Patna High Court
M/s Imprial Private Industrial Training InstituteversusThe State of Bihar
- Decided
- Disposal
- DISMISSED
Holding
The Court held that the cancellation of the plot and forfeiture of the deposited amount were lawful and in accordance with the statutory provisions, and therefore dismissed the appeal.
Summary
M/s Imperial Private Industrial Training Institute was allotted a 10,000 sq ft plot (L1) in the Jahanabad industrial area for an ITI under a 90‑year lease. Possession was given in 2015 and the institute submitted a building plan, but the Authority later said map approval was unnecessary. The institute failed to commence construction by the stipulated date and, after the 2016 Bihar Industrial Investment Promotion Policy restricted industrial land to manufacturing uses, its request for a larger plot was denied. BIADA cancelled the allotment on 8 March 2019 and forfeited the Rs 3,30,255 deposited, directing that no future claim could be entertained. The institute appealed, arguing violation of natural justice and lack of a valid show‑cause notice. The High Court held that the cancellation and forfeiture were authorised by Section 6(2)(a) of the Bihar Industrial Area Development Authority Act, 1974, that procedural requirements were met, and that the policy change legitimately affected the allotment. Consequently, the appeal was dismissed.
Issues considered
- The cancellation and forfeiture of the allotted plot and deposited amount are valid under Section 6(2)(a) of the Bihar Industrial Area Development Authority Act, 1974.
- Whether the 2016 Bihar Industrial Investment Promotion Policy, which limits land use to manufacturing, can lawfully override the original allotment for an ITI.
- Whether the Authority complied with principles of natural justice by providing a show‑cause notice and an opportunity to be heard before cancellation.
- Whether the forfeited amount is refundable to the appellant.
Legislation cited
- General Clauses Act, 1897 — s. 27
Subjects
- land allotment
- industrial area
- forfeiture
- natural justice
- policy change
- construction delay
- lease
- industrial training institute
- Bihar Industrial Area Development Authority Act
- letters patent appeal
Judgment
IN THE HIGH COURT OF JUDICATURE AT PATNA
Letters Patent Appeal No.559 of 2025
In
Civil Writ Jurisdiction Case No.17448 of 2019
======================================================
M/s Imprial Private Industrial Training Institute through its Director Dinesh
Kumar, Male, aged about 53 years, Son of Basant Lal, resident of Nasriganj,
P.O. Digha, P.S. - Danapur, District- Patna.
... ... Appellant
Versus
1. The State of Bihar through its Secretary, Department of Industries, Govt. of
Bihar, Vikash Bhawan, Patna.
2. The Secretary, Department of Industries, Govt. of Bihar, Vikash Bhawan,
Patna.
3. The Executive Director, Bihar Industrial Development Authority, (BIADA)
Udyog Bhawan, First Floor Eastern Gandhi Maidan, Patna.
4. The Area In charge Industrial Area, BIADA, Jahanabad.
5. The Development Officer, BIADA, Patna.
6. Administrative Officer, Department of Industries Govt. of Bihar, Vikash
Bhawan, Patna.
... ... Respondents
======================================================
Appearance :
For the Appellant/s : Mr. Ajay Kumar Prasad, Advocate
For the State : Mr. Yogendra Prasad Sinha, AAG-7
Mr. Rajeev Kumar Sinha, AC to AAG-7
For the BIADA : Mr. Bindhyachal Singh, Sr. Advocate
Mr. Gyan Shankar, Advocate
======================================================
CORAM: HONOURABLE THE CHIEF JUSTICE
and
HONOURABLE MR. JUSTICE HARISH KUMAR
ORAL JUDGMENT
(Per: HONOURABLE THE CHIEF JUSTICE)
Date : 28-04-2026
The instant Letters Patent Appeal has been preferred
by M/s Imperial Private Industrial Training Institute, through its
Director, challenging the order dated 25.02.2025 passed by the
learned Single Judge in C.W.J.C. No. 17448 of 2019, whereby
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the writ petition filed by the petitioner came to be dismissed.
2. The writ petition was filed seeking the following
relief(s):
“i.) For quashing of order dated
15.07.2019 passed by The Secretary,
Department of Industries, Government of Bihar,
Patna by which, while rejecting the memo of
appeal of the petitioner refused to consider the
grounds of the appeal against the order of the
Executive Director, Bihar. Industrial Areas
Development Authority (hereinafter shall be
referred as "BIADA" for short), Patna dated
08.03.2019 contained in memo No.1960/D
dated 08.03.2019 and declined to consider the
case of the petitioner judiciously even the return
of forfeited amount was also not considered on
the ground that there is no enabling provision
for the same under BIADA Act, 1974 and its
allied amendments the aforesaid order was
communicated by the Administrative officer of
the Industries deptt. vide Letter No.3081 dated
15.07.19.
(ii) For quashing of order dated
08.03.2019 contained in memo No.1960/D
dated 08.03.2019 passed by the Executive
Director, Bihar Industrial Areas Development
Authority (hereinafter shall be referred as
"BIADA" for short), Patna whereby and
whereunder the allotment of plot No. L1, Area
10,000 Sqft situated at Industrial Area
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Jahanabad has been cancelled and the entire
valuation amount deposited against the
aforesaid plot has been forfeited with a further
direction that no claim against the aforesaid
cancelled plot shall be entertained in future.
iii.) For restoration of allotment of
aforesaid plot Ll with all consequential right
and interest consequent upon quashing of order
dated 08.03.2019.
iv.) For refund of forfeited amount
deposited against the aforesaid Plot No. L1
along with interest there upon.
v.) For any other relief/reliefs to
which the Petitioner is found entitled in the
facts and circumstances of the case.”
3. It is the case of the petitioner that Bihar Industrial
Area Development Authority, Patna (hereinafter referred to as
‘BIADA’) allotted a piece of land admeasuring 10,000 sq. ft. in
the Industrial Area, Jehanabad, for establishment of an Industrial
Training Institute. A lease for a period of 90 years was granted
vide Letter No. 5505/D dated 23.08.2012, subject to certain
terms and conditions. However, the initially allotted Plot No. L2
was found to be disputed and sub judice before this Court.
Consequently, an alternative Plot No. L1 was allotted to the
petitioner by the Executive Director, BIADA, vide Office Order
No. 308/D dated 15.03.2013 on similar terms and conditions.
4. Upon visiting the site, it was discovered that an 11
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KV high-tension transmission line was passing over the said
land. The petitioner accordingly requested the Managing
Director, BIADA, to take necessary steps for its removal.
Pursuant thereto, the Managing Director took up the matter with
the Chairman of the Bihar State Power Holding Corporation and
the concerned Executive Engineer finally shifted the said line.
Thereafter, physical possession of Plot No. L1 was handed over
to the petitioner on 25.05.2015 vide Memo No. 22/Je. The
petitioner, whereupon deposited the entire valuation amount for
the said plot and submitted the building plan for the proposed
I.T.I., prepared by a registered architect, along with all requisite
documents before the Executive Director, BIADA, Patna on
08.07.2015, seeking approval in terms of Clause 11 of the
allotment letter dated 23.08.2012 and order no. 308/D dated
15.03.2013 with a request to accord approval of the map so that
construction work for the establishment of I.T.I. could be
completed in time.
5. It is further stated that, in the absence of approval
of the building plan, no construction could lawfully be
undertaken. Meanwhile, during the pendency of the matter, the
State Government notified the Bihar Industrial Investment
Promotion Policy, 2016 (hereinafter referred to as “the Policy,
2016”) vide Resolution no. 1822 dated 01.09.2016. The
petitioner contends that despite repeated approaches, the
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authorities expressed their inability to approve the building plan
in view of the said policy.
6. It is also the case of the petitioner that the
Directorate General of Employment and Training (D.G.E.T.),
New Delhi, subsequently revised the affiliation norms for I.T.I.s
in 2017, prescribing a minimum land requirement of 1.07 acres
(i.e., 46,609 sq. ft.). In light of the same, vide letter dated
21.08.2018, the petitioner requested BIADA to allot a larger plot
of land measuring at least 1.25 acres. The petitioner further
asserted that the Policy, 2016 would not have retrospective
effect so as to alter the terms and conditions of the allotment
made in his favour in the year 2012.
7. It is further contended that the petitioner submitted
the revised plan for establishment of a Technical Skill
Development Centre in terms with the earlier Policy; in the
meanwhile, the Senior Accounts Officer, BIADA, raised a
demand of Rs. 27,207/-, which was duly paid by the petitioner.
However, subsequently, without issuance of any notice as
mandated under Section 6(2)(a) of the Bihar Industrial Area
Development Authority Act, 1974 (for brevity ‘the Act, 1974’),
the Executive Director, BIADA, cancelled the allotment of Plot
no. L1 (10,000 Sq. ft.) situated at Industrial area Jehanabad and
forfeited the entire amount deposited by the petitioner, further
directing that no future claim in respect of the said plot would
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be entertained.
8. Aggrieved thereby, the petitioner preferred an
appeal before the Principal Secretary-cum-Appellate Authority,
Department of Industries, Government of Bihar, Patna, which
too came to be rejected vide order no. 3081 dated 15.07.2019.
9. According to the petitioner, the impugned actions of
the respondents are arbitrary, unreasonable, and in gross
violation of the principles of natural justice.
10. Pursuant to issuance of notice, respondent nos. 3
to 5 have filed a counter affidavit, duly sworn by the D.G.M.
(Legal), BIADA, stating as follows:
“6. That the present memo of appeal
has been directed against the order dated
25.02.2025 Passed in C.W.J.C. No. 17448 of
2019, whereby the writ petition was dismissed
with following order:
“The Court finds no error. in
the cancellation of the plot, as the
petitioner did not comply with the terms
and failed to commence construction
within the stipulated time. Therefore, the
cancellation stands upheld. This Writ
application’ is, accordingly, dismissed as
devoid of merits”.
7. That at the very outset, the
respondent submits that the averments made in
the application, filed on behalf of the appellant,
are denied, unless specifically admitted
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hereunder. It is prayed that no averments
contained in the said petition may be deemed to
be admitted, merely by reason of specific non-
traverse.
8. That it is stated that Bihar
Industrial Area Development Authority, alloted
a piece of land plot L2 admeasuring area
10,000 Sq. Ft. to the M/s Imprial Private
Industrial Training Institute for the
establishment of Industrial Training Institute on
the lease of 90 years vide letter no.| 5505/D
dated 23.08.2012 on the terms and condition
mentioned therein.
9. That it is stated that since
aforesaid plot no. L-2 was under litigation and
the case of land dispute was sub judice before
the Hon'ble High Court. Consequently, another
plot no. L-1 admeasuring 10,000 Sq: Ft. was
allotted by the Executive Director, BIADA vide
Office Order-no. 308/D dated 15.01.2013 to the
petitioner keeping the other terms and condition
of the allotments as same.
10. That it is stated when the
petitioner visited the site of plot no. L1 for
starting the construction work for establishment
of I.T.I. it was found that High Tension
Conductor of 11000 Volts was passing over the
aforesaid land and as such the petitioner
requested to Managing Director, BIADA to take
necessary steps for removing the High-Tension
Conductor over the land.
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11. That it is stated that in pursuance
to representation of the petitioner, Managing
Director, BIADA took the necessary steps by
requesting Chairman of Bihar State Power
Holding Co. and Executive Engineer of
aforesaid Co. for removing the High-Tension
Conductor wire over the land vide his letter no
1483/D dated 12.03.2013 and 7432/D dated
4.10.2013.
12. That it is stated that physical
possession order of aforesaid plot Ll of Area
10,000 sq.ft. was issued in favour of Petitioner
vide memo no. 22/Je dated’25.05.2015. |
13. That it is stated that the petitioner
has submitted the map of the ITI building
prepared by registered Architect on 08.07.2015
for its approval. Thereafter, it was informed to
the petitioner vide Letter No:
3798/36/DEV/BIADA/2012 dated 12.08.2015
(Annexure R/A of Counter Affidavit) to start
the construction work, there was no need for
approval of the map by the petitioner, it is not
necessary to obtain permission from the
authority to start construction work.
14. That it is stated that the
construction work over the aforesaid plot for
establishment of ITI was not started even after
the reply communicated to the respondent
regarding approval of aforesaid map.
15. That it is stated that a new Bihar
Industrial Investment Promotion Policy, 2016
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was notified by the Govt. of Bihar in the
Industries Department vide resolution no. 1822
dated 01.09.2016 therefore the further
allotment was not possible as the allotment
cannot be made for Service Sector and
Educational Institute as per the new Policy.
16. That it is stated that BIADA has
apprised the petitioner that in terms of Clause
5.2.1 and 5.2.2 (b) of Bihar Industrial
Investment Promotion Policy, 2016, that as a
policy decision, all vacant lands in industrial
Area shall now be used only for allotment of the
manufacturing units and not for the
establishment of ITI or any other service sector.
17. That it is stated that meantime
DGET, New Delhi modified the silent features
of affiliations norms for ITI -2017 in which
minimum plot area for affiliation of ITI has
been fixed to 1.07 Acre i.e.46609 Sq. ft.
18. That it is stated that the demand
of allotment of extra land in the Industrial Area
cannot be granted firstly as there is no vacant
land meeting the demand of the allottee and
secondly clause 5.2.1 and 5.2.2 of the Bihar
Industrial Investment Promotion Policy, 2016
does not allow allotment by BIADA for sectors
other than Manufacturing and also the forfeited
amount cannot be returned as it is against the
provision of BIADA Act, 1974 and allied
amendments.
19. That it is stated that in response
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to the aforesaid application dated 31.08.2018,
development officer, BIADA has intimated vide
letter no. 4953 dated 26.09.2018 (Annexure
R/B of Counter Affidavit) to establish
manufacturing units in aforesaid plot L1 as the
allotment cannot be made for Educational
Institute as per the new Policy.
20. That it is stated that BIADA eased
the terms of the agreement for its allottee's by
making the clause of getting the map approved
by BIADA “not mandatory" and the same was
also communicated to the petitioner in response
to their letter. They were asked to commence the
construction work at the premise and inform
BIADA about ‘the same. It was also submitted
that had the petitioner commenced the
construction of the Institute on time then they
could have received the affiliation for setting up
the ITI before the Government Notification was
released with the new terms in the year 2017.
21. That it is submitted that the
allottee cannot establish Training Institute
under the prevalent notification of the
Government of India. Their demand for setting
up a Skill Development Centre also cannot be
accepted as the same does not fall within the
ambit of ITI and therefore allowing this would
mean change in project which cannot be done
as the per the terms of allotment to
manufacturing sectors only, under the prevalent
Policy.
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22. That it is humbly stated that
respondent is merely trying to get away with
their own lackadaisical approach towards
setting up the Institute on time and fresh
allotment of land cannot be made for Service
Sectors and Educational Institutes under the
Bihar Industrial Investment Promotion Policy,
2016 even if the demanded land was vacant in
the Industrial Area. It is also clear that the
allottee cannot establish Training Institute
under the prevalent notification of the
Government of India. Their demand for setting
up a Skill Development Centre also cannot be
accepted as the same does not fall within the
ambit of ITI and therefore allowing this would
mean change in project which cannot be done
as the per the terms of allotment to
manufacturing sectors only, under the prevalent
Policy.
23. That it is stated that the Executive
Director, BIADA, Patna after issuing a notice
vide letter no. 110/J dated 08.11.2018
(Annexure R/C of Counter Affidavit) in terms
of clause 6(2) (a) of BIADA (Amendment) Act,
1991 has cancelled the allotment of plot no. L1,
Area 10,000 Sq. ft situated at Industrial Area,
Jehanabad vide order dated 08.03.2019
contained in memo no. 1960/D dated
08.03.2019 and the entire valuation amount
deposited against the aforesaid plot has been
forfeited with a further direction that no claim
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against the aforesaid cancelled plot shall be
entertained in future.
x x x
26. That it is submitted that the Plot
in question has been allotted to M/s Tanisha
Agrochemicals Private Limited vide Allotment
Letter No. 3291/D dated 13.08.2025 for
establishment of 1. Insecticide 2. Fungicide 3.
Herbicide unit.
11. The learned Single Judge, upon hearing the
respective parties and on perusal of the pleadings and averments
on record, was pleased to hold as follows:”
“16. On perusal of records, it is
evident that physical possession of Plot.No. L1
was granted to the petitioner vide Memo No.
22/Je. on 25.05.2015. Following this, the
petitioner submitted ITI building map on
08.07.2015, but BIADA informed ‘the petitioner
on 12.08.2015 that map approval was
unnecessary and that construction could be
proceed without permission. Despite of this, the
petitioner failed to begin construction by
01.09.2016. Subsequently, the Bihar Industrial
Investment Promotion Policy, 2016 was
implemented, restricting the use of vacant
industrial lands to manufacturing units, thereby
excluding ITIs and service sectors. In 2017, the
Directorate General of Employment and
Training modified ITI affiliation norms,
requiring a minimum plot area of 1.07 acres,
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which prompted the petitioner to request an
additional plot of 1.25 acres. BIADA denied this
request, citing a lack of available land and the
new Policy restrictions. The petitioner then
submitted a new proposal for a multi-skill
development center in March 2019, which was
also rejected for failing to align with the New
Policy. BIADA clarified that the approval of the
map was no longer mandatory, yet the petitioner
failed to commence construction on time. Had
the petitioner adhered to the timeline, they could
have obtained ITI affiliation before the policy
change. BIADA reiterated that the petitioner’s
request to establish a Skill Development Centre
did not conform to the policy, as such a project
fell outside ITI-related activities and the scope
of manufacturing sector allotments.
Furthermore, in response to the petitioner’s
application dated 31.08.2018, the Development
Officer, BIADA, informed the petitioner vide
Letter No. 4953 dated 26.09.2018 that the plot
could only be used for establishing
manufacturing units, in accordance with the
New Policy. However, the petitioner was
unwilling to start a manufacturing unit as per
the new policy.
17. As a result, the Executive Director
of BIADA cancelled the allotment of Plot No. L1
on 08.03.2019, forfeiting the deposited amount
and barring any future claims. The petitioner’s
appeal was dismissed on 15.07.2019,
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confirming the cancellation on the grounds of
delayed construction and failure to meet the
revised requirements.
18. In light of the above, the Court
finds no error in the cancellation of the plot, as
the petitioner did not comply with the terms and
failed to commence construction within the
stipulated time. Therefore, the cancellation
stands upheld.”
12. This matter was taken up on 17.03.2026. After
advancing arguments, learned counsel for the appellant confined
his prayer to the limited relief of refund of the forfeited amount.
In view of the aforesaid submission, this Court directed learned
Counsel for the appellant, to file an affidavit placing on record
documentary evidence with respect to the amount deposited
with respondent no. 3, the Executive Director, BIADA, towards
consideration for allotment of land for establishment of an I.T.I.
Simultaneously, learned counsel appearing on behalf of
respondent no. 3 was directed to obtain instructions regarding
the amount deposited by the appellant at the time of execution
of the agreement for the said purpose. He was further directed to
file an affidavit clarifying the circumstances under which the
amount was forfeited and whether, in any eventuality, the same
is refundable to the appellant.
13. In compliance with the aforesaid order, learned
counsel for the appellant filed a supplementary affidavit dated
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30.03.2026, wherein it has been stated as follows:
“3. That it is submitted that Sr.
Accounts Officer of the Respondent while
demanding the last installment of Rs.27,207/
vide letter no. 931 dated 09.02.19 had furnished
the statement of accounts which shows the
amount deposited by appellant which comes out
to be Rs 3,30,255/- including the payment of
last installment of Rs 27,207/-(Annexure-12)
which was forfeited inspite of no default on the
part of Appellant. The details of date wise
payment which has been received by the
Respondents are as below:
Date of Payment Amount Paid
10.09.2012 Rs. 69, 969/-
05.08.2014 Rs. 96,300/-
02.07.2015 Rs. 55, 237/-
17.03.2016 Rs. 27, 200/-
21.03.2017 Rs. 27, 176/-
06.03.2018 Rs. 27, 166/-
19.02.2019 Rs. 27, 207/-
Total Amount Paid Rs. 3, 30, 255/-
4. That it is stated and submitted that
it is manifest and clear that the total Amount
deposited by the appellant which comes out to
be Rs 3,30,255/ (Rs. Three Lacs thirty thousand
and two hundred fifty-five) only which was
forfeited by the Respondents needs to be
refunded with interest thereupon since
cancellation of plot is in the teeth of 6(2)(a) of
BIADA (Amendment Act, 1991 as well as in
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violation of Principles of natural Justice.”
14. Respondent nos. 3 to 5 have also filed a second
supplementary counter affidavit, wherein it has been stated as
follows:
“6. That it is respectfully submitted
that the terms and conditions of the allotment
letter are binding upon the allottee. In this
regard, Clause 26 of the allotment letter clearly
provides that upon cancellation of allotment,
BIADA is empowered, inter alia, to forfeit any
money deposited by the allottee. As per Clause
26 (b) of the allotment letter, it is specifically
stipulated that "BIADA may forfeit any money
that may have been deposited with BIADA",
thereby making it abundantly clear that
forfeiture of the deposited amount is a
contractual consequence of cancellation.
x x x
8. That as per the terms and
conditions of the allotment and the provisions,
including Section 6(2)(a) of BIADA Act, 1974,
"in case necessary effective steps are not taken
within the fixed period to establish the Industry
or all dues, rent, charges of the Authority have
not been paid within time or unregistered
product is manufactured or any construction
contrary to the approved plan has been carried
out or an activity injurious to industries has
been engaged into the Authority shall in such
condition cancel the allotted plot/shed and also
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forfeit the amount deposited in this connection".
x x x
13. That there is no provision under
the BIADA Act, 1974 or the relevant regulations
which mandates automatic refund of forfeited
amount once the allotment is cancelled due to
default attributable to the allottee.”
15. Adverting to the rival submissions advanced on
behalf of the parties, it would be apposite to extract the relevant
statutory provision governing forfeiture of the amount
deposited, as contained in Section 6(2)(a) of the Act, 1974:
“6. General duties and powers of the
Authority
2) The Authority shall be responsible for
planning, development and maintenance of the
Industrial Area and amenities thereto and
allotment of land or factory shed or building or
parts of buildings, execution of lease, modification
and cancellation of such allotment of lease,
realization of fees rent charges and matters
connected thereto.
(a) In case necessary effective steps
are not taken within the fixed period to
establish the Industry or all dues, rent, charges
of the Authority have not been paid within time
or unregistered product is manufactured or any
construction contrary to the approved plan has
been carried out or an activity injurious to
industries has been engaged into; the Authority
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shall in such condition cancel the allotted
plot/shed and also forfeit the amount deposited
in this connection. The Authority shall before
cancelling the allotment allow one month time
to the allottee to put up his case. The allottee on
being dissatisfied with the order of the
Authority may file an Appeal to the State
Government within one month and the State
Government shall, after due consideration
dispose of within two months from the date of
receipt of Appeal."
16. A plain reading of Section 6, which deals with the
general duties and powers of the Authority under Chapter III of
the Act, makes it evident that where the allottee fails to take
necessary effective steps within the stipulated period for
establishment of the industry, the Authority is empowered to
cancel the allotment and forfeit the amount deposited in
connection therewith. However, such power is not unfettered.
The provision mandates that prior to cancellation of allotment
and forfeiture of the deposited amount, the Authority must
afford the allottee an opportunity by granting one month’s time
to put forth allottee’s case.
17. Only upon consideration of the allottee’s response,
and after affording an opportunity of hearing, the Authority can
proceed to pass an order of cancellation of allotment along with
forfeiture of the deposited amount, if the explanation is found to
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be unsatisfactory.
18. The statute further provides a remedy to the
allottee by way of an appeal before the State Government,
within a period of one month from the date of such order. The
appellate authority is required to consider and dispose of the
appeal in accordance with law within the stipulated time frame
of two months.
19. Now, coming to the facts of the present case; the
forfeiture order, brought on record as Annexure-2 to the writ
petition, clearly indicates that a show-cause notice was issued to
the petitioner on 08.11.2018. However, no response was
submitted by the writ petitioner, and accordingly, the order of
cancellation was passed, along with forfeiture of the amount
deposited.
20. The writ petitioner also preferred an appeal before
the State Government, which came to be rejected; the said order
has been brought on record as Annexure-1 to the writ petition.
The principal ground urged in the writ petition is that the
allotment of Plot No. L1, admeasuring 10,000 sq. ft., was
cancelled vide order dated 08.03.2019, de hors statutory rules
without affording any opportunity to show cause, and the entire
amount deposited towards its valuation was forfeited, with a
further stipulation that no claim in respect of the said cancelled
plot would be entertained in future.
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21. The Hon’ble Supreme Court has, in multiple
decisions, emphasized the significance and object of a forfeiture
clause. In V. Lakshmanan -Vrs.- B.R. Mangalagiri, 1995 Supp
(2) Supreme Court Cases 33, it was held as follows:
“5. The question then is whether the
respondents are entitled to forfeit the entire
amount. It is seen that a specific covenant under
the contract was that the respondents are
entitled to forfeit the money paid under the
contract. So when the contract fell through by
the default committed by the appellant, as part
of the contract, they are entitled to forfeit the
entire amount....”
Similarly, in the case of K.R. Suresh -Vrs.- R.
Poornima and Others, 2025 Supreme Court Cases OnLine SC
1014, the Hon’ble Supreme Court has held as follows:
“34. In Satish Batra v. Sudhir Rawal,
(2013) 1 SCC 345, this Court emphatically held
that it is only the “earnest money”, paid as a
pledge for the due performance of the contract,
that can be forfeited by the seller on account of the
buyer's default…...
35. ..……This Court allowed the
forfeiture of the earnest money, which was held
to be security for the due performance of the
contract, by the seller when the transaction fell
through on account of the purchaser's fault…..
x x x
Patna High Court L.P.A No.559 of 2025 dt.28-04-2026
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39. This Court recently reaffirmed the
principles for deeming whether time is of the
essence in a contract in Welspun Specialty
Solutions Ltd. v. ONGC, (2022) 2 SCC 382. It
held that the determination must be made by
reading and analysing the contract in its
entirety, taking into account the surrounding
circumstances. An explicit clause stating that
time is of the essence is not, by itself, sufficient.
The Court further observed that any provision
allowing extensions under a contract effectively
negates such a clause, thereby indicating that
time is not of the essence. The relevant
observations are reproduced hereinbelow:
“34. In order to consider the relevancy of
time conditioned obligations, we may observe
some basic principles:
(a) Subject to the nature of contract, general
rule is that promisor is bound to
complete the obligation by the date for
completion stated in the contract. [Refer
to Percy Bilton Ltd. v. Greater London
Council [Percy Bilton Ltd. v. Greater
London Council, [1982] 1 WLR 794
(HL)]]
(b) That is subject to the exception that the
promisee is not entitled to liquidated
damages, if by his act or omissions he
has prevented the promisor from
completing the work by the completion
date. [Refer Holme v. Guppy [Holme v.
Patna High Court L.P.A No.559 of 2025 dt.28-04-2026
22/25
Guppy, (1838) 3 M & W 387 : 150 ER
1195]]
(c) These general principles may be
amended by the express terms of the
contract as stipulated in this case.
35. It is now settled that “whether time is of
the essence in a contract”, has to be culled out
from the reading of the entire contract as well
as the surrounding circumstances. Merely
having an explicit clause may not be sufficient
to make time the essence of the contract. As the
contract was spread over a long tenure, the
intention of the parties to provide for extensions
surely reinforces the fact that timely
performance was necessary. The fact that such
extensions were granted indicates ONGC's
effort to uphold the integrity of the contract
instead of repudiating the same.”
(Emphasis Supplied)
22. Besides, the above referred legal position, the
respondents no. 3 to 5 in their counter affidavit have specifically
stated that the allottee cannot establish Industrial Training
Institute under the prevalent notification of the Government of
India and that their demand for setting up a Skill Development
Centre also could not be accepted as the same did not fall within
the ambit of ITI and therefore, allowing the same would mean
change in project which could not be done. As per the terms of
allotment, it is for manufacturing sectors only, under the
Patna High Court L.P.A No.559 of 2025 dt.28-04-2026
23/25
prevalent Policy.
Further, in the supplementary counter affidavit filed
on behalf of respondent nos. 3 to 5, it has been stated that the
Letter No: 3798/36/DEV/BIADA/2012 dated 12.08.2015
(Annexure R/A of Counter Affidavit) had been sent on
14.08.2015 through post and was duly served.
23. It is the contention of learned Counsel for the
appellant that, although a copy of the dispatch register has been
brought on record, however, no postal receipt evidencing
dispatch of the notice by registered post has been produced. It is
thus, urged that the presumption under Section 27 of the General
Clauses Act, 1897 would not be attracted in the facts of the
present case, and consequently, it cannot be held that the
mandatory requirement under Section 6(2)(a) of the Act, 1974,
of granting one month’s time to the allottee, stood duly
complied with.
24. It is well settled that disputed questions of fact are
not amenable to adjudication in writ jurisdiction. This principle
has been consistently reiterated in the cases of State of
Rajasthan -Vrs.-Bhawani Singh, [1993 Supp (1) SCC 306];
Union of India -Vrs.- Puna Hinda [(2021) 10 SCC 690]; State
of Assam -Vrs.- Bhaskar Jyoti Sarma [(2025) 5 SCC 321].
In the present case, a specific stand was taken in the
Patna High Court L.P.A No.559 of 2025 dt.28-04-2026
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order dated 17.03.2023, which stands impugned in the writ
petition. The said position has also been reiterated in the counter
affidavit. Moreover, during the course of arguments, as reflected
in the order dated 17.03.2026, learned Counsel for the appellant
specifically contended that atleast the forfeited amount ought to
be refunded to the appellant. This Court directed to place on
record by way of affidavit, documentary evidence indicating the
amount deposited with respondent no.3.
Learned Counsel for Respondent no.3 was also
directed to obtain instructions regarding the amount deposited
by the appellant and also clarifying the provisions governing
forfeiture of amount and the circumstances, if any, under which
the same could be refunded. By way of counter affidavit and
supplementary affidavit, respondent no.3 has presented the
evidence of issuance of show cause notice by annexing a copy
of dispatch register, whereas no rejoinder has been filed on
behalf of the appellant demonstrating submission of any reply to
the said show cause notice.
25. In such circumstances, we are of the considered
view that the learned Single Judge, in the impugned order, has
rightly held that there was no illegality in the cancellation of the
allotment, particularly in view of the petitioner’s failure to
comply with the terms and conditions and to commence
construction within the stipulated period. It is also evident from
Patna High Court L.P.A No.559 of 2025 dt.28-04-2026
25/25
the record that the petitioner had expressed his inability to
proceed with the project in terms of the prevailing policy.
26. Having regard to the submissions advanced on
behalf of the parties, the pleadings on record, and the relevant
statutory provisions, we find no perversity or infirmity in the
impugned order passed by the learned Single Judge. It is trite
that the scope of interference in an intra-court appeal, in
exercise of appellate jurisdiction, is limited and essentially
corrective in nature and we are of the humble view that no case
for interference is made out.
27. Accordingly, the present Letters Patent Appeal,
being devoid of merit, stands dismissed.
(Sangam Kumar Sahoo, CJ)
(Harish Kumar, J)
rohit/-
AFR/NAFR AFR
CAV DATE NA
Uploading Date 30-04-2026
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