate of Rs. 25.00
per sq. mtr. and locational charges @ Rs. Nil per sq. mtr. for
first five acres and is subject to adjustment according to
actual measurement of the plot. If the above amount falls
short of the amount equal to 10 percentage of the total
premium according to actual measurement, the balance will
be deposited by you within seven days of the receipt of
demand from us.
If the payments are not made as stipulated above this
allotment will stand automatically cancelled/and the whole
amount of the Earnest Money deposited by you will stand
forfeited to this corporation, even if the area of the plot either
exceeds or is less than the area of 20% or less of the area
applied for. However, if the area of the land allotted either
exceeds the area applied for or falls short of the applied for
by an area more than 20% of it, the Earnest Money will not
be forfeited if this allotment is not accepted, provided
intimation is sent to us in this respect by the date stipulated
above.
Note: - the premium herein is provisional and is liable to be
enhanced in accordance with the provisions of Licence
Agreement/Lease Deed.
xxx xxx xxx
5. The remaining 90% of the provisional premium shall have
to be paid by you in 8 equal half yearly installments each
of which will be due for payment on 1st day of January and
1st day of July each year. The first installments of each
payment will fall due for payment on 01.01.2006. The
second and subsequent installments of the premium will fall
due on 1st day of July and 1st day of January each year.
An interest at 15.00% per annum shall be charged on the
outstanding (balance) premium with effect from the date of
allotment and will be payable along with installments of
premium as stipulated in clause 3 above subject to a rebate
of 3.00% per annum and payment on or before the
prescribed date and if there are no arrears of dues. The
amount of the balance premium and the interest due on it
from time to time shall remain first charge on the land and
Page 3 of 29
the building and machinery erected thereon till it is (they
are) paid in full.
Note: - the premium mentioned herein is provisional and is
liable to be enhanced in accordance with the provisions of
licence agreement/Lease Deed .
xxx xxx xxx
9. The plot has been allotted on as it is where it is basis and
leveling etc, if any, is to be undertaken by you at expenses.
You will pay to the U.P. State Industrial Development
Corporation Ltd. Within 30 days from the date of the
demands made by this corporation from time to time such
recurring fee in the nature of service and/or maintenance
charges as determined by this corporation. In case of
default you will be liable to pay interest @15.00% p.a. on
the amount due .
xxx xxx xxx
13. You will have to take over possession of the land
executing the lease deed within 30 days from the date of
inviting you to do so or within 3 months from the date of this
letter whichever is earlier.”
[Sic]
4.3. After allotment, KNMT inspected the Subject Land and asserted that
it was encroached upon by third parties, seeking demarcation by the
relevant State Authorities. Simultaneously, KNMT defaulted in paying
the ‘reservation money’ by the prescribed date of 18.10.2003.
Responding to this default, UPSIDC, vide communication dated
04.11.2003, granted an extension until 17.11.2003 for payment along
with interest, while clearly stipulating that non-compliance would
result in automatic cancellation of the allotment.
4.4. KNMT deposited the reserve amount through two demand drafts
dated 17.11.2003 and requested that UPSIDC not levy any interest
Page 4 of 29
until physical possession of the Subject Land was granted to it.
UPSIDC, vide letter dated 11.12.2003, categorically rejected the
aforesaid request by stating that the same was violative of its policy.
Thereafter, UPSIDC afforded KNMT a three-day window to provide its
unconditional consent to preserve the validity of the allotment.
4.5. Subsequently, KNMT, admittedly, vide letter dated 15.12.2003,
responded to UPSIDC’s communication, confirming payment of the
interest amount while simultaneously expressing discontent
regarding the levy of such interest and requested UPSIDC to
reconsider its decision. Ultimately, after multiple correspondences,
this issue was finally resolved vide letter dated 07.01.2004, whereby
KNMT accepted the conditions of the Allotment Letter. Appellant No.
2 (official of KNMT) thereafter explicitly agreed to the original terms
and conditions, including to deposit the reservation amount along
with requisite interest, for completion of allotment of the Subject
Land. Concurrently, it bears emphasis that KNMT wrote several
letters seeking demarcation and handing over of possession of the
Subject Land after the removal of alleged encroachments. However,
no action was allegedly taken in respect of these communications.
Page 5 of 29
4.6. Soon thereafter, vide letter dated 21.02.2004, UPSIDC apprised KNMT
of a policy change, whereby KNMT was directed to execute the lease
deed prior to delivery of possession. Accordingly, KNMT was required
to furnish the necessary documents and make requisite payments for
the execution of the lease deed within 15 days, failing which UPSIDC
cautioned that it would proceed with cancellation of allotment of the
Subject Land.
4.7. Notably, the Allotment Letter required KNMT to make payments in a
scheduled manner. KNMT nonetheless failed to pay the instalments
and requested rescheduling of the same vide letter dated 11.03.2005.
UPSIDC, in response, assured them of consideration of their request
and, in the , directed them to pay the lease rent and also to
interim
provide the necessary documents for the execution of the lease deed.
4.8. UPSIDC, on 01.07.2005, approved the request for rescheduling the
payment and directed KNMT to pay the total amount of INR
1,44,27,313/- in ten instalments over a period of 5 years along with
15% interest starting from the date of issuance of the aforesaid letter,
which reads as follows:
“Please refer your undated letter on the above subject by
which you requested to reschedule the total amount of your
plot and sought permission to pay the first installment in
July 2005. In this connection, you are informed that
Page 6 of 29
according to your request, the approval of the headquarter
has been issued to reschedule the total amount of
Rs.1,44,27,313=10 paise to be paid in 10 six monthly
installments including 15°/o interest and the first
installments of 10% amounting to Rs. 14,42,731=35 paise
is payable by 01.07.2005. The balance 90 % amount is to
be paid in six monthly (a) further installments including the
interest. You are therefore requested to please arrange to
deposit the first installment of the amount of Rs.
14,42,731=35 paise as early as possible.”
[ Sic ]
4.9. However, KNMT failed to adhere to the aforesaid schedule as well and,
having defaulted in payment, UPSIDC issued a notice dated
14.12.2005, thereby mandating it to deposit a sum of INR
39,76,404.85/- (inclusive of interest and the previous pending
amount). KNMT, conversely, continued to request UPSIDC to
handover possession and to reconsider the decision to levy interest.
4.10. Following the continued non-compliance, UPSIDC issued a final
notice dated 13.11.2006, calling upon KNMT to deposit an amount of
INR 68,49,869.20/- as well as to submit the necessary documents for
execution of the lease deed. The notice stipulated a deadline of 10
days, failing which the allotment of the plot would be cancelled as per
the terms of the Allotment Letter. The relevant portion of the notice is
as follows:
“…. Now last and final notice is hereby given to you to
please submit an amount of Rs. 68,49,869.20 accrued upto
30.6.2006 and submit the desired documents within TEN
Page 7 of 29
DAYS from the date of this letter failing which allotment of
plot shall be cancelled as per Clause No. 15(a) & (b) of
allotment letter dated 18.9.03 and the money deposited by
you shall stand forfeited.”
4.11. In response, KNMT, without making the payment, vide letter dated
04.12.2006, repeated its earlier request to hand over the possession
of the land after demarcation and sought removal of the
encroachment. UPSIDC replied on 13.12.2006, stating that
possession of the land could only be handed over after execution of
the sale deed. The letter also underscored KNMT’s failure to deposit
the requisite documents for execution of the lease deed or any amount
except the reserve amount since 2003. In this light, UPSIDC finally
declined KNMT’s representation. The letter dated 13.12.2006
elucidated that:
“In this regard, it is informed you that the above said land
was allotted to you in September, 2003 thereafter you have
deposited only 10°/o amount of allotment. Later on in the
year, 2005 the re-schedulement was made on your request,
but despite that no payment has been made by you till
today, only writing for marking. As per the rules of the
Corporation, the possession of the land can be given after
due payment and execution of lease deed. Neither you have
made payment nor have submitted the requisite documents
of lease deed. You have only taking time by way of
unnecessary correspondence.
You had been requested to get execute the lease deed after
making due payment so that the possession can be given to
you. But, the aforesaid actions, you by not making the
payment of dues and execution of lease deed, you want to
evade the matter by making unnecessary correspondences.
Hence, the representation submitted by you is declined.”
[ Sic ]
Page 8 of 29
4.12. Feeling aggrieved, KNMT assailed the letter dated 13.12.2006 before
the High Court through Writ Petition No. 349/2007 (MB) ( First Writ ).
Meanwhile, the allotment of the Subject Land was cancelled vide the
order dated 15.01.2007, which was also challenged by KNMT by
amending the First Writ Petition.
4.13. The High Court, vide interim order dated 13.02.2007, restrained
UPSIDC from making any fresh allotment of the Subject Land.
4.14. Ultimately, the High Court disposed of the First Writ vide order dated
27.05.2009 with a direction to restore the allotment in favour of
KNMT, subject to certain conditions, including completion of all
formalities in accordance with the Allotment Letter and revalidation
of demand drafts.
4.15. Aggrieved, UPSIDC challenged the order dated 27.05.2009 before
this Court vide SLP (C) No. 14680/2009, wherein the matter was
remitted back to the High Court with the following observations:
“It is apparent from the impugned order that the
respondents challenged the cancellation order dated
January 15, 2007 by filing a petition for amendment in the
writ petition. Admittedly, the Court, without discussing the
validity of the order dated January 15, 2007, decided the
matter in favour of the respondents and directed to restore
the allotment and revalidate the demand drafts of
‘91,27,139.65 and to execute the lease deed in favour of the
respondents.
Page 9 of 29
Learned counsel for the parties accept that the High Court
ought to have given reasons regarding validity of the order
of cancellation dated January 15, 2007 before passing the
impugned order.
In the circumstances, we are of the view that the case
should be remitted to the Division Bench of the High Court
for its decision on merits.
We, accordingly, allow this appeal, set aside the impugned
judgment and order dated May 27, 2009, and remit the case
to the Division Bench of the High Court for its decision on
merits expeditiously.”
4.16. It is pertinent to note that, in the interregnum , UPSIDC allotted the
Subject Land to M/s Jagdishpur Paper Mills Ltd i.e. Respondent No.3,
which was challenged by KNMT before the High Court through
another Writ Petition bearing Misc. Bench No. 11055/2013 ( Second
Writ
). The High Court therein directed the parties to maintain status
quo with regard to the Subject Land. UPSIDC challenged the said
interim order dated 27.11.2013 by means of SLP (C) No. 7952/2014
wherein vide order dated 07.04.2017, this Court directed the High
Court to expeditiously adjudicate both the Writ Petitions filed by
KNMT.
4.17. Consequently, the High Court heard the matter and, vide the
Impugned Order, upheld the cancellation of the allotment of Subject
Land. In doing so, the High Court held that:
Page 10 of 29
i) KNMT failed to follow the stipulations of the allotment as it did
not adhere to the payment schedule;
ii) The explanation for delayed payment provided by KNMT, though
reasonable, failed to form part of the terms and conditions of
allotment. In other words, strict adherence to the payment
schedule was necessary; and
iii) UPSIDC rightly cancelled the allotment of Subject Land by
complying with the terms of The Manual for Marketing and
Management of Industrial Areas ( Manual ), specifically citing
Clause 3.04 (vii), which postulates that:
“(vii) If an allottee has not paid the dues despite three
consecutive legal notices, the Regional Manager shall be
required either to cancel the allotment or send his
recommendation for issue of Recovery Certificate.”
4.18. It is in this factual backdrop that the aggrieved KNMT is before this
Court. It must further be noted that, during the pendency of the
instant appeals, this Court, vide order dated 17.11.2017, stayed the
operation of the Impugned Order.
ONTENTIONS OF THE PARTIES
B. C
Page 11 of 29
5. We have heard Learned Senior Counsels for the parties at a
considerable length and meticulously perused the documents
submitted on record.
6. Mr. Maninder Singh, Learned Senior Counsel appearing on behalf of
KNMT made the following contentions:
a. The High Court erred in its conclusion that KNMT failed to make
payment of the allotment price as per the schedule. On the
contrary, UPSIDC failed to transfer the physical possession of the
Subject Land and merely continued to demand the outstanding
amount without fulfilling its reciprocal contractual obligations.
KNMT wrote several letters requesting to deliver possession.
However, UPSIDC continued to make excuses and used the
outstanding dues as a cloak for not handing over possession of
the Subject Land to KNMT. In other words, UPSIDC allegedly
frustrated the contract.
b. UPSIDC’s refusal to demarcate the Subject Land contravenes the
provisions contained in the Allotment Letter. It was thus
emphasized that UPSIDC was not in a position to handover the
physical possession as the farmers were still holding the Subject
Land and continued to cultivate it for agricultural purposes.
Page 12 of 29
c. Pursuant to the High Court’s directions dated 27.05.2009, KNMT
duly deposited the due amount with UPSIDC, which has
remained unutilized for more than ten years. Evidently, KNMT
duly abided by both the terms of the Allotment Letter as well as
the directions given by the High Court.
d. The High Court erroneously interpreted Clause 3.04 (vii) of the
Manual, which stipulates that UPSIDC must give three legal
notices to defaulters. In the instant case, UPSIDC sent only one
such notice dated 13.11.2006. UPSIDC, therefore, failed to abide
by the conditions prescribed in the Manual, and the cancellation
order suffers from procedural infirmities. In other words, the
cancellation of allotment is procedurally flawed and legally
untenable, as it disregarded both the mandatory notices as
contemplated under the Manual as well as the fundamental
principle of reciprocal contractual obligations, where possession
and demarcation ought to have preceded demands for full
payment.
7. Per contra , Mr. K.K. Venugopal and Mr. Atmaram N.S. Nadkarni,
Learned Senior Counsels, represented UPSIDC and canvassed the
following submissions:
Page 13 of 29
a. UPSIDC provided ample opportunities for KNMT to make
payment as per the terms and conditions of the allotment.
However, KNMT chose to delay payment for more than six years
from the date of allotment on false, misleading and specious
grounds. Moreover, KNMT could not honour its commitment even
after UPSIDC, taking a lenient view, rescheduled the payment
terms. Furthermore, despite the High Court’s directions dated
12.03.2007, KNMT paid only the outstanding principal amount
without any interest or additional fees for restoration.
b. The procedure outlined in Clause 3.04 of the Manual was duly
adhered to by UPSIDC through notices dated 14.12.2004,
1.07.2005, 14.12.2005, and 13.11.2006. Strangely,
notwithstanding the rejection of its request for waiving of interest,
KNMT repeatedly implored UPSIDC to reconsider the same rather
than making payment towards the allotment price.
c. The allegations regarding the non-demarcation and
encroachment on the Subject Land are false and vexatious. The
Allotment Letter issued to KNMT itself contained the site plan
along with precise measurements and the area of land in the plot.
Furthermore, to the satisfaction of KNMT, UPSIDC had
Page 14 of 29
demarcated the Subject Land on 03.03.2005, which was duly
acknowledged by KNMT in its letter dated 11.03.2005.
d. UPSIDC had charged the interest in consonance with the terms
of the Allotment Letter accepted by KNMT. In this regard, a
pointed reference was made to Clauses 3 and 5 of the Allotment
Letter, whereunder the method of computation of interest on the
outstanding balance was duly provided.
e. Lastly, KNMT itself has admitted the non-payment of dues before
this Court. Further, the current market value of the Subject Land
is valued in the range of more than a hundred crores. In these
circumstances, the instant appeal is wholly without merit and
ought to be dismissed.
SSUES
C. I
8. Having considered the rival contentions advanced by the parties, it is
evident that the central issue concerns the legality of the cancellation
of allotment by UPSIDC. Given the nature of the dispute and the
competing interpretations regarding procedural compliance, we find it
appropriate to examine the following issues:
i) Whether UPSIDC is responsible for frustrating the performance
of the allotment contract?
Page 15 of 29
ii) Whether the cancellation of allotment of the Subject Land was
procedurally defective and legally untenable?
D. A NALYSIS
D.1 I SSUE N O .1: Whether UPSIDC is responsible for frustrating the
performance of the allotment contract.
9. Although the issue in these Appeals revolves around the cancellation
of allotment by UPSIDC, we deem it necessary first to address the
KNMT’s plea pertaining to the alleged frustration of the contract. To
clarify, these contentions concern the purported non-demarcation,
alleged encroachment, and non-delivery of possession of the Subject
Land by UPSIDC. For our analysis, we must collocate these instances
against the factual matrix as well as the terms of allotment to
conclusively ascertain the plausibility of frustration of the contract.
10. Firstly , on a careful scrutiny of the record, we find that though KNMT
addressed multiple communications to UPSIDC alleging non-
demarcation of the Subject Land, such communications were,
however, ex-facie an afterthought. We say so for the reason that the
site plan appended with the Allotment Letter has described precise
measurements and all other relevant details pertaining to the Subject
Page 16 of 29
Land. That apart, the allotment was made on an ‘as it is where it is’
basis.
11. In any case, UPSIDC demarcated the Subject Land on 03.03.2005 to
the satisfaction of KNMT, and the latter also acknowledged such
factum vide letter dated 11.03.2005, which reads as under:
“It is to inform that the demarcation of the said land has
been made on 03.03.2005 by the department, which I
agree. Please inform the value of the stamp papers required
for the execution of the registry of the said land, so that I
may get the lease deed of the said land executed, so that
further work may be proceeded.”
12. There is thus no merit in the contention that KNMT suffered any
prejudice due to the purported non-demarcation of the Subject Land.
13. Secondly , in so far as the encroachment at the site is concerned, the
affidavits filed by UPSIDC enumerate details of the 276 Khasra
numbers constituting the Subject Land. UPSIDC has further clarified
that possession of the said land was duly taken after completing the
acquisition process, which included payment of compensation to the
landowners. These averments are duly supported with documentary
proof. We, therefore, find that the allegation of encroachment is thus
devoid of any merit.
Page 17 of 29
14. Lastly , we must consider whether UPSIDC erred in not handing over
possession of the Subject Land despite several requests made by
KNMT. In this regard, Clause 2.15 of the Manual, which deals with
the delivery of possession of plots, proves instructive. It provides that:
“2.15. POSSESSION OF PLOTS
(i) The date of Possession of Plots shall be fixed by the
Regional Manager after registration of Lease Deed itself.
(ii) That date so fixed shall be intimated to the lessor
alongwith the second copy of the lease deed and the
concerned Junior Engineer for necessary action on their part
through a letter.
(iii) Effort shall be made to hand over possession within 15
days of the registration of the lease deed as far as
practicable.
(iv) If the lessee fails to take possession even after issuance
of two letters, legal notice of the same may be issued and
action may be taken accordingly.”
15. It may be seen that UPSIDC was obligated to hand over possession
only after registering the lease deed, which was a mandatory
condition. The Clause categorically stipulates that the Regional
Manager shall fix the date of possession only ‘after registration of
Lease Deed itself’, thereby creating a sequential condition wherein
registration must precede possession.
16. That being so, it becomes pellucid that the insistence of UPSIDC to
furnish requisite documents for registration of the lease deed was both
legitimate and in conformity with the prescribed procedure. Since
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KNMT failed to furnish the necessary documents in a timely manner,
it is itself to blame for the non-delivery of possession.
17. Our examination of all three contentions raised by KNMT reveals that
none of the alleged acts—non-demarcation, removal of encroachment,
or non-delivery of possession—constitute conduct that would
frustrate the performance of the allotment terms. On the contrary, the
record demonstrates that UPSIDC acted in accordance with
prescribed procedures and as per the terms of allotment. In contrast,
KNMT failed to fulfil its obligations, particularly regarding the timely
submission of documents required for executing the lease deed. The
foundation upon which KNMT forges its argument of frustration thus
crumbles.
D.2 Issue No.2: Whether the cancellation of allotment of the Subject
Land was procedurally defective and legally untenable.
18. Adverting to the alleged illegality in the cancellation of allotment by
UPSIDC, KNMT relies on Clause 3.04 of the Manual, which prescribes
the procedure to address defaults by allottees. The relevant Clause in
this regard is reproduced in totality below for ease of analysis:
“ 3.04 ACTION AGAINST DEFAULTERS
In case payment is not received by 31st January/31st July
legal notice shall be issued to the defaulting
allottees/licences/lessees in the following manner.
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(i) The Regional Manager shall ensure that the legal notice
in all the defaulting cases are issued by 10th February and
10th August.
(ii) A separate file shall be opened in every Regional Office
in which the Dealing Assistant and concerned officer shall
give a certificate that notice to all defaulting allottees have
been issued. This certificate shall be verified by the Regional
Manager.
(iii) The legal notice shall be sent by Registered Post with
A/D and appropriate entry in the Legal Notice Register shall
be made. The legal notice shall be issued in terms of the
allotment letter/licence agreement/lease deed and the
period by which the payment is required shall also be
strictly in accordance with the terms of allotment
letter/licence agreement/lease deed.
(iv) After the expiry of the period of legal notice and
confirmation of its service it shall be the responsibility of the
Dealing Assistant to process the file within 15 days. The
same shall then be put up before the Regional Manager for
his orders and instruction for cancellation or otherwise.
(v) If the Regional Manager decides not to cancel the
allotment of plot and the next due date of payment of
instalment of premium/interest has fallen, then another
legal notice shall be issued in the manner specified above.
(vi) After the expiry of the legal notice, if no payment is
received it shall be the responsibility of the concerned officer
to put up the file to the Regional Manager and obtain his
orders about cancellation of allotment or issuance of
Recovery Certificate or otherwise.
(vii) If an allottee has not paid the dues despite three
consecutive legal notices, the Regional Manager shall
be required either to cancel the allotment or send his
recommendation for issue of Recovery Certificate.
However, if Regional Manager feels that further time should
be accorded, he shall do so with the approval of Head Office
only.
(viii) List of defaulters for amount exceeding Rs.20,000/-
may be published in newspaper in the month of
February/September at least once in a year, after obtaining
approval of Head Office.”
[ Emphasis Supplied ]
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19. A bare perusal of the above-reproduced provision reveals a well-
defined procedure prescribed to address defaults by allottees. During
arguments, KNMT placed considerable emphasis on sub-clause (vii),
contending that UPSIDC had failed to issue the stipulated three
consecutive legal notices. KNMT nevertheless conceded that the notice
dated 13.11.2006 could be considered a ‘legal notice’ within the
meaning of the aforesaid Clause. Per contra , UPSIDC maintains that
the previous correspondence dated 14.12.2004, 01.07.2005, and
14.12.2005 also substantially satisfied the ingredients of a ‘legal
notice’ as contemplated under the Manual.
20. It seems to us that this issue ought to be examined through the prism
of administrative law principles the contractual powers of the
vis-à-vis
State. While it is well-settled that land allotment authorities such as
UPSIDC possess the inherent right to cancel allotments upon violation
of stipulated conditions, this Court has consistently emphasized that
judicial intervention in matters concerning land revocation should be
1
circumscribed to ensure adherence to procedural safeguards. This
paradigm underscores the administrative autonomy vested in such
1
Dilip Singh and Ors v. State of Haryana and Ors., (2019) 11 SCC 422, paragraph 22.
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authorities while safeguarding allottees’ rights through procedural
fairness.
21. As already elucidated, KNMT relies upon Clause 3.04 (vii) of the
Manual to assert that non-issuance of the requisite legal notices by
UPSIDC resulted in procedural illegality. In this light, it becomes
incumbent upon us to ascertain whether the correspondence issued
by UPSIDC satisfies the threshold requirement of ‘three consecutive
legal notices’ as mandated under the said provision and,
consequently, whether the cancellation of allotment was procedurally
sound. To resolve this issue, we must determine the essential
characteristics that embody a ‘legal notice’ within the contemplation
of the Manual.
22. It may be recapitulated that the notice dated 13.11.2006 has been
understood as a ‘legal notice’ by both sides. Upon comparative
analysis of the communications, particularly those dated 14.12.2004
and 14.12.2005, we find that these bear substantial similarity with
the notice dated 13.11.2006. It is beyond our comprehension as to
what prejudice has really been caused to KNMT merely because these
notices are not captioned as legal notices.
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23. It further appears to us that the expression ‘legal notice’ connotes an
unambiguous communication along with legal consequences to a
noticee who is alleged to be in default. Illustratively, the essential
elements of a legal notice would include:
a. It should contain a clear and concise set of facts which convey
the information leading to the relevant circumstances. This
element is also fulfilled when reference is made to any earlier
communications issued between the concerned parties;
b. It should convey the intimation of any impending legal obligation
or breach committed by any party;
c. It should convey the intention of the party issuing the
communication to hold the other party liable to appropriate legal
action or charge; and
d. The communication in toto must be unambiguous and should not
mislead or suppress material information. If issued under a
Statute, it must comply with the relevant requirements
prescribed therein as well.
24. If the communications dated 14.12.2004, 14.12.2005, and
13.11.2006 are juxtaposed to the abovementioned ingredients, we
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have no reason to doubt that these constitute valid ‘legal notices’ and
thus, UPSIDC has duly complied with the process envisaged under
Clause 3.04(vii) of the Manual.
25. We may hasten to add at this stage that the dues for the Subject Land,
allotted in 2003, remained unpaid despite multiple communications
spanning several years. KNMT not only failed to make timely
payments but also sought unwarranted concessions, including waiver
of interest and rescheduling of dues. This persistent non-compliance
establishes KNMT as a chronic defaulter, while the continued
attempts to seek waiver evince a deliberate strategy to avoid payment
obligations. UPSIDC’s action in treating KNMT as a defaulter was,
therefore, both justified and necessary to preserve the integrity of the
allotment process. Allowing such deliberate defaults to persist
unchecked would undermine the entire framework of land allocation
and set a detrimental precedent.
26. For the reasons stated, we are satisfied that the cancellation of
allotment by UPSIDC is fully justified and in accordance with law.
E. I NVOKING T HE P UBLIC T RUST D OCTRINE IN T HE A LLOCATION OF
R ESOURCES .
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27. The prolonged litigation initiated by KNMT has spanned over fifteen
years, unnecessarily burdening the judicial system and impeding the
efficient functioning of public authorities. Such protracted disputes
highlight the need for more stringent initial evaluation processes to
prevent chronic defaults.
28. While we have upheld the cancellation due to KNMT’s default, the
circumstances reveal systemic concerns in the original allocation
process. UPSIDC allotted the Subject Land to KNMT within merely two
months of application, raising questions about the thoroughness of
the evaluation. Furthermore, during the pendency of this dispute,
UPSIDC demonstrated remarkable alacrity in considering alternative
allotments to M/s. Jagdishpur Paper Mills Ltd.
29. We, therefore, consider it necessary to examine whether UPSIDC’s
procedure for industrial land allotment meets standards of
administrative propriety, particularly in light of the Public Trust
Doctrine ( Doctrine ) mandating that public resources be managed
with due diligence, fairness, and in conformity with public interest.
30. The Doctrine emanates from the ancient principle that certain
resources (seashores, rivers and forests) are so intrinsically important
to the public that they cannot be subjected to unrestricted private
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control. Rooted in Roman law and incorporated into English common
law, this Doctrine recognizes that the Sovereign holds specific
2
resources as a trustee for present and future generations.
31. In the Indian context, the Doctrine has evolved to encompass public
resources meant for collective benefit, reflecting the constitutional
mandate under Article 21. As held in Natural Resources Allocation
In re, while the Doctrine does not impose an absolute prohibition on
transferring public trust property, it subjects such alienation to
stringent judicial review to ensure legitimate public purpose and
3
adequate safeguards.
32. When a substantial tract of industrial land is allocated without a
comprehensive evaluation, it raises critical questions about
adherence to these principles. The Doctrine requires that allocation
decisions be preceded by a thorough assessment of public benefits,
beneficiary credentials, and safeguards ensuring continued
compliance with stated purposes.
33. The allocation of 125 acres of industrial land to KNMT without a
competitive process fundamentally violated the Doctrine, which
2
M.C. Mehta v. Kamal Nath, (1997) 1 SCC 388, para 24-25.
3
(2012) 10 SCC 1.
Page 26 of 29
demands proper procedure and substantive accountability in public
4
resource allocation. UPSIDC ought to have considered verifiable
evidence of economic benefits, employment generation potential,
environmental sustainability, and alignment with regional
development objectives to demonstrate that the decision serves the
collective benefit. The failure to adopt transparent mechanisms not
only deprived the public exchequer of potential revenue—as evidenced
by the substantial appreciation in the value of such a large tract of
land—but also created a system where privileged access supersedes
equal opportunity. This betrays the fiduciary relationship between the
State and its citizens.
34. Having upheld the cancellation due to KNMT’s chronic default, we
observe that the hasty allotment followed by years of litigation
exemplifies systemic deficiencies in the allocation process. This
necessitates comprehensive directions to ensure that future
allocations uphold principles of transparency and accountability,
thereby preventing prolonged disputes while ensuring that public
resources genuinely promote industrial development and economic
growth.
4
Centre for Public Interest Litigation v. Union of India, (2012) 3 SCC 1, para 94-96.
Page 27 of 29
ONCLUSION AND IRECTIONS
F. C D
35. In light of our detailed examination of the contentions raised by the
parties, the comprehensive analysis of the factual and legal matrix
and the resultant conclusions, we uphold the cancellation of the
allotment by UPSIDC.
36. The actual allotment or any offer thereof made by UPSIDC in favour
of M/s Jagdishpur Paper Mills Ltd (Respondent No.3) for the Subject
Land is also declared to be illegal, contrary to public policy and is
consequently annulled. However, if any earnest money or any
payment has been received from the said prospective allottee, the
same is directed to be refunded along with interest at the rate granted
by the Nationalized Banks.
37. The appeals are accordingly dismissed with no order as to costs.
38. However, considering the broader implications for the transparent
allocation of public resources and the need to strengthen
administrative accountability in industrial land distribution, we deem
it appropriate to issue the following directions:
i) The State Government of Uttar Pradesh and UPSIDC are directed
to ensure that any such allotment in the future be made in a
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transparent, non-discriminatory and fair manner by ensuring
that such allotment process fetches maximum revenue and also
achieves the larger public interest like industrial development
priorities, environmental sustainability, and regional economic
objectives; and
ii) The Subject Land shall also be allotted strictly in accordance with
the procedure as illustrated in direction ( i ) above.
39. Ordered accordingly. Pending applications, if any, also stand disposed
of in the above terms.
…..........................J.
(SURYA KANT)
………….………………..........................J.
(NONGMEIKAPAM KOTISWAR SINGH)
NEW DELHI;
Dated: May 30, 2025
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