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Supreme Court of India· 30 May 2025

Can an allottee plead frustration of the allotment contract for non-demarcation and non-delivery of possession where the site plan was appended to the allotment letter and the land was allotted on an 'as it is where it is' basis?

Kamla Nehru Memorial Trust & Anr. v. U.P. State Industrial Development Corporation Limited & Ors.
2025 INSC 791
Coram: Surya Kant; Nongmeikapam Kotiswar Singh
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Answer

No. Where the site plan appended with the allotment letter describes precise measurements and all other relevant details, and the allotment was made on an 'as it is where it is' basis, communications alleging non-demarcation are ex-facie an afterthought. None of the alleged acts of non-demarcation, removal of encroachment or non-delivery of possession constitutes conduct that would frustrate the performance of the allotment terms where the authority acted in accordance with prescribed procedures and the allottee failed to fulfil its own obligations.

Headnote

Manual for Marketing and Management of Industrial Areas — Clause 2.15 — Clause 3.04(vii) — Legal notice — Cancellation of allotment — Public Trust Doctrine — Allocation of public resources — Art. 21 — Manual for Marketing and Management of Industrial Areas — Clause 3.04(vii) — Essential elements of a legal notice — Held: A 'legal notice' connotes an unambiguous communication along with legal consequences to a noticee alleged to be in default, conveying the facts, the impending breach and the intention to hold the other party liable. A communication not captioned a legal notice is not thereby disqualified. (¶22, 23) Manual for Marketing and Management of Industrial Areas — Clause 2.15 — Possession only after registration of lease deed — Held further: Where the Manual fixes the date of possession only after registration of the lease deed, registration must precede possession. An allottee who fails to furnish the documents for registration is itself to blame for non-delivery of possession. (¶15, 16) Cancellation of allotment — inherent right of the allotment authority — judicial intervention circumscribed — Held further: Land allotment authorities possess the inherent right to cancel allotments upon violation of stipulated conditions. Judicial intervention in matters concerning land revocation should be circumscribed to ensure adherence to procedural safeguards. (¶20) Public Trust Doctrine — Art. 21 — Allocation of industrial land without a competitive process — Held further: Allocation of a substantial tract of industrial land without a competitive process fundamentally violates the Public Trust Doctrine, which demands proper procedure and substantive accountability in public resource allocation. Cancellation upheld and appeals dismissed; the subsequent allotment annulled and directions issued. (¶33, 36)

In the Court's own words
Paragraph 10Firstly, 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 Land. That apart, the allotment was made on an ‘as it is where it is’ basis.
Paragraph 17Our 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.
Acts & Sections
Clause 3.04(vii) Manual for Marketing and Management of Industrial AreasClause 2.15 Manual for Marketing and Management of Industrial AreasArt. 21 Constitution of India

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Also decided in this judgment
Where a Manual requires three consecutive legal notices before an allotment may be cancelled, what are the essential elements of a 'legal notice', and must the communication be captioned as one?Where the governing Manual fixes the date of possession of an industrial plot only after registration of the lease deed, can the allottee resist payment on the ground that possession was not delivered first?To what extent may a court interfere with the cancellation of an industrial land allotment by a State industrial development corporation?Under the Public Trust Doctrine, is the allocation of a substantial tract of industrial land without a competitive process valid?Does the Public Trust Doctrine impose an absolute prohibition on transferring public trust property?
Plain-language answer prepared by the LexStreak Editorial Desk — verify against the judgment. Source: Supreme Court of India. Corrections