Non-commencement of industry within stipulated timelines justifies cancellation of allotment and forfeiture of deposited amount.

The Appellant was allotted 10,000 sq. ft. of land (Plot L1) in the Industrial Area, Jehanabad, by the Bihar Industrial Area Development Authority (BIADA) in 2013 for establishing an Industrial Training Institute (ITI).

Possession was handed over on 25.05.2015 after the removal of high-tension lines.

Although BIADA informed the Appellant that formal building map approval was not mandatory to start work, no construction commenced.

Subsequently, the Bihar Industrial Investment Promotion Policy, 2016, restricted such allotments to manufacturing units only, excluding the service/education sector.

Furthermore, revised national norms required a minimum of 1.07 acres for ITIs, which the Appellant did not possess.

Due to non-commencement of construction and policy non-compliance, BIADA cancelled the allotment and forfeited the deposited amount of ₹3,30,255/- on 08.03.2019.

A Writ Petition challenging this was dismissed by a Learned Single Judge on 25.02.2025.

1. Whether the cancellation of the land allotment and subsequent forfeiture of the deposited amount by BIADA was legally sustainable under the BIADA Act, 1974.

2. Whether the Authority complied with the mandatory requirement of natural justice and Section 6(2)(a) regarding the issuance of a one-month show-cause notice before forfeiture.

Section 6(2)(a) of the Bihar Industrial Area Development Authority Act, 1974 (as amended), which empowers the Authority to cancel allotments and forfeit deposits if an allottee fails to take effective steps to establish an industry within the fixed period, provided a one-month notice is given.

V. Lakshmanan v. B.R. Mangalagiri (1995) to uphold the right of forfeiture when a contract falls through due to the default of the appellant.

Principle from Satish Batra v. Sudhir Rawal (2013) regarding the forfeiture of earnest money as security for performance.

Welspun Specialty Solutions Ltd. v. ONGC (2022) concerning the determination of "time as the essence" of a contract.

The Court observed that physical possession was given in 2015, yet the Appellant failed to begin construction for years, even after being told map approval was unnecessary.

The Court found that the subsequent shift in government policy (2016 Policy) and the revised national ITI norms made the Appellant’s original project unfeasible on the allotted plot.

Regarding the forfeiture, the Court noted that BIADA produced evidence (dispatch register) of a show-cause notice dated 08.11.2018, which the Appellant failed to rebut with any evidence of a reply.

The Court determined that since the default was entirely attributable to the Appellant’s "lackadaisical approach" and failure to meet statutory timelines, the Authority was within its rights under Section 6(2)(a) to cancel the allotment and forfeit the funds as per the contractual terms in Clause 26 of the allotment letter.

The Letters Patent Appeal was dismissed, and the request for a refund of the forfeited amount was denied.