Unilateral Cancellation of Land Allotment After Accepting Delayed Payments Violates Estoppel and Natural Justice.

The Petitioner No. 1, a registered medical education trust, was allotted 64,890 sq. meters of land in Jaipur at a concessional rate by the Jaipur Development Authority (JDA) for a hospital project vide letter dated 22.03.2023

The premium was payable in four installments; the first was paid timely, and possession was handed over on 27.04.2023

The petitioner defaulted on the timelines for the second, third, and fourth installments, but eventually deposited the entire balance by 13.02.2025 following a JDA notice dated 21.01.2025

Despite accepting these payments and engaging with the petitioner on building plan revisions until April 2025, the JDA unilaterally refunded the installments on 11.03.2025 and cancelled the allotment on 08.04.2025, citing "automatic cancellation" under Condition No. 17 due to payment delays

1. Whether the allotment stood automatically cancelled under Condition No. 17 despite JDA's subsequent acceptance of delayed payments and continued administrative engagement?

2. Whether the cancellation of allotment and refund of deposits without prior notice or opportunity of hearing violated principles of natural justice?

3. Whether the doctrines of legitimate expectation and promissory estoppel apply to preclude JDA from rescinding the allotment?

4. Whether time was the essence of the allotment contract?

Principles of Natural Justice, specifically audi alteram partem, requiring a fair hearing before State action with civil consequences

Rule 15 and 17 of the Rajasthan Improvement (Disposal of Urban Land) Rules, 1974, governing institutional allotments

Doctrine of Promissory Estoppel from Motilal Padampat Sugar Mills v. State of UP

Doctrine of Legitimate Expectation from Union of India v. Hindustan Development Corporation

Principle from Chand Rani v. Kamal Rani and Hind Construction Contractors v. State of Maharashtra, holding that in immovable property transactions, time is ordinarily not of the essence unless explicitly intended and strictly pursued

Nemo potest mutare consilium suum in alterius injuriam (no one can change their position to the detriment of another)

Doctrine of Waiver by conduct

The Court reasoned that JDA’s invocation of "automatic cancellation" under Condition No. 17 was legally tenable only if the authority had not waived that condition through its conduct

By accepting the second installment in July 2024 and issuing a fresh demand notice in January 2025, JDA treated the allotment as subsisting, thereby waiving the rigors of the "automatic" clause

The Court found that the petitioner had a "legitimate expectation" that the allotment was valid as they had altered their position by securing various NOCs (Medical, AYUSH, Airports Authority) and depositing nearly Rs. 27 Crores

JDA's action of seeking revised building plans even after the refund was initiated demonstrated a lack of internal consistency and arbitrariness

The Court held that since the land was for an institutional/philanthropic project and the JDA accepted delayed performance, time was not the essence of the contract

The mid-stream cancellation without a show-cause notice was declared a "gross violation" of natural justice

It held that the allotment is restored in favor of the Trust

The JDA was directed to: (i) accept the refunded balance of Rs. 20.98 Crores along with 6% annual interest for the delay periods; (ii) execute the lease deed within six weeks; and (iii) process building plans strictly in accordance with law

The Petitioner was directed to complete construction within two years as per their undertaking