Cancellation of industrial land allotment is valid where the allottee fails to commence operations and permits encroachment.

The petitioner-company was allotted 45,000 sq. ft. of land bearing Plot No. M-43, Phase IV, Adityapur Industrial Area, pursuant to Land Allotment Order No. 1623/ADA dated 25.09.1996, and possession was delivered on 08.11.1996.

The Jharkhand Industrial Area Development Authority (“JIADA”) subsequently cancelled the allotment order and lease deed by Memo No. 1863 dated 21.10.2009, after issuing notices and granting several opportunities of hearing.

The cancellation was based on the finding that the allotted land was abandoned, was not being used for industrial purposes, and had been encroached upon by anti-social elements who had established cattle sheds.

The petitioner challenged the cancellation before the appellate authority in Appeal No. 1 of 2020.

The appeal, including the application for condonation of delay, was dismissed by the Secretary, Department of Industries, on 02.03.2020, principally on the grounds that industrial activity had not commenced and the lease conditions had not been complied with.

During the writ proceedings, the petitioner produced GST returns and electricity bills, while JIADA filed a status report pursuant to the Court’s directions.

The GST returns largely reflected nil production and the electricity consumption was found to be meagre.

Whether JIADA lawfully cancelled the petitioner’s allotment order and lease deed on the grounds of non-utilisation of the allotted land for industrial purposes, abandonment, encroachment, and non-compliance with the lease conditions.

Whether the appellate authority erred in dismissing the petitioner’s appeal and refusing to condone the eleven-year delay in challenging the cancellation order.

Whether the materials produced during the writ proceedings, including GST returns and electricity bills, demonstrated sufficient industrial activity to warrant interference with the impugned orders.

The Court applied the contractual and administrative principle that an allottee of industrial land must comply with the conditions of allotment and lease and must use the allotted premises for the approved industrial purpose.

Non-utilisation, abandonment, encroachment, and failure to commence or maintain industrial activity may justify cancellation of the allotment and lease, particularly where the allottee has been afforded opportunities of hearing.

The Court also applied the principle that an unexplained and substantial delay in challenging an administrative order may defeat the challenge, and that appellate relief may be refused where the delay is not satisfactorily explained.

No specific statutory provision or judicial precedent was cited in the judgment.

The Court found no procedural infirmity in the cancellation because JIADA had issued several notices and provided the petitioner with opportunities of hearing before concluding that the plot was abandoned, encroached upon, and not being used for industrial purposes.

The petitioner’s own subsequent records did not establish meaningful industrial activity: the GST returns showed zero production for substantial periods, while the electricity bills reflected consumption inconsistent with industrial operations on a 45,000 sq. ft. plot.

The Court further noted that the petitioner challenged the 21.10.2009 cancellation only after approximately eleven years, and that the appellate authority had rightly rejected both the appeal and the request for condonation of delay.

In light of the meagre progress, inadequate industrial output, encroachment, and breach of the lease conditions, the Court held that the impugned orders did not warrant judicial interference.

It upheld the cancellation of the allotment order and lease deed dated 21.10.2009 and the appellate order dated 02.03.2020, finding no infirmity in either order.

The writ petition was accordingly dismissed.