2008 (4) TMI 663 - HC - Indian Laws

Cancelling letter of allotment/letter of permission - declining to extend the validity of LOA/LOP - Held that - In the present case, as we have already noticed, after expiry of last extended period of 2006, i.e., 7-4-2006, the respondents have not been able to show that any notice or opportunity was given to the petitioner before passing the impugned orders.In the result, we have no hesitation in holding that the impugned orders are in violation of principles of natural justice and, therefore, liable to be set aside. The writ petition, therefore, succeeds and is allowed.

Issues Involved:
1. Cancellation of Letter of Allotment/Letter of Permission (LOA/LOP).
2. Denial of extension of the validity of LOA/LOP.
3. Alleged violation of principles of natural justice.
4. Application of the doctrine of legitimate expectation.

Detailed Analysis:

1. Cancellation of Letter of Allotment/Letter of Permission (LOA/LOP):
The petitioner was aggrieved by the order dated 3-8-2006, which canceled the LOA/LOP initially granted on 28-7-2003 for setting up an export-oriented unit at Noida Special Economic Zone (SEZ). The Development Commissioner had granted this permission subject to specific conditions, including the commencement of production within one year and achieving Net Foreign Exchange (NFE) as prescribed. Despite multiple extensions, the petitioner failed to commence production or complete construction, leading to the cancellation of LOA/LOP by the Assistant Development Commissioner.

2. Denial of Extension of the Validity of LOA/LOP:
The petitioner sought extensions for the validity of LOA/LOP multiple times due to non-availability of basic infrastructure and facilities. The final extension was granted until 7-4-2006. However, the petitioner applied for another extension on 10-8-2006, which was denied by the authorities, citing unsatisfactory progress of work. The Development Commissioner's inspection on 17-8-2006 revealed that not even 10% of the work was complete, leading to the refusal of further extension.

3. Alleged Violation of Principles of Natural Justice:
The petitioner contended that the cancellation order dated 3-8-2006 was passed without affording an opportunity to show cause, thus violating the principles of natural justice. The respondents argued that the petitioner was given due notice as evidenced by the show cause notice dated 13-2-2006. However, the court observed that the authorities had extended the validity period multiple times even after the expiry of the initial period, indicating that the expiry of LOA/LOP was not treated as sacrosanct. The court found that no notice or opportunity was given to the petitioner after the last extension expired on 7-4-2006 before passing the impugned orders.

4. Application of the Doctrine of Legitimate Expectation:
The court held that the doctrine of legitimate expectation was applicable in this case. The petitioner had a legitimate expectation that no adverse order would be passed without giving an opportunity to show cause, based on the past practice of granting extensions. The doctrine of legitimate expectation is considered part of the principles of natural justice, ensuring fairness in administrative actions. The court cited precedents, including Southern Petrochemical Industries Co. Ltd. v. Electricity Inspector and Kuldeep Singh v. Government of N.C.T. of New Delhi, to support its view that the petitioner was entitled to an opportunity to show cause before the cancellation of LOA/LOP.

Conclusion:
The court concluded that the impugned orders were in violation of the principles of natural justice and thus liable to be set aside. The writ petition was allowed, and the respondents were directed to pass a fresh order in accordance with the law after giving the petitioner an opportunity to show cause. The parties were instructed to maintain the status quo regarding the land in question until a fresh order was passed. There was no order as to costs.

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