The Supreme Court has upheld the decision to cancel 125 acres of land earlier allotted to Kamala Nehru Memorial Trust (KNMT) by the Uttar Pradesh State Industrial Development Corporation (UPSIDC). The decision was taken after the court highlighted systemic issues in the original allotment process and emphasized that public resources should be managed with diligence, fairness and transparency and whichever is better.

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The Supreme Court bench of Justice Suryakant and Justice N Kotishwar Singh dismissed KNMT's appeal against the 2017 Allahabad High Court decision, which canceled the allotment of land located in Utelwa Industrial Area of ​​Jagdishpur in Sultanpur district of Uttar Pradesh. KNMT, a charitable institution established in 1975, received the land in 2003 for the purpose of flower cultivation.

The apex court pointed out that UPSIDC allotted the land to KNMT within just two months of the application, raising concerns over the length of the assessment process. "UPSIDC allotted the subject land to KNMT within just two months of the application, thereby raising serious questions about the completeness of the assessment," the apex court said.

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The apex court also took note of the "remarkable promptness" shown by UPSIDC in considering an alternative allotment to Jagdishpur Paper Mills Ltd during the period of litigation, raising further concerns about the transparency and fairness of the process. "The actual allotment or any proposal therefor made by UPSIDC in favour of Jagdishpur Paper Mills Ltd for the subject land is declared to be illegal, contrary to public policy and consequently set aside," the bench said.

The court also made it clear that the protracted litigation, which has gone on for over 15 years, has unnecessarily burdened the judicial system and hindered the efficient functioning of public authorities. "Such protracted disputes highlight the need for more rigorous, preliminary evaluation processes to prevent chronic defaults," the bench said.

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It said "the hasty allocation, followed by years of litigation, exemplifies systemic deficiencies in the allocation process," and stressed the importance of transparent mechanisms to avoid problems in the future. The court directed that future allocation of industrial land should be done through transparent, non-discriminatory and fair processes, to ensure that allocations generate maximum revenue and support public interests such as industrial development, environmental sustainability and regional economic goals.

The court emphasised the public trust doctrine, which requires that public resources be managed in a manner consistent with the public interest. "The allocation of 125 acres of industrial land to KNMT without a competitive process fundamentally violates the principle, which calls for due process and genuine accountability in public resource allocation," the bench said.

Additionally, the court directed that any payment or earnest money received from potential allottees such as Jagdishpur Paper Mills Ltd be refunded with applicable interest rates.

The Supreme Court also criticised UPSIDC for its failure to consider important factors such as economic benefits, employment generation potential, environmental impact and regional development alignment. The court said that "failure to adopt a transparent mechanism not only deprived the state exchequer of potential revenue… but also created a system in which privileged access became more important than equal opportunity."

The Supreme Court pulled up the Uttar Pradesh government and UPSIDC and directed them to ensure that future industrial land allotments are made with transparency, fairness and strict adherence to public interest, with revenue maximisation and sustainable development goals being given priority. It also ordered the authorities to reallocate 125 acres of land in Sultanpur as per the directions given by the Supreme Court.

Case Title: Kamla Nehru Memorial Trust & Anr Versus U.P. State Industrial Development Corporation Limited & Ors.

Appearance:

For Petitioner(s) : Mr. Maninder Singh, Sr. Adv. Mr. Mahabir Singh, Sr. Adv. Mr. Sunil Kumar Jain, AOR Mr. Ramraj, Adv. Mr. Shaantanu Jain, Adv. Ms. Rashika Swarup, Adv.

For Respondent(s) : Mr. K.K. Venugopal, Sr. Adv. Mr. A.N.S. Nadkarni, Sr. Adv. Ms. Ruchira Gupta, Adv. Mr. Salvador Santosh Rebello, AOR Ms. Pooja Tripathi, Adv. Mr. Gautam Sharma, Adv. Ms. Kritika, Adv. Mr. Amit Kumar, Adv. Mr. Abhishek Verma, Adv. Ms. Manisha Gupta, Adv. Ms. Arzu Paul, Adv. Ms. Deepti Arya, Adv. Ms. Himanshi Nagpal, Adv. Ms. Pooja Gill, Adv.