The Supreme Court has upheld the Bihar government’s decision to cancel an industrial land allotment to facilitate the expansion of IIT Patna, ruling that public interest must prevail over private commercial claims. The court set aside a Patna High Court order that had favoured the allottee and restored the decision of the Single Judge who had earlier refused to interfere with the cancellation.
The judgment was delivered by a Bench of Justice Dipankar Datta and Justice Augustine George Masih on January 23, 2026.
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Background of the Case
The dispute arose from an allotment made in June 2007 by the Bihar Industrial Area Development Authority (BIADA) to M/s Scope Sales Pvt. Ltd. The company had secured Plot No. C-347 in Patna Industrial Area through auction for setting up a multiplex-cum-shopping complex.
Possession of the plot was handed over in October 2007. However, soon after, the State decided to use the adjoining land for the temporary campus and future expansion of IIT Patna, which had begun operations in a nearby government polytechnic.
In March 2008, BIADA asked the company to stop construction. This was followed by a show-cause notice and, eventually, cancellation of the allotment in April 2009. The authority refunded the land cost with 5% interest.
Aggrieved, the company approached the Patna High Court, arguing that the cancellation had no legal basis and that it had already invested heavily in the project.
High Court’s Diverging Views
A Single Judge of the Patna High Court initially dismissed the company’s plea, observing that the land was required for a public purpose and that the decision was taken in larger public interest.
However, the Division Bench later reversed this view. It held that once land was allotted and third-party rights were created, BIADA had no power to cancel the allotment merely on the ground of public interest. The Bench also observed that such cancellation violated Article 300A of the Constitution, which protects property rights.
This led BIADA and the State of Bihar to approach the Supreme Court.
Court’s Observations
The Supreme Court disagreed with the Division Bench and restored the Single Judge’s order.
The Bench emphasised that writ jurisdiction is discretionary and should not be exercised where interference would harm public interest. It noted that IITs serve a vital national purpose and require adequate land for expansion.
“The High Court ought to have exercised restraint. Interference in such cases, where larger public interest is involved, is not warranted,” the court observed.
The judges underlined that the land was reclaimed not for commercial use but for an educational institution of national importance. They also noted that the decision to cancel the allotment was taken bona fide and not with malice.
Importantly, the court pointed out that M/s Scope itself had sought compensation as an alternative relief, which showed that restoration of the plot was not the only possible remedy.
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On Powers of BIADA and Public Interest
The court clarified that even if there were differing interpretations of BIADA’s statutory powers, the key issue was whether the High Court should have interfered at all.
It held that:
- Courts must balance private rights with public interest
- Judicial interference should be minimal where public infrastructure is involved
- A Division Bench should not overturn a Single Judge’s view unless it is clearly perverse
The Bench reiterated that “public interest must outweigh individual commercial interest” when the two are in conflict.
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Final Decision
Setting aside the Division Bench’s judgment, the Supreme Court restored the Single Judge’s order and upheld the cancellation of allotment.
The court directed:
- Refund of ₹3.38 crore to M/s Scope
- Payment of 7% annual interest on the amount
- Use of the land strictly for educational purposes only
- No commercial exploitation of the plot
With this, the appeals filed by BIADA and the State of Bihar were allowed.
Case Title: Bihar Industrial Area Development Authority vs M/s Scope Sales Pvt. Ltd.
Case No.: Civil Appeal Nos. 929–930 of 2020
Decision Date: 23 January 2026
