Holding

The Supreme Court held that lease forfeiture cannot be decided in a writ petition under Article 226, the Vice‑Chairman does have an incidental power to cancel a permission but must observe natural‑justice, and the State cannot repossess possession extra‑judicially.

Summary

The lessees of a Nazool lease applied to the Lucknow Development Authority for permission to construct a multi‑storeyed building, which was granted on 31 January 1985. The State Government later issued directions alleging violations of lease conditions and, after a show‑cause notice, cancelled the lease and the building permission. The High Court quashed both the lease cancellation and the permission revocation, holding that the proceedings violated natural justice and that the questions involved factual disputes unsuitable for Article 226. On appeal, the Supreme Court held that the lease forfeiture could not be decided in a writ petition because it required a civil trial, but affirmed that the Vice‑Chairman possessed an inherent power to revoke a permission as part of the regulatory scheme, provided natural‑justice requirements are met. The Court also ruled that the State, even as a lessor, cannot repossess possession extra‑judicially and that Section 41(1) of the Act does not confer additional powers to the Vice‑Chairman. Consequently, the order cancelling the lease was upheld, while the order revoking the building permission was set aside pending a fresh, fair hearing.

Issues considered

The validity of adjudicating lease forfeiture and cancellation under Article 226 of the Constitution.
Whether the Vice‑Chairman of the Lucknow Development Authority has the power to revoke or cancel a permission granted under Section 15 of the Uttar Pradesh Urban Planning and Development Act, 1973.
The scope of Section 41(1) of the Act and whether it empowers the Vice‑Chairman to act on the Government’s directives.
Whether the cancellation orders violated the principles of natural justice by denying a hearing.
Whether the State, as a lessor, may re‑enter and take possession of the leased land by force.
The distinction between regulatory (incidental) power to cancel a licence and judicial power.

Legislation cited

Constitution of Indias. Article 226
General Clauses Acts. 21
Transfer of Property Act, 1882s. 108, s. 111, s. 114A
Uttar Pradesh Urban Planning and Development Act, 1973s. 14, s. 15, s. 3, s. 37, s. 41

Subjects

lease forfeiturecancellation of permissionUttar Pradesh Urban Planning and Development Actnatural justiceextra‑judicial re‑entryArticle 226regulatory powerquasi‑judicial discretion

Judgment

A
STATE OF U.P. & ORS.
v.
+
MAHARAJA DHARMANDER PRASAD SINGH ETC.

JANUARY 17, 1989

B [RANGANATH MISRA AND M.N. VENKATACHALIAH, JJ.]

Uttar Pradesh Urban Planning and Development Act, 1973: Ss
14, 15, 37 & 41: Lucknow Development Authority-Permission for
development of land by private party-Cancellation/revocation of-
Validity of.
c Constitution of India, Article 226: Forfeiture and cancellation of
/ease-Whether can be agitated in writ proceedings-Judicial review-
Scope and nature of.

Transfer of Property Act, 1882: Ss. 108, 111 & I 14A-Lessee-
D Nature of possession after expiry/forfeiture of /ease-Forcible dispos-
session prohibited.

Section 3 of the Uttar Pradesh Urban Planning and Development
Act, 1973 provides for declaration of an area to he a 'development area' J. •
by gazette notification. Section 14(1) of the Act interdicts development
E of land in such an area by any person or body unless permission has
been obtained from the Vice-Chairman of the Development Authority.
Section 15(1) requires every person or body desirous of obtaining -
permission to make an appUcation in the manner prescribed. Section
15(3) empowers the Vice-Chairman, after making such an enquiry as he
considers necessary, either to grant the permission subject to such con- --\__
F ditions .as be may specify, or refuse the permission. Section 15(5) pro-
vides for an appeal to the Chairman against an order made by the
Vice-Chairman refusing permission. Section 37 inter alia makes an
order of the Vice-Chairman made under s. 15 linal. Section 41(1) makes
it incumbent on the Authority (the Chairman or the Vice-Chairman) to
carry out such directions as may he issued to it from time to time by the
G State Government for the efficient administration of the Act. Section
41(3) confers revisional powers on the State Government.

The respondent-lessees applied to the appellant-Development
Authority under s. 15(1) of the Act for permission to put up a multi-
storeyed building on the demised plot. The Vice-Chairman of the
H Authority sanctioned the permission by his order dated January 31,
176
STATE OF U.P. v. D.P. SINGH 177

,.+. 1985. However, on July 24, 1985 the State Government issued direc-
A
tions purporting to be under 8; 41(1) ofthe Act interdicting the progress
of construction on ground of violation of the conditio~ of the lease. The
High Court allowed the writ petition preferred by the respondents and
quashed the said directions.

Thereafter, on August 12, 1985 the State Government brought to B
the notice of the Vice-Chairman serious illegalities in the building sanc-
tion and indicated that the same be reviewed and revoked, to which he
did not agree. Finally, by its communication dated October 15, 1985
addressed to the Chairman of the Authority the State Government
directed him to initiate immediate proceedings against the respondents
for making misrepresentations, fraudulent statements and concealing
material facts in obtaining building permission. To that letter was c
annexed a notice for service on the lessees and the builder associated
with construction to show cause for cancellation of the lease and demoli-
tion of unauthorised construction. The respondents filed their objec-
tions against the proposed cancellation, but the Government by its
order dated November 19, 1985 found the explanation unacceptable D
and proceeded to terminate the lease. This order was challenged by the
respondent-lessees in a writ petition before the High Court.

Subsequently, the Vice-Chairman of the Authority in a separate
action issued notice dated January 9, 1986 to the respondents to show
cause why the bnilding permission granted on January 31, 1985 should E

- not be cancelled. Respondents objected to the proposed action but the
Authority found the objections unacceptable and proceeded by its order
dated April 19, 1986 to cancel the permission. The two lessees chal-
lenged this cancellation in writ petitions before the High Court.

The High Court found that the proceedings initiated and the F
action taken by the Government and the Vice-Chairman of the Author-
ity in the matter, respectively, of forfeiture of the lease and the cancella-
tion of the permission to build were both infirm in law and required to
be quashed. It took the view that a reasonable opportunity of being heard
had been denied to the lessee-respondents, ·and that the grounds for
forfeiture of the lease were irrelevant and illusory; that there was no G
provision in the Development Act conferring powers on the Vice-
Chairman to review the decision in the matter of sanctioning a plan to
build after the same was acted upon and constructions were being made
only in accordance with it; thats. 41(1) of the Act could authorise the
Vice-Chairman to review the earlier permission but that there being no
such directive from the Government the Vice-Chairm20 acting as a H
I

11
178 SUPREME COURT REPORTS [1989] 1 S.C.R.

A statutory authority had no power to revoke or cancel the permission
once granted, and that there was no casual connection between the +
Government's directive dated October 15, 1985, which bad confined
itself to the cancellation of the lease, and the proceedings initiated by
the Vice-Chairman on January 9, 1986. It further found that as
personal hearing has not been given to the petitioners the order passed
B by the Vice-Chairman violates the principles of natural justice and that
the grounds alleged were not sufficient to sustain the cancellation of the
permission.

In the appeals by special leave prefer.red by the State Government
in tile matter of forfeiture of lease, it was contended for the appellants
that the High Court fell into an error in allowing a matter, which should
c properly have been the subject matter of a civil suit, to be agitated in
proceedings under Article 226 of the Constitution. The submission was
that the question whether there were breaches of covenants on the part
of the lessees involved the construction of the terms of the lease deed
which required evidence on the matter and such a dispute could not be
D resolved on mere affidavits, and that the relationship between the
parties being one of lessor and lessee the dispute between them
pertained to a private law situation. It was also submitted that no
hearing could he contemplated in the context for forfeiture of a lease of
this nature. For the respondents it was contended that the State, even as
a lessor, could not act arbitrarily either in the ·grant or premature
E termination of the leases of public property and disputes arising in such

-
context cannot always be reckoned as private law situations, and that at
all events, the threatened exercise of extra-judicial re-entry by the
State, being violative both of the limitations of the powers of the State as
lessor under the law of landlord and tenant and of its actions as State,
was a matter which required to be mandated against.
F
In the appeals by special leave by the Development Authority in
the matter of cancellation of permission to build, it was contended for it
that the order dated April 19, 1986 itself disclosed the extent of
opportunities afforded to the lessees and there could, therefore, be
no question of failure of natural justice, that if permission had been
G obtained by the lessees by misrepresentation or fraud or, if after obtain·
ing the permission there had been violation of the terms and conditions
of the grant, as in the instant case, the statutory authority granting the
permisi.ion has itself the inherent and incidental and supplemental
powers to revoke the permission, and that no express grant of power iD
this behalf was necessary. For the respondents it was contended that the
H proceedings for cancellation of the permission having been initiated at
STATE OF U.P. v. D.P. SINGH 179

+ the instance of and compelled by the directions issued by the Govern-
ment purporting to act under s. 41(1) of the Act there was a surrender
of statutory discretion on the part of the Vice-Chairman thereby vitiat-
A

( ing the decision; that the Vice-Chairman bad no authority in law to
cancel the permission, that the power to cancel or revoke a licence or
permission, even assuming that the statute enables such cancellation,
was clearly distinguishable from the power of refusal of an initial grant B
-~ and that the exercise of power of cancellation which prejudicially affects
'
vested rights partakes predominantly of quasi-judicial complexion; and
that as there was denial of a reasonable opportunity of being beard the
order passed by the Vice-Chairman violates the principles of natural
.-J. justice.

Allowing appeals by the State, c
,
Y..
HELD: 1. The question whether the purported forfeiture and
cancellation of the lease were valid or not should not have been
allowed by the High Court to be agitated under Article 226 of the
Constitution since it involved resolution of disputes on questions of D
fact as well. h 91 Cl

~-
Express Newspapers v. Union of India, [1985) Suppl. 3 SCR 382,
referred to.

2. A lessor, with the best of title, has no right to resume posses- E
sion extra-judicially by use offorce, from a lessee, even after the expiry
or earlier termination of the lease by forfeiture or otherwise. The use of
, the expression 're-entry' in the .lease-deed does not authorise extra-

). judicial methods to resume possession. Under law the possession of a
lessee, even after the expiry or its earlier termination is judicial posses-
sion and forcible dispossession is prohibited. He cannot, therefore, be F
dispossessed otherwise than in due course of law. [191F-G I

lo the instant case, the fact that the lessor is the State does not
p_lace it in any higher or better position. On the contrary, it is under an
additional inhibition stemming from the requirement that all actions of
Government and governmental authorities should have a 'legal G
pedigree'. The State Government is, accordingly, prohibited from tak-
ing possession otherwise than in accordance with law: [J92C I

Bishandas v. State of Punjab, [1962) 2 SCR 69, referred to.

The question of the_ legality and validity of the purported cancella- H
180 SUPREME COURT REPORTS [1989) 1 S.C.R.

A tion of the lease and the defence of the lessees is left open to be urged in --1
'

appropriate legal proceedings, whenever and wherever Government
proceeds to initiate action in accordance with law for resumption of
possession. [1920-E]

Partly allowing the appeals by the Development Authority,
B
HELD: 1.1 The Vice-Chairman, for purposes of s. 15(3) of the
Act is a distinct statutory authority with statutory powers of his own
distinct from Development Authority, which under s. 4(2) is a body
corporate having perpetual succession and common seal. II 97C-D I

C 1.2 An order made by him under s. 15(3) of the Act granting
permission is not one of the orders revisable by Government under s.
41(3). Such an order, under the scheme of the Act, is not also appeal-
able but assumes a finality contemplated by s. 37. I197F-GI

1.3 The power of control of the State Government under s. 41(1)
D consistent with the scheme of the Act, cannot be construed as a source
of power to authorise any authority or functionary under the Act to do
or carry out something which that authority or functionary is not,
otherwise, competent to do or carrying under the Act. The section is not
a Super Henry VID clause for the supply or source of additional provi-
sions and powers not already obtaining under the Act. [198A-B J
E
2.1 The view of the High Court that in the absence of a directive
or authorisation from the Government under s. 41(1), the Vice-
Chalrman, acting as the statutory authority dispensing permissions for
development under the Act, cannot revoke or cancel a permission once (

F
granted is clearly erroneous. I198F I
-~
2.2 The grant of permission is part of or incidental to the statu-
tory power to regulate orderly development of the 'development area'
under the Act under regulatory laws. The power to regulate with the
obligations and functions that go with and are incidental to it, are not
spent or exhausted with the grant of permission. The power of regula-
G lion which stretches beyond the mere grant of permission, takes within
its sweep the power, in appropriate cases, to revoke or cancel the
permission as incidental or supplemental to the power to grant.
Otherwise, the plenitude of the power to regulate would be whittled
down or even frustrated. [198F-H)

H 2.3 The power to grant, where the grant is itseH vitiated by fraud
STATE OF U.P. v. D.P. SINGH 181

or misrepresentation on the part of the grantee at the time of obtaining
A
the grant, or where the grantee, after the grant violates the essential
terms and conditions subject to which grant is made, must therefore, be
held to include the power to revoke or cancel the permit, even in the
absence of any other express statutory provisions in that behalf. The
grounds must, of course, be such as would justify such drastic action.
This cancellation is a preventive step. There may, however, be cases of B
the third kind where the grant may be voidable at the instance of the
Development Authority or otherwise entitling the Development Author-
ity to initiate appropriate declaratory or other action to get rid of the
effect of the permission. [J99G-H; 200A-B]

2.4 It is erroneous to equate the powers under ss. 14 and JS of the
Act with judicial power which, in the absence of express provisions, c
could not enable the review of a judicial order after its exercise on the
principle offunctus officio. [J98H; 199A]

Sardul Singh v. The District Food and Supplies C ontro//er,
Patiala and 0 rs., W.P. No. 126of1962 decided on December 19, 1962 D
• referred to.

3. The power of revocation or cancellation of the permission is
akin to and partakes of a quasi-judicial complexion. In exercising the
power the authority must bring to bear an unbiased mind, consider
impartially the objections raised by the aggrieved party and decide the E
matter consistent with the principles of natural justice. The authority
cannot permit its decision to be influenced by the direction of others as
this would amount to abdication and surrender of its discretion. It
· would then not be the authority's discretion that is exercised, but some-
one else's. If an authority bands over its discretion to another body it ·
acts ultra vires. Such an interference by a person or body extraneous to F
the power would plainly be contrary to the nature of the power con-
ferred upon the authority. [200B-D J

Judicial Review of Administrative Action by S.A. de Smith refer-
red to.
G
j In the instant case, however, there was no such surrender of
~ discretion by the Authority. The directive from the Government dated
August 12, 1985 bad spent itself out with the then the Vice-Chairman
declining to act in accordance with it. The directivo dated October 15,
1985 confined itself only to the cancellation of the lease and as incidental
thereto, required the stoppage of work pending decision whether the H
lease should be cancelled or not. [201B-D]
..

!82 SUPREME COURT REPORTS 119891 1 S.C.R.

4.1 It not unoften happens that what appears to be a judicial
A
review for breach of natural justice is, in reality, a review for abuse of
discretion. 120 lH I

4.2 Judicial review under Article 226 cannot be converted into an
appeal. Judicial review is directed, not against the decision, but is con-
B fined to the examination of the decision-making process. 12028 I
-~·
4. 3 When the issue raised in judicial review is whether a decision
is ·vitiated by taking into account irrelevant, or neglecting to take into
account of relevant, factors or is so manifestly unreasonable that no
reasonable authority, entrusted with the power in question con!d
reasonably have made such a decision, the judicial review of the deci-
c sion making process includes examination as a matter of law, of the
relevance of the factors. In the instant case, it is, however, not neces-
sary to go into the marits and relevance of the grounds. [202F-H]

Chief Constable of the North Wales Police v. Evans. [1982]
D WLR 1155 referred to.

5. There has been a denial of natural justice in the proceedings
culminating in the order of canceUation. The show cause notice itself is
an impalpable congeries of suspicions and fears, of relevant or irrelev-
ant matter and has included some trivia. On a matter of such import- ~.
E ance where the stakes are heavy for the lesS<Oi!s who claim to have made
large investments on the project and where a number of grounds
require the determination of factual matters of some complexity, the
statutory authority should, in the facts of the case, have afforded a
personal hearing to the lessees. Both the show cause notice dated •
January 9, 1986 and the subsequent order dated April 19, 1986 cannot, Ji..
F therefore, be sustained. 12038-D I ·· ~.
It is left open to the statutory authority, should it consider it
necessary, to issue a fresh show cause notice setting out the precise
grounds, and afford a reasonable opportunity, including an opportun-
ity of personal hearing and of adducing evidence wherever necessary to
G th~ respondent-lessees. In view of this liberty, reserved to the authority,
the finding recorded by the High Court on the merits of the grounds is II.
set aside. [203D-EI ~

CIVIL APPELLATE JURISDICTION: Civil Appeal Nos. 165-
166 of 1989.
H
From the Judgment and Order dated 8.12.1986 of the Allahabad
STATE OF U.P. v. D.P. SINGH (VENKATACHALIAH, J.J 183
'
+· High Court in W.P. Nos. 6819of1985 and 367of1986. A
AND

Civil Appeal Nos. 167 to 171of1989.

From the Judgment and Order dated 8.12.1986 of the Allahabad B
.~ High Court in W.P. Nos. 3463, 367 of 1986, 5521, 5699 and 6819 of
1985.

Yogeshwar Prasad, D.D. Thakur, Soli J. Sorabjee and S.N.
""'L-<_ Kacker, Mrs. Shobha Dikshit, C.P. Lal, Umesh Chandra, Krishan
Chandra,. R.K. Mehta, R.C. Verma, Dr. Roxma Swamy, Dilip
Tandon, Harish N. Salve, Rajiv Shakdher for the appearing parties. c

-~ The Judgment of the Court was delivered by

VENKATACHALIAH, J. Special Leave Petitions (Civil) 4761
and 4762 of 1985 are by the State of Uttar Pradesh and its officers and D
SLJ?s 13298 and 11498 of 1987 by the Lucknow Development Author-
ity, {LO A for short) a statutory body constituted under Sec. 4( 1) of the
Uttar Pradesh Urban Planning & Development Act, 1973 (Act for
short) and its Authorities. Seeking special leave to appeal from the
X common judgment dated 8.12.1986 of the High Court of Judicature,
.. Allahabad, in Writ Petition Nos. 6819 of 1985 and 367 of 1986 which
were heard and decided along with three other writ-petitions i.e. WP
E

5521 & 5699 of 1985 and 3463 of 1986.

Special leave petitions 11515 of 1987 and SLP 11499 of 1987 are
,.J by the LDA and its Authorities directed against the said common
~!~judgment dated 8.12.1986 in so far as it pertains respectively to W.P. F
5699 of 1985 and 5521 of 1985: Special leave petition 11220 of 1987 is
by the LDA and its Authorities seeking leave to appeal from the Order
in W .P. 3463 of 1986.

2. The Writ-petitions before the High Court were preferred by
the Respondent Lessees Sri D.P. Singh and his mother Smt. Raj G
Lakshmi Devi, the heirs of Maharaja Pateshwari Prasad Singh in
respect of Nazool land in Plot No. 10, Ashok Marg, Hasratganj, Luck-
now, under deed dated 7.10.1961 commencing from 15.11.1961 and
stated to expire on 31.3.1991. The proceedings arose out of two mat-
ters. The first pertained to the legality of the Notice dated 19.11.1985
issued by the State Qovernment in cancelling the lease. The cancella- H
184 SUPREME COURT REPORTS [1989] 1 S.C.R.

tion was challenged in two writ-petitions filed separately by Sri D.P. -+
A Singh and Smt. Raj Lakshmi Devi in W.P. 6819 of 1985 and WP 367 of
1986 respectively. The High Court by its common order dated
8.12.1986 allowing the said two writ-petitions quashed the said cancel-
lation. In SLPs 4761 and 4762 of 1987 and in SLPs 13298 and 11498 of
1987 the Lucknow Development Authority have assailed this part of
B the common order.
\·
The second area of the controversy arises out of the order dated
19.4.1986 of the Vice-Chairman, Lucknow Development Authority,
(LDA for short) cancelling the earlier order dated 31.1.1985 granting
permission under Sec. 15 of the Act in favour of the Respondent
Le:;sees to develop the lease-hold property by errecting thereon a
C multi-storeyed building called "Balarampur Towers" comprising of
flats etc. This cancellation was challenged by the two Lessees in the
joint writ-petition No 3463 of 1986. The High Court allowed this Writ-
Petition also and has quashed the impugned order dated 19.4.1986 by
which the permission to build earlier granted was sought to be
D revoked. In SLP 11220 of 1987 the LDA seeks leave to appeal against
this part of the order.

WPs 5699 of 1985 and 5521 of 1985 from which the LDA has
preferred SLP 11515 of 1987 and SLP 11499 of 1987 respectively do not
relate to or bear upon the substantial points of controversy between 'A
E the parties. They relate to certain incidental matters. Accordingly
SLPs 11515 of 1987 and SLP 11499 of 1987 would be governed by the
order made in the main SLPs.
:
3. Special leave is granted in all the petitions. We have heard Sri
D.D. Thakur. learned Senior Counsel for the LDA and its authorities;-~
F Sri Yogeshwar Prasad, learned senior counsel for the State of Uttar ~~
Pradesh and its officers and Sri Soli J. Sorabjee for the respondent-
Lessees.

The subject matter of the lease is stated to be an extent of about
9885 Sq. Metres of Nazool land, which was comprised in the lease in
G favour of a certain Mr. Edwards, granted in the year 1901 for a period
of 30 'years in the first-instance, with provision for renewal for two
more terms of 30 years each. On 6.11.1936, there was the first renewal
for 30 years effective from 1.4.1931 in favour of a certain Sri Syed Ali
Zahir, a transferee from Mr. Ed\\ards. Sri Syed Ali Zaheer assigned
his interest under the lease in favour of Maharaja Pateshwari Prasad
H Sing-,h of Balrampur. On 7.10.1961, there was a second renewal in
STATE OF U.P. v. D.P. SINGH [VENKATACHALIAH, J.] 185

-i-- favour of the present respondents, as the heirs of the said Maharaja Sri A
Pateshwari Prasad Singh.

4. On 11.8.1981, Respondent-lessees, in collaboration with M/s
Ambar Builders (P) Limited applied to the LDA under Sec. 15(1) of
the Act for permission to put up a multi-storeyed building on the
.) demised property. The permission was refused on the ground, inter B
alia, that the proposed construction would bring about a change in the
user permitted under the lease. The lessees preferred an appeal before
the Appellate Authority who dismissed their appeal. The Revision-
~ Petition filed by the lessees before the Government under Sec. 41(1) of
the Act was partly allowed and the Government by its order dated
15.10.1984, remitted the matter to the appropriate authority under the
, Act for a fresh consideration. On 31.3.1984, during the pendency of c
·t-
the revision-petition respondents submitted a modified plan, styling
the construction as consisting of "residential-flats". After remand, the
Nazool Officer is said to have given his "No objection Certificate"
dated 2.12.1984 for the grant of permission. The power of attorney
holder of respondents, a certain Sri Pawan Kumar Aggarwal, filed an D
affidavit dated 28.12.1984 before the appropriate authority of the
LDA in regard to their being no impediment under Urban Ceiling
Laws and the manner in which the Lessees propose to comply with
xany order that may eventually be made in that behalf. Finally on
23 .1.1985, the Vice-Chairman of LDA sanctioned the permission. This
was forµially communicated to the Respondents on 31.1.1985. The E
lessees were required to, and did, deposit Rs. 53,440 with the LDA
;
towards what was called 'Malba' charges. This marked one stage of the
proceedings.

·t
--. 5. The next stage of the matter opened on 24.7.1985 with the
issue of directions from Government purporting to be under sec. 41(1) F
of the Act interdicting the progress of the construction as, in the view
of the Government, the lessees had violated the conditions of the
lease; that the matter would require further examination and that any
further construction in the meanwhile would create avoidable hardship
to themselves. In W.P. 3732 of 1985 Respondent-Lessees challenged
this direction of the Government before the High Court, which G

+ allowed the petition and quashed those directions.

Thereafter, on 12.8.1985, the Government brought to the notice
of the then Vice-Chairman of the LDA what, according to Govern-
ment, were serious illegalities in the sanction of the permission dated
31.1.1985 and indicated to the Vice-Chairman that sanction earlier H
186 SUPREME COURT REPORTS [1989] 1 S.C.R.

granted on 31. 1. 1985 be reviewed and r,evoked. The Vice-Chairman, -+
A
however, did not appear to share the view of Government either as to
the existence of any legal infirmities in the grant of permission or as to
the availability and the justifiability of review of the permission
suggested by Government. The disinclination of the Vice-Chairman in
this behalf was communicated to the Government by letter dated
B 12. 9.1985. This marked yet another stage of the proceedings.

6. The State Government, apparently, was in no mood to relent.
By communication No. 5062-37-37-3-1985 dated 15.10.1985 Shri . _
Kamal Pandey, the then Secretary to Government of Uttar Pradesh, ~
wrote to the Chairman, LOA recapitulating therein the previous pro-
ceedings in the matter of grant of permission for the "Balrampur-
c Towers" on the lease-land and enumerating what, according to Gov- \. _
ernment, were serious infirmities in, and illegalities resulting from, the --'r
permission and as to how the construction violated the terms and
conditions of the lease and directed the Chairman, LOA, to initiate
immediate proceedings as directed in the said communication. To that
D letter was annexed, a show-cause notice which the Chairman was
asked to serve on the Lessees and the Builders associated with the
construction. It is necessary to excerpt some portion of that
communication.

"It has come to the notice of the Govt. that in obtaining the
E said permission the following illegalities, irregularities,
material misrepresentation, fraudulent statements, con-
cealments of material facts etc. "!'_pear to have been com-
mitted."

Referring to the various alleged illegalities, and breaches of-t.
F ·covenants and of violations of law which, according to Government,
vitiated the grant of permission to build and also render the lease liable
to forfeiture. The communication proceeded to direct the Chai1man.

"Therefore, the Governor is pleased to direct you to
serve the enclosed show cause notice in the Maharani, Sri
Singh and Builders and obtain their explanation within
G
three days of the service of the noticf" give them an -f
opportunity of hearing on the fourth day and submit your
comments on the explanation along with your recommen-
dations in the light of the above mentioned circumstances
along with your report fixing the responsibility on the Vice-
H Chairm.an of the Lucknow Development Authority and
STATE OF U.P. v. D.P. SINGH [VENKATAcHALIAH, J.[ 187

Officers/Officials of the Nazul and building section latest
A
by 28th October, 1985."

The relevant portions of the show cause notice annexed to the
said letter and intended to be, and was later, served on the r%-
ponden~~-Lessees said:
. B
"Therefore, in compliance with the instructions of the
Govt. Maharani Raj Laxmi Kumari Devi Sahiba and Sri
Singh and M/s Ambar Builders (P) Ltd. are hereby given
the show cause notice and an opportunity of hearing and
they are required to explain within three days of the receipt
of this notice as to why the Nazul lease granted in their C
favour be not cancelled and the unauthorised construction
,
be not demolished for breach of the lease conditions and
·t. violation of the provisions of Urban Land and Ceiling Act
and for making fraudulent statement and misrepresenta·
tion in respect of the land use in Lucknow Master Plan and
on account of continuing constructions on the basis of D
fraudulently obtained building permission."

"If the desired explanation is not received within
three days of the service of this notice by the undersigned,
it will be presumed that they have nothing to say in their
defence and thereafter action for cancellation of nazul E
lease and building permit and the removal of the un-
-
J
authorised constructions will be taken along with their pro-
secution for fraudulent statement and misrepresentation as
contained in the affidavit."

8. The respondents filed their objections and representations F
against the proposed cancellation. But Government, by its order No.
5496/37-3/85 dated 19.11.1985, found the explanation unacceptable to
it and proceeded to terminate the lease. The operative part of the
"notice" terminating the lease reads:

"Now therefore on account of the aforesaid breach of G
the lease conditions the Governor of U.P. does hereby
+· terminate the lease. You are required to hand over posses-
sion of the land and building standing thereon to Collector,
Lucknow, within 30 days of the receipt of this notice
otherwise action for eviction will be taken against you at
your cost." H
188 SUPREME COURT REPORTS [1989] 1 S.C.R.

A This order was, as stated earlier, challenged by the respondent- .-+·
lessees in WP No. 3463 of 1986 before the High Court.

9. So far as the permission for development of the property
earlier granted on 31.1.1985 was concerned, separate action was taken
by the Vice-Chairman of the LDA who issued the notice dated
B 9 .1.1986 to the respondents requiring them to show-cause why the
permission should not be cancelled. Respondents objected to the
proposed action; but the Vice Chairman found the objections un-
acceptable and proceeded, by his order No. 363NC/RB0/86 dated
19.4.1986, to cancel the permission.

The operative portion of the said order dated 19 .4.1986 reads:
c
"From the above it is clear that the.above irregulari- --'f-
ties, material mis-representation and fradulent statements
have been made along with the building map-plan and
other documents submitted by Sri D.P. Singh and he has
D deliberately concealed material facts and mislead the
Authority. Therefore, the permission dated 31.1.1985
granted to him is being cancelled."

The two Lessees challenged this cancellation before the High ;A
Court in two separate writ petitions filed by each of them in WP 6819
E of 1985 and WP 367 of 1986 respectively.

10. The High Court was persuaded to the view that the pro-
ceedings initiated and the action taken by the Government and the
Vice-Chairman of the LDA in the matter, respectively, of forfeiture of
the lease and the cancellation of the permission to build were both
F infirm in law and required to be quashed. Accordingly, writ petitions
t
6819 of 1985 and WP 367 of 1986 were allowed and the order dated
19 .11.1985 of the Government purporting to cancel the lease was
quashed.

Likewise, WP 3463 of 1986 filed jointly by the Lessees was
G allowed and the show cause notice dated 9 .1.1986 as well as the order
dated 19.4.1986 of the Vice-Chairman cancelling the permission were
quashed.
-+
11. We may first take up the appeals of the State Government
and of the LDA assailing the order of the High Court quashing the
H Cl!Jlcellation of the lease. Sri Yogeshwar Prasad for the appellants
STATE OF U.P. v. D.P. SINGH IVENKATACHALIAH, J.] 189

submitted that the High Court fell into an error in allowing a matter, A
which should properly have been the subject-matter of a civil-suit, to
be agitated in proceedings under Article 226 of the Constitution.
Learned counsel submitted that the relationship between the parties
was one of the Lessor and Lessee; the dispute between them pertained
to the question whether there were breaches and non-performance of
the covenants and conditions of the lease justifying the forfeiture of B
the lease, and that these matters, pertained to a private law situation
and were not appropriately matters for enforcement of public law
remedies. Learned Counsel further submitted that the question
whether there were breaches of covenants on the part of the lessee
involved the construction of the terms of the lease-deed and required
evidence on the matter. Disputes of this nature, learned counsel sub-
mitted, could not be resolved on mere affidavits. Thirdly, Sri Yogesh- C
war Prasad submitted that on the merits of the contentions, the High
Court should have noticed that even on the facts admitted, there were
clear violations of the covenants and conditions of the lease. Learned
counsel also submitted that the view of the High Court that a reason-
able opportunity of being heard had been denied to the respondents D
was erroneous and that, at all events, no hearing could be contemp-
lated in the context for forfeiture of a lease of this nature.

Sri Sorabjee for the respondents contended that the State,. even
as a lessor, could not act arbitrarily either in the grant or premature

-
termination of the leases of public property and disputes arising in E
such contexts cannot always be reckoned as private law situations and
that, at all events, the threatened exercise of extra-judicial re-entry by
the State, being violative both of the limitations of the powers of the
State as lessor under the law of landlord and tenant and of its actions
as State, is a matter which requires to be mandated against.
F
12. The show-cause notice preceding the cancellation of the
lease and the decision dated 19.11.1985 to cancel the lease, refer to
and rely upon 10 grounds .. Grounds 1 to 7 pertain to what the Govern-
ment consider to be violations and breaches of the terms and condi-
tions of the lease. They pertain to an alleged change of user, to sub-
letting and sub-division of the leasehold property. The grounds also G
+- refer to the alleged non disclosure of the terms and conditions of the
Memorandum dated 7. 7 .1984 between the Lessees on the one hand
and Messrs Amar Builders Private Limited on the other. The grounds
for forfeiture also refer to the likelihood of fraud being practised on
the prospective purchasers of the flats as to the nature and extent of
the lessees' subsisting interest under the lease and the limitations H
thereon.
190 SUPREME COURT REPORTS [1989] 1 S.C.R.

A We do not propose to go into the merits of these grounds and
their sufficiency in law to support the purported forfeiture as, in our
view, this exercise, having regard to the disputed questions of fact that
are required to be gone into in that behalf, are extraneous to proceed-
ings under Article 226 of the Constitution.

El 13. In regard to the merits of the grounds for forfeiture of the ~

lease, the High Court after an elaborate discussion of the relevance '
and tenability of each of the grounds, the learned judge held: c

"From the comments made by me on the above nine ~
gronnds it would be seen that some of the grounds are
irrelevant or illusory or based on irrelevant material or on
c ·non-existent facts and some require serious consideration
which has not been given. It has also been seen that while J.- I

under the lease-deed the right of re-entry could be exer-
cised only for a breach of the term of the lease in presenti,
the lease has been cancelled for a breach in future. In this
D view of the matter the impugned order of the State Govern-
ment cannot be sustained."

Shri Yogeshwar Prasad says that this exercise ..:as extraneous to
a proceeding under Article 226 as the question whether the construc-
tion with 39 flats would be one unit or multiplicity of units; whether if

-
E third party rights were created by the transfer, or use, of the flat, that
would amount to sub-letting or assignment; or would, in any other
way, violate the terms and conditions of the lease and the like, would
not be matters that admit of being satisfactorily resolved on mere
affidavits. Learned counsel submitted that even according to the
learned judges there were serious questions to be examined.
F
14. On a consideration of the matter, we think, in the facts and
circumstances of this case, the High Court should have abstained from
ihe examination of the legality or correctness of the purported cancella-
tion of the lease which involved resolution of disputes on questions of
fact as well. In Express News Papers v. Union of India, [1985] Supp. 3
G SCR 382 Venkataramiah, J. in a somewhat analogous situation
observed:
"The rest of the questions relate truly to the civil rights
of the parties flowing from the lease deed. Those questions
cannot be effectively disposed of in this petition under Article
32 of the Constitution. The questions arising out of the lease,
such as, whether there has been breach of the convenants
STATE OF U.P. v. D.P. SINGH [VENKATACHALIAH, J.] 191

under the lease, whether the lease can be forfeited, whether A
relief against forfeiture can be granted etc. are foreign to the
scope of Article 32 of the Constitution. They cannot be deci-
ded just on affidavits. These are matters which should be tried
in a regular civil proceeding. One should remember that the
prope_rty belongs to the Union of India and the rights in it
cannot be bartered away in accordance with the sweet will of B
an Officer or a Minister or a Lt. Governor but they should be
_dealt with in accordance with law. At the same time a person
who has acquired rights in such property cannot also be depri-
ved of them except in accordance with law. The stakes in this
case are very high for both the parties and neither of them can
take law into his own hands."
c
Accordingly, we hold that the question whether the purported
forfeiture and cancellation of the lease were valid or not should not
have been allowed to be agitated in proceedings under Article 226.

15. Sri Sorabjee submitted that great hardship and injustice D
would be occasioned to the respondents if the State Government, on
the self-assumed and self-assessed validity of its own action of cancel-
lation of the lease, attempts at and succeeds in, a resumption of pos-
-~ session extra-judicially by physical force. Sri Sorabjee referred to the
notice dated 19.11.1985 in which the Government, according to Sri
Sorabjee, had left no-one in doubt as to its intentions of resorting to an E
extra-judicial resumption of possession. Sri Sorabjee referred to paras
,. 3. 10 and 4 of the order dated 19 .11.1985.
A lessor, with the best of title, has no right to resume possession
I extra-judicially by use of force, from a lessee, even after the expiry or
.__j earlier termination of the lease by forfeiture or otherwise. Tue use of
the expression 're-entry' in the lease-deed does not. authorise extra- F
judicial methods to resume possession. Under law, the possession of a
lessee, even after the expiry or its earlier termination is juridical pos-
session and forcible dispossession is prohibited; a lessee carmot be
dispossessed otherwise than in due course of law. In the present case,
the fact that the lessor is the State does not place it in any higher or
better position. On the contrary, it is under an additional inhibition G
-~· stemming from the requirement that all actions of Government and
Governmental authorities should have a 'legal pedigree'. In Bishandas
v. State of Punjab, [1962] 2 SCR 69this Court said:

"We must, therefore, repel the argument based on
the contention that the petitioners were trespassers and H
192 SUPREME COURT REPORTS [1989) 1 S.C.R.

could be removed by an executive order. The argument is
A
not only specious but highly dangerous by reason of its
implications and impact on law and order."

"Before we part with this case, we feel it our duty to
say that the executive action taken in this case by the State
B and its officers is destructive of the basic principle of the
rule oflaw."

Therefore, there is no question in the present case of the
Government thinking of appropriating to itself an extra-judicial right
of re-entry. Possession can be resumed by Government only in a man-
ner known to or recognised by law. It cannot resume possession
C otherwise than in accordance with law. Government is, accordingly,
prohibited from taking possession otherwise than in due course of law.

In the result, the appeals of the State of Uttar Pradrsh (SLPs
4761 and 4762 of 1987) and of the LDA (SLPs 13298 and 11498 of
D 1987) directed against the common Judgment dated 8.12.1986 in so far
as it pertains to WP 6819 of 1985 and WP '367 of 1986 are allowed and
the said two writ petitions are dismissed, leaving the question of the
legality and validjty of the purported cancellation of the lease and the
defence of the lessees open to be urged in appropriate legal proceed-
ings, whenever and wherever Government proceeds to initiate action
E in accordance with law for resumption of possession on the basis of the
alleged cancellation or forfeiture of the lease. Any developmental
work that may be made by the lessees or at their instance would, of .
course, be at their own risk and shall be subjc'ct to the result of such
proceedings.

F 17. We may now turn to the controversy of the cancellation or
revocation dated 19.4.1986 of the permission earlier gran~ed under
section 15 of the "Act", which was the subject matter of writ petition
No. 3463 of 1986. The order of revocation was passed by the successor
Vice-Chairman, Shri Govindan Nair, IAS. The earlier permission was
granted by the then Vice-Chairman, Sbri Babu Ram.
G
A show cause notice dated 9.1.1986 preceding the cancellation _.,
was issued by Vice-Chairman, Shri Govindan· Nair himself. The order
dated 19.4.1986 revoking the permission was challenged before the
High Court on four grounds, viz., (a) that the lessees had had no reason··
able opportunity of showing cause against the action proposed in the
B: notice dated 9.1.1986 and that an opportunity of an oral hearing had
STAIB OF U.P. v. D.P. SINGH [VENKATACHALIAH, J.] 193

been denied; (b) that the Vice-Chairman, under the provisions of the A
Act had no authority or power to revoke a permission once granted;
( c) that, at all events, the lessees having incurred enormous expendi-
ture on the development work, and having, on the strength of the
permission granted earlier on 31.1.1985, altered their position substan-
tially to their disadvantage, the Vice-Chairman was estopped from
revoking the permission on principles of promissory estoppel; and (d) B
that the grounds on which cancellation rested were themselves irrelev-
ant and insufficient in law to support the cancellation. The High Court
accepted grounds at (a), (b) and (d). It did not find it necessary to go
into ground (c) in regard to which the High Court observed:

"The petitioners also contended that the Vice-
Chairrnan of Lucknow Development Authority was estop- c
pe,d from cancelling the sanction to build, more so when it
was acted upon ....................... In the instant
case this question need not be gone into detail inasmuch as
sanction to· build was sought to be cancelled on the ground
of suppression of material facts, fraud and misrepresenta- D
tion etc."

In regard to the Lessees', grievance at (a) supra of denial of
natural justice, the High Court said:

"He even did not give any opportunity of hearing to the E
petitioner on the said question and passed 8n order some
2V2 months thereafter without even touching the objection
of the petitioner regarding the competence and jurisdiction
of the Vice-Chairman. Some new facts which found place
in para 3 of the show cause notice aiso found place in the
order. The Vice-Chairman did· not make any enquiry into F
those facts including construction of three buildings in the
city itself and as such it became still more necessary mi him
to give atieast a personal hearing to the petitioner. As hear-
ing has not been given to the petitioner although there was
enough time for the same, the order passed by the Vice-
Chairman violates the principles of natural justice and can- G
not be sustained.

On the contention (b ), the High Court held that the Vice-
Chairman had no power to review the earlier order. The High Court
was of the view-and this is exactly the opposite of Sri Sorabjee's
.contention before us-that the Vice-Chairman could derive power to H
194 SUPREME COURT REPORTS [1989] 1 S.C.R.

A
review only if he had been empowered by Government by a direction -t-
under section 41(1) of the Act. The High Court said:

"It has not been pleaded by opposite parties that on
9.1.1986 when the new Vice-Chairman took over charge or
on any date thereafter the state Government issued any
B direction to him to issue any show cause notice to the f
petitioners. There is no other provision in the Develop-
ment Act conferring powers on the Vice-Chairman to
review the decision in the matter of sanctioning a plan to
build. In the absence of any provision in the Act or any )..-./
direction issued by the State Government, the Vice-
Chairman had no jurisdiction or authority to reconsider the
c decision granting sanction to a plan i.e. permit to build
after the same was acted upon and constructions were
being made only in accordance with it."
.+-
As to ground (d), the Higb Court examined the merits of each of
D the grounds and, in substance, came to the conclusion that the grounds
were either irrelevant or, otherwise, insufficient in law to support the
purported cancellation. The Higb Court held:

"The above discussion shows that even thougb fraud, mis-
representation and concealment of facts etc. on the part of
the petitioners having not been made out, yet such con-
clusions have been arrived at. The matter essentially
hinged on the meaning and interpretation of the word
'Building' and instead of doing it in the right and correct
..
perspectives, suspicion 'and presumptions have been made

F
in arriving at the conclusions so arrived at." t:
19. Shri Thakur assailed the conclusions reached by the Higb
Court on all the three questions. Learned counsel urged that the order
dated 19 .4.1986 itself discloses the extent of the opportunities afforded
to the Lessees and there could, therefore, be no question of failure of
natural justice in this case. As to the Vice-Chairman's power to cancel
G or to revoke a permission earlier granted, Sri Thakur submitted that if
the permission had been obtained by the lessees by misrepresentation
or fraud or, if after obtaining the permission there had been violation -+'
of the terms and conditions of the grant, the statutory authority grant-
ing the permission has itself the inherent and incidental and supple-
mental powers to revoke the permission, and that no express grant of
h power in this 'behalf was necessary. Shri Thakur submitted that the
STATE OF U.P. v. D.P. SINGH [VENKATACHALIAH, J.I 195

grounds in this case related not only to fraud and misrepresentation
A
practised at the time of securing the permission but also violation of
the terms and conditions of the grant itself. He further submitted that
there was material on record to show that the officers and the
authorities of the LDA concerned with the grant of' the permission
under section 15 had betrayed the trust reposed in them by the statute
and were disloyal to the Development Authority and on that ground B
also the successor Vice-Chairman could revoke and rescind the sanc-
tion so vitiated by fraud. Shri Thakur relied upon Sec. 21 of General
Clauses Act for the exercise of the power to revoke.

20. Shri Sorabjee for the Lessees, however, maintained that the
Vice-Chairman, having regard to the nature of the allegations on
which the revocation is purported and which fell in the last category c
mentioned by Sri Thakur, had no authority in law to cancel the permis-
sion. He submitted that the view of the High Court as to the irrele-
vance and insufficiency in law of the grounds on which the purported
cancellation was based were correct as they were well known
administrative law tests of administrative or statutory discretion, and D
that appeal to Section 21 of the General Clauses Act to sustain the
review was wholly inapposite in this case. Sri Sorabjee submitted that
the power to cancel or revoke a licence or permission, even assuming
that the Statute enabled such cancellation, was clearly distinguishable
from a power of refusal of an initial grant and that the exercise of the
power of cancellation which prejudically affects vested rights partake

-
E
predominently of quasi-judicial complexion and where, as here, such
power is resorted to at the behest of some-body extraneous to the
power, there would be an abdication and surrender of the statutory
discretion vitiating the decision. Sri Sorabjee said that the Vice-
Chairman, even granting that he had power to cancel, acted at the
behest of the Government which purported to Act under Section 41(1) F
issued directives on 12.8.1985 and on 15.10.1985 overriding the dis-
cretion oft.he Vice-Chairman.

21. To appreciate these contentions in their proper perspective
it is necessary to notice the scheme of the Act in relation to the Regu-
lation of Development in the "Development Area" under the Act. G
The preamble of the Act says:

"In the developing areas of the State of Uttar Pradesh the
problems of town planning and urban development need to
be tackled resolutely. The existing local bodies and other
authorities in spite of their best efforts have not. been able H
196 SUPREME COURT REPORTS 11989] 1 S.C.R.

to cope with these problems to the desired extent. In order
A to bring about improvement in this situation, the State
Government considered it advisable that in such develop-
ing areas, Development Authorities patterned on the Delhi
Development Authority be established. As the State Gov-
ernment was of the view that the urban development and
B planning work in the State had already been delayed it was
felt necessary to provide for early establishment of such
Authorities."

Sec. 2(b), (e) and (f) defines "building" "Development" and
"Development Area":
c "2(b) 'building' includes any structure or erection or
part of a structure or erection which is intended to be used
for residential, industrial, commercial or other purposes
whether in actual use or not."

D "2(e) 'development". with its grammatical varia-
tions, means the carrying out of building, engineering, min-
ing or other operations in, on over or under land, or the
making of any material change in any building or land, and
includes re-development."

E "2(f) 'development area' means any area declared to
be development area under Section 3." ·

Section 3 provides: -
"Declaration of development areas: If in the opinfon ~- ·.
F of the State Government any area within the State reqmres
to be developed according to plan it may, by notification in
the Gazette, declare the area to be a development area."

Section 14(1) provides:

G Development of land in the developed area.-After
the declaration of any area as development area under Sec-
tion 3, no development of land shall be undertaken or car-
ried out or continued in that area by any person or body
+
(including a department of Government) unless permission
for such development has been obtained in writing from the
H (Vice-Chairman) in accordance with the provisions of this
Act."
1, ••
STATE OF U.P. v. O.P. SINGH [VENKATACHALIAH, J.] 197

Section 15(1) provides:
A
"Application for permission-Every person or body
(other than any department of Government or any local
authority) desiring to obtain the permission referred to in
Section 14 shall make an application in writing to the (Vice-
Chairman) in such form and containing such particulars in B
respect of the development to which the application relates
as may be prescribed by (bye laws)."

Section 15(3) provides that on receipt of an application for
permission for development, the Vice-Chairman, after making such
enquiry as he considers necess~ry in relation to matters specified in
Sec. 9(2)( d) or any other matter by order in writing either grant the
c
permission subject to such conditions as he may specify or refuse the
permission. The Vice-Chairman, for purposes of Section 15(3) is a
distinct statutory authority with statutory powers of his own distinct
from the "Development Authority" which under section 4(2) is a body
corporate having perpetual succession and common seal. D

Section 15(5) contemplates and enables an appeal to the
Chairman against an order made by the Vice-Chairman refusing
~· permission.

Section 37, inter alia, makes an order of the Vice-Chairman E

.. made under Sec. 15 final .

22. Section 41(3) enables the State Government either on its own
motion or on an application made to it in this behalf to call for the
-- -
j '
records of any case disposed of or order passed by the Authority or the
Chairman for purposes of satisfying itself as to its legality or propriety F
and may pass such orders or issue such directionns in relation thereto
as it may think fit. It is relevant to note that an order made by an
Vice-Chairman under Se.c. 15(3) of the Act granting permission is not ....
one of the orders revisable by Government under section 41(3). Such
an order, under the scheme of the Act, is not also appealable liut
assumes a finality contemplated by Sec. 37. G

23. Sec. 41(1) of the Act provides:

"Control by State Government-The (Authority, the
Chairman or the Vice-Chairman) shall carry out such direc-
tions as may be issued to it from time to time by the State H
198 SUPREME COURT REPORTS [1989] 1 S.C.R.

Government for the efficient administration of this Act."
A
This power of the State Government consistent with the scheme
of the Act, cannot be construed as a source of power to authorise any
authority or functionary under the Act to do or carry out something
which that authority or functionary is not, otherwise, competent to do
B or carryout under the Act. Section 41(1) is not a Super Henry VITT
clause for the supply or source of additional provisions and powers not
already obtaining under the 'Act'.

Sri Sorab jee for the Lessees says that the proceedings for cancel-
lation were initiated at the instance of and compelled by the directives
issued by Government under Section 41( 1) and that therefore there
C was a surrender of discretion by the statutory Authority viz., the Vice-
Chairman. Here is a piquant situation. The High Court says that sec-
tion 41(1) could authorise the Vice-Chairman to review the earlier
permission but that there being no such directive, the Vice-Chairman
had no power to review. The High Court was in effect, held that the
D earlier directive dated 15.10.1985 under Sec. 41(1) was limited to the
cancellation of the lease and for suspension of the building work in the
interrugnam as incidental thereto and that the show cause notice dated
9. 1.1986 for cancellation of the permission was not pursuant to any
directive under Sec. 41(1). Thus, the legal position which the High
Court assumes as to the scope of Sec. 41( l) is precisely what Shri

-
E Sorabjee contends against.

22. It appears to us that view of the High Court that in the
absence of a directive or authorisation from the Government under
Section 41(1), the Vice-Chairman, acting as the statutory authority
dispensing permissions for development under the Act, cannot revoke
F or cancel a permission once granted is clearly erroneous. In this case
the grant of permission is part of or incidental to the statutory power to
regulate orderly development of the "Development Area" under the
Act under Regulatory Laws. The power to regulate with the obliga-
tions and functions that go with and are incidental to it, are not spent
or exhausted with the grant of permission. The power of regulation
G which stretches beyond the mere grant of permission, takes within its
sweep the power, in appropriate cases, to revoke or cancel the permis-
sion as incidental or supplemental to the power to grant. Otherwise
the planitude of the power to regulate would be whittled down or even
frustrated.

H It is erroneous to equate the powers under sections 14 and 15 of
STATE OF U.P. v. D.P. SINGH [VENKATACHALIAH, J.J 199
.__,l
, ' the Act with Judicial power which, in the absence of express provi- A
'
sions, could not enable the review of a judicial order after its exercise
on the principle of Functus-Officio. In Sardul Singh v. The District
Food and Supplies Controller, Patiala and Ors., in writ petition 126/
1962 DD 19.12.1962 a statutory order, promulgated under sec 3 of the
Essential Commodities Act, 1955, contained a provision enabling the
·+ cancellation of a 'permit' under certain circumstances. The contention B
was that section 3 of the parent 'Act' itself did not delegate to the
subordinate legislative authority to make such a provision for cancella-
tion and, therefore, the provision for cancellation in the subordinate
legislature was ultra vires. There was no provision in the Act expressly
conferring the power to make a provision for cancellation of the
permit. Section 3(2)( d) of the parent Act merely enabled the govern-
ment to make orders "for Regulating by licences, permits or other- c
wise, the storage, transport, distribution, disposal, acquisition, use or
consumption of any essential commodity" and Section 3(2)(j) merely
enabled Government to make orders for incidental and supplementary
matters (emphasis supplied). The question arose whether provisions
for cancellation of the permits envisaged in para 10 of the particular D
statutory order could be said to be relatable to or justified as a matter
incidental or supplementary to Regulation. This Court held that the
power to cancel was an "incidental and supplementary" matter. It was
held:

"If a trade in an essential commodity like coal is to be E
regulated by licenses . or permits, it is obvious that the
power to grant licenses or permits must include the power
to cancel or suspend such licenses or permits as an "inciden-
tal or supplementary matter"; otherwise, the very purpose
of S. 3 of the Act would be frustrated."
F
23. Indeed, the submissions of Sri Thakur on the point con-
template the exercise of the power to cancel or revoke the permission
in three distinct situations. The first is where the grant is itself vitiated
by fraud or misrepresentation on the part of the grantee at the time of
.obtaining the grant. To the second situation belong the class of cases
where the grantee, after the grant violates the essential terms and G
conditions subject to which the grant is made. In these two areas, the
power to grant must be held to include the power to revoke or cancel
the permit, even in the absence of any other express statutory provi-
sions in that behalf. There must, of course be the compliance with the
requirements of natural justice and the grounds must be such. as would
justify such drastic action. This cancellation is a preventive step. The H
200 SUPREME COURT REPORTS [1989] I S.C.R.

one aspect of the remedial measures is set-out in Section 27 of the Act.
A
There may be cases of third kind where the grant may be voidable at
the instance of the Development Authority or otherwise entitling the
Development Authority to initiate appropriate declaratory or other
action to get rid of the effect of the permission.

B It is trne that in exercise of powers of revoking or cancelling the
permission is akin to and partakes of a quasi-judicial complexion and
that in exercising of the former power the authority must bring to bear
an unbiased mind, consider impartially the objections raised by the
aggrieved party and decide the matter consistent with the principles of
natur:il justice. The authority cannot permit its decision to be
influenced by the dictation of others as this would amount to abdica-
C tion and surrender of its discretion. It would then not be the Authori-
ty's discretion that is exercised, but someone else's. If an authority +-
"hands over its discretion to another body it acts ultra vires". Such an
interference by a person or body extraneous to the power would
plainly be contrary to the nature of the power conferred upon the
D authority. De Smith sums up the position thus:

"The relevant principles formulated by the courts
may be broadly summarised as follows. The authority in
which a discretion is vested can be compelled to exercise
that discretion, but not to exercise it in any particular man-
E ner. In general, a discretion must be exercised only by the
authority to which it is committed. That authority must
;
genuinely address itself to the matter before it: it must not
act under the dictation of another body or disable itself
from exercising a discretion in each individual case. In the
purported exercise of its discretion it must not do what it
F has been forbidden to do, nor must it do what it has not
been authorised to do. It must act in good faith, must have
regard to all relevant considerations and must not be
swayed by .jrrelevant considerations, must not seek to pro-
mote purposes alien to the letter or to the spirit of the
legislation that gives it power to act, and must not act
G arbitrarily or capriciously. Nor where a judgment must be
made that certain facts ens! can a discretion be validly
exercised on the basis of an erroneous assumptio_n about
those facts. These several principles can conveniently be
grouped in two main categories: failure to exercise a discre-
tion, and excess or abuse of discretionary power. The two
H classes are not, however, mutually exclusive."
STATE OF U.P. v. D.P. SINGH [VENKATACHALIAH, J.I 201

25. But the question is whether the issue of the show cause
A
notice or the subsequent decision to cancel could be said to have been
made at the behest or compulsion of Government. Shri Sorabjee refers
to paragraphs 17 and 18 of Shri Kamal Pandey's letter dated
15.10.1985. We are not sure that this is a correct understandin.g of the
position. The High Court did not see any casual connection between
the Government's directive dated 15.10. 1985 and the proceedings B
initiated by the Vice-Chairman on 9 .1.1986. The High Court was of
the view that directive confined itself to the cancellation of the lease
and as incidental thereto, required the stoppage of work pending deci-
sion whether the lease should be cancelled or not. This infact, was the
basis for holding that the Vice-Chairman had no power to cancel.
Lessees do not rely upon any subsequent directive to the Vice-
Chairman from the Government in the matter of revocation of the c
permissi1m. The earlier directive dated 12.8.1985 from the Govern-
ment to the Vice-Chairman speQt itself out with the then Vice-
Chaiffl!an declining to act in accordance with It. There is no material
to hold that Sri Govardhan Nair felt himself bound by that directive.
Sri ~orabjee's contention based on an alleged surrender of discretion D
cannot, therefore, be upheld.

26. It has, therefore, to be held that the finding of the High
Court that the Vice-Chairman had no competence to initiate proceed-
ings to revoke the permission on the ground t])at the permission itself

-
had been obtained by misrepresentation and fraud and on the ground E
that there were violations of the conditions of the grant, appear to us
to be unsupportable. The contention of the Respondent-Lessees that
the Sb<!W cause notice, dated 9.1.1986 and the cancellation order,
. ,J dated 19 .4.1986, are vitiated by a surrender of a discretion on the part
.~f of the Vice-Chairman cannot also be held to be well-founded. Sri
Thakur's contention to the contrary on both these points would f
require to be accepted.

27. Now in the end, two more findings of the High Court remain
to be considered, viz., on the Lessees' grievance of denial of reason-
able opportunity of being heard and the validity and sufficiency of the
alleged grounds to sustain the cancellation. We may consider the lat- G
ter, first:

28. It not unoften happens that what appears to be a judicial
review for breach of natural justice is, in reality, a review for abuse of
discretion. It is true that amongst the in.any grounds put forward in the
show cause notice dated 19.1.1986, qui.tea few overlap each other and H
202 SUPREME COURT REPORTS [1989) 1 S.C.R.

are distinguishable from those urged for the cancellation of the lease
A
itself. Some of the grounds might, perhaps, be somewhat premature.
Some of them even if true are so trivial that no authority could reason-
ably be expected to cancel the permission on that basis. For instance
the ground that the permission was applied for and granted in the
name of one only of the two lessees would be one such.
B
However, Judicial review under Article 226 cannot be converted
into an appeal. Judicial review is directed, not against the decision, but
is confined to the examination of the decision making-process. In
Chief Constable of the North Wales Police v. Evans, [1982) 1 WLR
1155 refers to the merits-legality distinction in judicial review. Lord
Hailsham said:
c
"The purpose of judicial review is to ensure that the
individual receives fair treatment, and not to ensure that
the authority, after according fair treatment, reaches on a
matter which it is authorised by Jaw to decide for itself a
0 conclusion which is correct in the eyes of the court."

Lord Brightman observed: •
" ..... Judicial review, as the words imply, is not an appeal
from a decision, but a review of the manner in wltich the

-
E decision was made ..... "

And held that it would be an error to think:

" ..... that the court sits in judgment not only on the cor- +-1
rectness of the decision-making process but also on the •-~--
correctness of the decision itself."

When the issue raised in judicial review is whether a decision is
vitiated by taking into account irrelevant, or neglecting to take into
account of relevant, factors or is so manifestly unreasonable that no
reasonable authority, entrusted with the power in question could
G reasonably have made such a decision, the judicial review of the deci-
sion making process includes examination, as a matter of Jaw, of the --+..
relevance of the factors. In the present case, it is, however, not neces-
sary to go into the merits and relevance of the grounds having regard
to lhe view we propose to take on the point on natural justice.

H It would, however, be appropriate for the statutory authority, if
STATE OF U.P. v. D.P. SINGH [VENKATACHALIAH, J.J 203

it proposes to initiate action afresh, to classify the grounds pointing out A
which grounds, in its opinion, support the allegation of fraud or misre-
presentation and which, in its view constitute subsequent violations of
the terms and conditions of the grant. The grounds must be specific so
as to afford the Lessees an effective opportunity of showing cause.
B
29. On the point of denial of natural justice, we agree with con-
clusion of the High Court, though not for the same reasons, that there
has been such a denial in the proceedings culminating in the order of
cancellation. The show cause notice itself is an impalpable congeries of
suspicions and fears, of relevant or irrelevant matter and has included
some trivia. On a matter of such importance where the stakes are
heavy for the Lessees who claim to have made large investments on the c
project and where a number of grounds require the determination of
+ factual matters of some complexity, the statutory authority should, in
the facts of this case, have afforded a personal hearing to the lessees.
We, therefore, agree with the conclusion of the High Court that both
the show cause notice dated 9.1.1986 and the subsequent order dated
D
19.4.1986would require to be quashed, however, leaving it open to the
statutory authority, should it consider it necessary, to issue a fresh
show cause notice setting out the precise grounds, and afford a reason-
able opportunity including an opportunity of personal hearing and of
adducing evidence wherever necessary to the Respondent-Lessees. In
view of this liberty, reserved to the authority, it is necessary to set-
aside the findings recorded by the High Court on the merits of the E

- grounds. The appeal of the Lucknow Development Authority arising
out of SLP 11220 of 1987 is partly allowed and the order of the High
Court in WP 3463/1986 modified accordingly. Appeals arising out of
SLPs 11515 of 1987 and 11499 of 1987 of the LDA directed against the
common judgment of the High Court in so far as it relates to WP 5699 F
of 1985 and WP 5521 of 1985 also disposed of in the light of the order is
made in the appeals arising out of SLPs 4761, 4762, 13298, 11498 and
11220 of 1987.

30. In the circumstances, we leave the parties to bear and pay
their own costs.
G
~ P.S.S. Appeals allowed partly.