Institute of Legal and Management Studies

The Supreme Court today upheld the Uttar Pradesh State Industrial Development Corporation's (UPSIDC) decision to cancel a land allotment to a private company over payment defaults. However, it sharply criticized the UPSIDC for "serious systemic flaws" in its allocation process, noting that 125 acres of land were allotted within just two months without a proper evaluation of public benefit.

The bench comprising Justices Surya Kant and N Kotiswar Singh, taking note of the Public Trust Doctrine, emphasized that state-held resources must be allocated transparently to serve public interest, not private entities.

“The (Public Trust) Doctrine requires that allocation decisions be preceded by a thorough assessment of public benefits, beneficiary credentials, and safeguards ensuring continued compliance with stated purposes.”, the court observed.

The Court noted that UPSIDC's failure to adopt a transparent mechanism without a competitive process, betrayed the fiduciary relationship between the State and its citizens.

The issue related to the allotment of land to the Kamala Nehru Memorial Trust in September 2003. In December 2006, the allotment was cancelled over non-payment of the amount. This was challenged by the Trust in the Allahabad High Court, which after certain rounds of litigation to Supreme Court and back after remand, ultimately in 2017, upheld the cancellation. Challenging the HC judgment, the Trust approached the Supreme Court.

Rejecting the Trust's appeal, the Supreme Court said

“The allocation of 125 acres of industrial land to KNMT(Kamala Nehru Memorial Trust) without a competitive process fundamentally violated the Doctrine, which demands proper procedure and substantive accountability in public resource allocation. UPSIDC ought to have considered verifiable evidence of economic benefits, employment generation potential, environmental sustainability, and alignment with regional development objectives to demonstrate that the decision serves the collective benefit. The failure to adopt transparent mechanisms not only deprived the public exchequer of potential revenue—as evidenced by the substantial appreciation in the value of such a large tract of land—but also created a system where privileged access supersedes equal opportunity. This betrays the fiduciary relationship between the State and its citizens.”, the court said.

The Court also noted that during the pendency of the litigation, the UPSIDC showed "alacrity" in considering allotment of the land to another entity.

"We, therefore, consider it necessary to examine whether UPSIDC's procedure for industrial land allotment meets standards of administrative propriety, particularly in light of the Public Trust Doctrine (Doctrine) mandating that public resources be managed with due diligence, fairness, and in conformity with public interest."

Considering the broader implications for the transparent allocation of public resources and the need to strengthen administrative accountability in industrial land distribution, the judgment authored by Justice Kant deems it appropriate to issue the following directions:

"i) The State Government of Uttar Pradesh and UPSIDC are directed to ensure that any such allotment in the future be made in a transparent, non-discriminatory and fair manner by ensuring that such allotment process fetches maximum revenue and also achieves the larger public interest like industrial development priorities, environmental sustainability, and regional economic objectives; and

ii) The Subject Land shall also be allotted strictly in accordance with the procedure as illustrated in direction (i) above."

Also From Judgment: Essential Elements Of Valid Legal Notice : Supreme Court Explains

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

Citation : 2025 LiveLaw (SC) 652

Click here to read/download the judgment

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.