Supreme Court clarifies rights of applicants under discontinued schemes: Ritu Maheshwari vs. Promotional Club (2022) INSC 447

Date of the Judgment: May 5, 2022

Citation: (2022) INSC 447

Judges: Uday Umesh Lalit, J., S. Ravindra Bhat, J., Pamidighantam Sri Narasimha, J.

Can an applicant insist on allotment under a scheme that has been discontinued? The Supreme Court of India recently addressed this question in a case concerning the Noida Authority’s land allotment scheme. The core issue revolved around whether an applicant has a vested right to allotment under a scheme that was terminated by the authority. The Court clarified that applicants do not have an automatic right to allotment under a discontinued scheme, emphasizing that the terms of the scheme and the authority’s discretion play a crucial role. The judgment was delivered by a three-judge bench comprising Justice Uday Umesh Lalit, Justice S. Ravindra Bhat, and Justice Pamidighantam Sri Narasimha, with Justice S. Ravindra Bhat authoring the opinion.

Case Background

In 2010, the Noida Authority (“Noida”) launched a scheme for the allotment of industrial plots larger than 2000 sq. meters in Phases II and III of the industrial area in Noida. The scheme was open-ended, allowing Noida to close it at any time. M/s. Promotional Club (“the Club”) applied for two plots under this scheme, submitting the required processing fee, registration amount, and necessary documents. However, Noida terminated the scheme on July 5, 2012, and informed all concerned, including the Club, on July 12, 2012. Noida then sought to refund the deposited amount to the Club.

Aggrieved by the termination of the scheme, the Club approached the Allahabad High Court, contending that it had fulfilled all requirements and deserved consideration for allotment. During the pendency of the writ petition, Noida launched a new scheme in 2013, under which the Club also applied and was allotted a plot in 2014. However, the Club did not disclose this subsequent allotment to the High Court while pursuing its claim under the old scheme.

Timeline

Course of Proceedings

The Allahabad High Court initially ruled in favor of the Club, directing Noida to consider the Club’s applications under the old scheme, stating that the Club’s candidature was never considered. The High Court ordered Noida to allow the Club to re-deposit the registration amount and consider their applications for allotment of the remaining plots. Noida filed a clarification application, stating that no plots were available under the old scheme, which was dismissed. Noida then filed a review petition, which was also rejected by the High Court.

Subsequently, the Club initiated contempt proceedings against Noida for non-compliance with the High Court’s order. The High Court, in the contempt proceedings, noted that the Club’s application was deemed eligible and directed Noida to consider the Club’s application under the old scheme. The High Court expressed dissatisfaction with Noida’s attempt to allot plots under a new scheme, stating that it complicated the issue.

Legal Framework

The judgment primarily revolves around the interpretation of the terms of the Noida’s 2010 scheme. Clause 2(i) of the scheme stated:

“This scheme is an open -ended scheme. However, NOIDA reserves the right to close the scheme at any point of time without any notice and without assigning any reasons.”

The Supreme Court also referred to previous judgments to determine the rights of applicants under such schemes.

Arguments

Noida’s Arguments:

• Noida argued that the High Court’s judgment was based on a wrong factual statement made by one of its officers, stating that eight plots remained unallotted, which caused prejudice to Noida.
• Noida contended that the scheme was terminated on July 5, 2012, and the Club was aware of the fact that the scheme could be discontinued at any time.
• Noida submitted that once the scheme was discontinued, the Club had no basis to claim allotment.
• Noida argued that the High Court’s direction to consider the Club’s applications could only mean considering them under the subsequent, extant scheme of 2020, where allotment is based on a draw of lots.
• Noida contended that the Club suppressed the fact that it had been allotted a plot under a subsequent scheme in 2014, which disentitled it to any relief.

The Club’s Arguments:

• The Club argued that Noida provided no reason for the closure of the scheme or for overlooking its application.
• The Club contended that the High Court’s judgment meant that its application had to be processed under the 2009-10 scheme, where interviews were conducted for allotment, and not under the new scheme of 2020, where allotment was based on a draw of lots.
• The Club argued that it was not required to disclose that it had applied under another scheme.

Issues Framed by the Supreme Court

The Supreme Court did not explicitly frame issues but considered the following:

1. Whether the Club had a right to allotment under the old scheme after its termination.
2. Whether the High Court’s direction to consider the Club’s application meant considering it under the old scheme or the extant scheme.
3. Whether the Club’s non-disclosure of the subsequent allotment disentitled it to relief.

Treatment of the Issue by the Court

The following table demonstrates as to how the Court decided the issues

Authorities

The Supreme Court relied on the following authorities:

1. Delhi Development Authority vs. Pushpendra Kumar Jain [1994 (Supp3) SCR 770] – The Court held that mere identification or selection of an allottee does not give a legal right to allotment at the price prevailing on the date of draw of lots.
2. The Bihar State Housing Board & Ors. v Radha Ballabh Health Care and Research Institute (P) Ltd [2019 (10) SCC 483] – The Court reiterated that an applicant does not get any right of allotment of a plot merely because it applied earlier.
3. Usman Gani Khatri of Bombay v Cantonment Board [1992 (3) SCR 1] – The Court affirmed that building plans can only be sanctioned according to the building regulations prevailing at the time of sanctioning.
4. Howrah Municipal Corpn. & Ors. v Ganges Rope Co. Ltd. & Ors [2003 Supp (6) SCR 1212] – The Court held that no vested right is created in favor of any party by statutory operation of the provisions merely by submission of application for sanction for construction.

Judgment

The Supreme Court allowed Noida’s appeals and set aside the High Court’s judgment and orders. The Court held that the Club did not have a vested right to allotment under the old scheme after its termination. The Court also noted that the Club’s non-disclosure of the subsequent allotment under the 2013 scheme disentitled it to any relief.

How each authority was viewed by the Court?

✓ Delhi Development Authority vs. Pushpendra Kumar Jain [1994 (Supp3) SCR 770]*: The Supreme Court used this authority to support its view that mere identification of an allottee does not create a vested right to allotment.

✓ The Bihar State Housing Board & Ors. v Radha Ballabh Health Care and Research Institute (P) Ltd [2019 (10) SCC 483]*: The Supreme Court relied on this case to reiterate that applying for a plot does not confer any legal right to seek allotment.

✓ Usman Gani Khatri of Bombay v Cantonment Board [1992 (3) SCR 1]*: This case was used to support the view that new rules are applicable for considering applications, not old ones.

✓ Howrah Municipal Corpn. & Ors. v Ganges Rope Co. Ltd. & Ors [2003 Supp (6) SCR 1212]*: The Court followed this case to support the view that no vested right is created merely by submitting an application.

What weighed in the mind of the Court?

The Supreme Court’s decision was primarily influenced by the following factors:

• Terms of the Scheme: The Court emphasized that the 2010 scheme was open-ended and explicitly allowed Noida to close it at any time without assigning reasons. This clause was crucial in determining that the Club did not have a vested right to allotment.
• No Challenge to Closure: The Club did not challenge the closure of the scheme, which meant that it accepted the termination. Therefore, it could not claim a right to allotment under a terminated scheme.
• No Vested Right: The Court reiterated that mere application for allotment does not create a vested right to allotment. The right was only to be considered for allotment while the scheme was in force.
• Compliance with Law: The Court held that Noida’s interpretation of the High Court’s direction to consider the applications was correct. Noida had to consider the applications under the prevailing scheme, not the old scheme.
• Non-Disclosure of Material Fact: The Club’s failure to disclose that it had been allotted a plot under the 2013 scheme was a material fact that disentitled it to any relief.
• Precedents: The Court relied on several precedents to support its view that applicants do not have an inherent right to be considered under an old policy if a new policy is in place.

Logical Reasoning

Key Takeaways

• Applicants do not have a vested right to allotment under a scheme that has been validly terminated.
• The terms of the scheme are crucial in determining the rights of applicants.
• Authorities have the right to close or terminate schemes, and applicants must challenge such decisions if they disagree.
• When a court directs consideration of an application, it should be under the prevailing scheme, not a terminated one.
• Non-disclosure of material facts can disentitle a party to relief under Article 226 of the Constitution.

Directions

The Supreme Court set aside the judgment and orders of the High Court. No specific directions were given.

Development of Law

The ratio decidendi of this case is that an applicant does not have a vested right to allotment under a scheme that has been validly terminated. The Court reiterated that mere application for allotment does not create a vested right and that the terms of the scheme are crucial in determining the rights of the applicants. This judgment reinforces the principle that authorities have the right to close or terminate schemes, and applicants must challenge such decisions if they disagree. This judgment clarifies the position of law by reiterating the position that the High Court’s direction to consider the application meant that it should be considered under the prevailing scheme, not a terminated one.

Conclusion

The Supreme Court’s judgment in Ritu Maheshwari vs. M/s. Promotional Club clarifies that applicants do not have a vested right to allotment under a scheme that has been validly terminated. The Court emphasized the importance of the terms of the scheme and the need for applicants to challenge the closure of a scheme if they disagree with it. The judgment also highlights the significance of disclosing material facts in court proceedings. This ruling provides clarity on the rights of applicants under such schemes and reinforces the authority of development agencies to manage their schemes.