Allotment of Plot; Metal Seam Vs. Avadh Delicacies [Supreme Court of India, 19-01-2016]

Constitution of India, 1950 – Article 14 – Allotment of Sheds in Industrial Estate – Allotment order was issued without any public auction or inviting tenders – Authorities directed to conduct public auction or invite tenders for allotment of shed concerned at present market value.

Allotment of Plot

(2016) 4 SCC 564 : 2016 (1) Scale 377 : JT 2016 (1) SC 354 : 2016(159) AIC 255



(V. Gopala Gowda) and (Uday Umesh Lalit) JJ.

January 19, 2016


(Arising out of SLP (C) No. 10951 of 2014)

M/s Metal Seam Co. of India (P) Ltd. …Appellant


M/s Avadh Delicacies & Others …Respondents

For Petitioner(s) Mr. Anil Kumar Mishra,Adv.; For Respondent(s) Mr. Gaurav Dhingra,Adv. Mr. Akshit Gadhok, Adv. Mr. Munawwar Naseem,Adv.


Uday U. Lalit, J.

Leave granted.

This appeal challenges the judgment and order dated 28.03.2014 passed by the High Court of Judicature at Allahabad, Lucknow Bench, Lucknow in Writ Petition No.1840 of 1998 whereby the High Court was pleased to set-aside the orders dated 09.06.1998 and 15.06.1998 passed by the General Manager, District Industries Centre, Lucknow.

The facts in the present matter are as under:-

In 1956, Shed No.B-5 inclusive of appurtenant open space situated in Talkatora Industrial Estate, Lucknow (hereinafter referred to as the “concerned shed”) was allotted to M/s Surya Chemicals for establishment of a factory. Under the Hire Purchase agreement entered into between M/s Surya Chemicals and the Director of Industries on behalf of the Government of U.P., it was expressly stipulated in Condition No.4 as under:-

“Not to sell, mortgage, assign or otherwise transfer the factory building except with the previous permission in writing of the Director of Industries, U.P. till the price has been fully paid and the transfer as aforesaid shall be as such conditions as the Director of Industries, U.P., may lay down while granting such permission.” The present Appellant was allotted the adjoining shed namely B-6 in the year 1968 and in due course of time it started manufacturing containers and drums. As the business of the Appellant expanded, it required additional premises. Around this time M/s Surya Chemicals was in arrears in making payment of instalments in respect of the concerned shed. At one stage the allotment in its favour was cancelled but on an assurance that it would start production, it was given time and the allotment was restored. The Appellant approached the Joint Director of Industries for allotment of the concerned shed on payment of entire cost.

Since M/s Surya Chemicals was in default, the Joint Director of Industries recommended cancellation of allotment of the concerned shed and wrote to the General Manager to take the appropriate steps after taking legal opinion in the matter. The General Manager however by his order dated 01.12.1983 recommended transfer of the concerned shed in favour of Avadh Delicacies, Respondent No.1 herein. Respondent No.1 was a new firm provisionally registered as a Small Scale Industries unit with the General Manager. The order was passed on an application moved by M/s Surya Chemicals for transfer of the concerned shed to Respondent No.1.

d) On 25.02.1984 the Joint Director of Industries accepted the transfer application moved by M/s Surya Chemicals permitting the transfer of the concerned shed in favour of Respondent No.1. This led to the filing of Writ Petition No.1166 of 1984 by the Appellant in the High Court. It was submitted that the application for transfer ought to have been considered along with other pending applications and when the application of the Appellant was pending there was no question of accepting the transfer as proposed by M/s Surya Chemicals.

e) That writ petition was allowed by the High Court by its judgment and order dated 04.03.1987. It was observed as under:-

“In the instant case, from the above facts, it is obvious that the allotment which has been permitted without considering other applications, is unreasonable and lacks good faith and could not be said to be in public interest. The order passed by the State Government effecting the order of transfer in favour of opposite party No.6 is unreasonable and invalid. In these circumstances, the allotment order passed in favour of opposite party No.6 cannot be allowed to stand.

The writ petition is accordingly allowed and a writ of certiorari is issued quashing the order dated 25.02.1984, passed by the Joint Director of Industries (Annexure-14) and the order dated 23.02.1984, passed by the State Government contained in Annexure-13 to the writ petition. However, it will be open to the opposite parties to consider the merits of the case of the petitioner and that of opposite party No.6 and in case the opposite party No.6 in fact has started any production regarding which there is dispute and doubt, his claim would be given due consideration and in any view the opposite parties will, so far as possible, allot any other shed to opposite party No.6 if circumstances warrant that he should not get and keep possession over shed No.5-B.”

f) Thus the order of transfer in favour of opposite party No.6 i.e. Respondent No.1 was quashed. The authorities were directed to consider the merits of the case of the Appellant and Respondent No.1 and in case the claim of Respondent No.1 was to be accepted, its claim could inter-alia be considered in respect of any other shed.

g) The aforementioned judgment and order dated 04.03.1987 was challenged by Respondent No.1 in this Court by filing Civil Appeal No. 3062 of 1987 and during its pendency nothing could be done. It appears that on 25.09.1997 Shed No.C-1 in the very same Industrial Estate came to be allotted to the Appellant. On 29.09.1997 the aforesaid civil appeal was dismissed for non-prosecution by this Court and such dismissal has attained finality.

h) Soon thereafter the matter was taken up for consideration. On 20.03.1998 a notice was issued to the Respondent No.1 to present its case along with necessary record relating to the concerned shed. A further notice in that behalf was again issued to Respondent No.1 on 27.03.1998. Similar notices were also issued to the Appellant and M/s Surya Chemicals.

i) In the meeting of Zila Udyog Bandhu held on 20.05.1998, the matter concerning allotment of concerned shed was considered. It was observed that in the year 1997 Shed No.C-1 was already allotted in favour of the Appellant. The committee however concluded as under:-