Case Note & Summary
The case arose when the Bihar Industrial Area Development Authority (BIADA) allotted land to M/s Scope Sales Pvt. Ltd. for commercial use. Subsequently, the State required the same land for expansion of IIT Patna and cancelled the allotment citing public interest.
The allottee challenged the cancellation. The Single Judge upheld the cancellation considering the larger public interest. However, the Division Bench reversed this decision, holding that BIADA lacked statutory power to cancel the allotment once third-party rights were created.
The Supreme Court examined whether such interference by the Division Bench was justified. It emphasized that writ jurisdiction is discretionary and must be exercised in furtherance of public interest. It further held that intra-court appellate courts should not substitute their view unless the original decision is perverse.
Considering the importance of establishing and expanding an IIT and absence of mala fides, the Court held that public interest outweighed private contractual rights. It also noted that the allottee had sought compensation in the alternative.
Headnote
A. Constitution of India – Article 226 – Writ Jurisdiction
Discretionary nature of writ jurisdiction – Even where legal infirmity exists, courts may refuse relief if interference harms public interest – Courts must balance individual rights with larger societal interest.
B. BIADA Act, 1974 – Sections 6 & 9(3)
Power of cancellation – Scope and interpretation – Whether allotment can be cancelled absent default – Held, issue debatable; however, larger public interest overrides.
C. Intra-Court Appeal (Letters Patent Appeal)
Scope of interference – Division Bench should not interfere unless Single Judge’s view is perverse or manifestly erroneous – Mere possibility of another view is insufficient.
D. Public Interest vs Private Rights
Conflict between individual allottee rights and public purpose (IIT expansion) – Held, individual rights must yield to larger public interest.
E. Compensation
Cancellation of allotment – Allottee entitled to refund with reasonable interest – Compensation acts as equitable relief where restoration is not feasible
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Issue of Consideration: The Issue of whether the cancellation of plot allotment by BIADA on grounds of public interest was justified and if so, whether the compensation offered was adequate under the Bihar Industrial Area Development Authority Act 1974
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Final Decision
The Supreme Court allowed the appeals, restored the Single Judge’s decision upholding cancellation of allotment in public interest, and directed refund of the amount with 7% interest while restricting the land’s use strictly for educational purposes.
2026 LawText (SC) (01) 76
Civil Appeal No. 929 of 2020, Civil Appeal No. 930 of 2020
DIPANKAR DATTA J. , AUGUSTINE GEORGE MASIH J.
Mr. Sudhir Nandrajog, Mr. Azmat Hayat Amanullah, Mr Ram Kumar learned senior counsel appearing For Appellants, Mr. Satyabir Bharti, learned senior counsel appearing for Respondents
Bihar Industrial Area Development Authority & Ors., State of Bihar
M/s. Scope Sales Pvt. Ltd. & Anr., M/s. Scope Sales Pvt. Ltd. & Ors.
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Nature of Litigation: Civil appeal challenging High Court judgment on writ petition regarding cancellation of plot allotment
Remedy Sought
M/s. Scope Sales Pvt. Ltd. sought quashing of cancellation order and market value compensation; BIADA and State of Bihar sought reversal of High Court decision
Filing Reason
BIADA cancelled plot allotment for IIT Patna establishment, offering refund with interest; M/s. Scope challenged adequacy of compensation
Previous Decisions
Single Judge – High Court of Judicature at Patna (24 Jan 2014)
Writ Petition filed by M/s Scope Sales Pvt. Ltd.
Decision: Dismissed
Reasoning:
Cancellation of allotment was in larger public interest (for IIT Patna).
No mala fide intention by State/BIADA.
Action justified under statutory framework.
Issues
Whether cancellation of plot allotment by BIADA on public interest grounds was justified under the BIADA Act
Whether the compensation offered by BIADA was adequate and in compliance with legal principles
Submissions/Arguments
BIADA argued cancellation was for public interest (IIT establishment) under Section 9(3) of BIADA Act, with refund and interest as sufficient compensation
M/s. Scope argued cancellation lacked legal authority, compensation should reflect market value and investments made, as per alternative prayer in writ petition
Ratio Decidendi
Courts should not exercise writ jurisdiction or appellate interference in a manner that defeats bona fide State action taken in overriding public interest, especially when the original decision is reasonable and not perverse.
Judgment Excerpts
On Discretionary Writ Jurisdiction
“The remedy of a writ is discretionary in nature… relief may be denied… if grant of such relief does not serve or advance public interest.”
On Public Interest vs Individual Rights
“If interfering with an impugned order would result in more harm to society, the writ courts may decline to exercise jurisdiction.
On Role of High Courts
“The High Courts… carry the responsibility to maintain social balance by interfering when justice demands and not interfering when it would affect public interest.”
On Intra-Court Appeal Limits
“An intra-court appellate Bench ought not to substitute its own view merely because it considers its view to be better… so long as the view taken by the Single Bench is a plausible one.”
On Public Purpose (IIT Importance)
“Institutes such as IITs… play a critical role in the development of individuals, society, and the nation… their importance cannot be measured merely in quantitative terms.”
On Balancing Competing Interests
“Individual interest must necessarily yield to the larger public good.”
On Equity & Compensation
“While balancing the equities… the alternative prayer for compensation assumes considerable importance.”
Procedural History
Allotment & Cancellation (2007–2009)
BIADA allotted land to M/s Scope (2007). Later cancelled allotment (2009) for use in expansion of IIT Patna citing public interest.
Writ Petition – Single Judge, High Court of Judicature at Patna M/s Scope filed writ petition challenging cancellation.Decision (24.01.2014): Petition dismissed.Held: Cancellation justified in larger public interest; no mala fides.
Intra-Court Appeal – Division Bench (LPA No. 335/2014), High Court of Judicature at PatnaAppeal filed by M/s Scope.
Decision (21.10.2014): Allowed.Held:BIADA lacked authority to cancel allotment after creating third-party rights.Allotment = property under Article 300A.Set aside Single Judge order.
Appeal before Supreme Court of India (Civil Appeals No. 929–930 of 2020)
Filed by BIADA & State of Bihar.
Final Decision (23.01.2026): Appeals allowed.
Division Bench judgment set aside; Single Judge order restored.
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