Kamla Nehru Memorial Trust & Anr. vs U.P. State Industrial Development Corporation Limited & Ors.

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 NITIN TALREJA land admeasuring 125 acres situated in the Utelwa Industrial Area, 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. FACTS

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 interim, directed them to pay the lease rent and also to

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.

B. CONTENTIONS OF THE PARTIES

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.

C. ISSUES

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. ANALYSIS

D.1 ISSUE NO.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

Page 18 of 29 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.

Page 19 of 29

(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 vis-à-vis the contractual powers of the

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

circumscribed to ensure adherence to procedural safeguards. 1 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. INVOKING THE PUBLIC TRUST DOCTRINE IN THE ALLOCATION OF

RESOURCES.

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

resources as a trustee for present and future generations.2

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

adequate safeguards.3

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

resource allocation.4 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 F. CONCLUSION AND DIRECTIONS

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

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