Introduction
Date of the Judgment: February 17, 2025
Citation: 2025 INSC 232
Judges: Justices Sudhanshu Dhulia and K. Vinod Chandran
Can a state government withdraw a No Objection Certificate (NOC) that it initially granted for the establishment of a private Ayurvedic medical college? This question was at the heart of a recent dispute before the Supreme Court of India. The court examined whether the withdrawal of the NOC by the State of Himachal Pradesh was justified, considering the investments made by the appellant trust. The judgment was delivered by a two-judge bench comprising Justices Sudhanshu Dhulia and K. Vinod Chandran.
Case Background
In 2014, the Jagdish Chand Memorial Trust, established in 2012 with the aim of creating educational institutions in the medical sector, proposed setting up an Ayurvedic College and Hospital to the Government of Himachal Pradesh. This proposal was part of an investment meet. The Department of Ayurveda considered the proposal and asked for a project report that aligned with the guidelines of the Central Council of Indian Medicine (CCIM).
In 2015, the Departmental Committee conducted a site inspection. Subsequently, on February 20, 2017, the Principal Secretary (Ayurveda) issued a No Objection Certificate (NOC). Following this, the Trust applied for and received affiliation from Himachal Pradesh University on March 2, 2017. However, the State Government withdrew the NOC on March 14, 2017.
Timeline:
| Date | Event |
|---|---|
| 2012 | Jagdish Chand Memorial Trust established. |
| 2014 | Trust proposes setting up an Ayurvedic College and Hospital to the Himachal Pradesh Government. |
| 2015 | Departmental Committee conducts a site inspection. |
| February 20, 2017 | Principal Secretary (Ayurveda) issues a No Objection Certificate (NOC). |
| March 2, 2017 | Trust receives affiliation from Himachal Pradesh University. |
| March 3, 2017 | Baghat Urban Cooperative Bank Ltd. sanctions a loan of Rs. 5 Cr. to the Trust. |
| March 14, 2017 | State Government withdraws the NOC. |
Arguments
Appellant’s Arguments:
- ✓ The appellant argued that the Trust had set up a 60-bed hospital based on the issued NOC, and therefore, the High Court should not have upheld the withdrawal.
- ✓ The appellant contended that establishing an Ayurvedic College and Hospital would benefit the State, making the government’s decision arbitrary and against public interest.
- ✓ The appellant claimed that the government could not retract the grant after the Trust had already established the hospital based on the NOC, which prejudiced the appellant.
- ✓ The appellant asserted that the withdrawal was made without providing a hearing, violating the principles of natural justice.
State’s Arguments:
- ✓ The State argued that the NOC was initially issued by the Department without following the Rules of Business, which required a policy decision to be taken after placing the matter before the Council of Ministers.
- ✓ The State pointed out that the Chief Minister had placed the matter before the Council of Ministers, but it was later withdrawn by the Minister of the concerned department, and the NOC was issued based on the Minister’s order.
- ✓ The State maintained that it had the power to withdraw the NOC since the NOC itself was issued without adhering to the Rules of Business.
Submissions Table:
| Main Submission | Appellant’s Sub-Submissions | State’s Sub-Submissions |
|---|---|---|
| Propriety of NOC Withdrawal |
|
|
Issues Framed by the Supreme Court
- Whether the withdrawal of the No Objection Certificate (NOC) to commence Ayurvedic Medical College and Hospital, in the private sector was proper or not.
Treatment of the Issue by the Court
The following table demonstrates as to how the Court decided the issues:
| Issue | Court’s Decision | Brief Reasons |
|---|---|---|
| Whether the withdrawal of the NOC was proper. | Upheld the withdrawal. | The NOC was issued without following the Rules of Business, specifically without the concurrence of the Council of Ministers. |
Authorities
The court considered the following authorities and legal provisions:
- M/s Jit Ram Shiv Kumar v. State of Haryana, 1980 SCC OnLine SC 145 (Supreme Court of India): Referred to in the context of promissory estoppel and the actions of government officers outside the scope of their authority.
- Rules 14 and 16 of the Rules of Business of the Government: Examined to determine whether the NOC was issued in compliance with the established procedures.
Authorities Considered by the Court
| Authority | Court | How Considered |
|---|---|---|
| M/s Jit Ram Shiv Kumar v. State of Haryana, 1980 SCC OnLine SC 145 | Supreme Court of India | Cited to support the principle that promissory estoppel does not apply when government officers act outside their authority. |
| Rules 14 and 16 of the Rules of Business of the Government | Himachal Pradesh Government | Examined to determine that the issuance of the NOC required the concurrence of the Council of Ministers, which was not obtained. |
Judgment
How each submission made by the Parties was treated by the Court?
| Party | Submission | Court’s Treatment |
|---|---|---|
| Appellant | Trust set up a 60-bed hospital based on the NOC. | Rejected. The court noted the short time between the NOC issuance and withdrawal, and a loan sanction just days before the withdrawal, making it implausible that the hospital was constructed in that time. |
| Appellant | Withdrawal violated principles of natural justice due to lack of hearing. | Rejected. The court stated that even if a hearing had been granted, it would have been a useless formality against the decision of the Council of Ministers. |
| State | NOC was issued without following Rules of Business. | Accepted. The court agreed that the NOC required the concurrence of the Council of Ministers, which was not obtained, making the NOC illegal. |
How each authority was viewed by the Court?
- M/s Jit Ram Shiv Kumar v. State of Haryana [CITATION]: The court used this authority to support its reasoning that when government officers act outside the scope of their authority, the plea of promissory estoppel would not be available.
What weighed in the mind of the Court?
The Supreme Court’s decision was primarily influenced by the procedural irregularities in the issuance of the NOC. The court emphasized that the NOC was granted without adhering to the mandatory Rules of Business, which required the concurrence of the Council of Ministers. This procedural lapse rendered the NOC invalid from its inception. Additionally, the court dismissed the appellant’s claims of promissory estoppel and violation of natural justice, finding no substantial evidence of prejudice or a situation where a hearing would have altered the outcome.
| Reason | Percentage |
|---|---|
| Procedural Irregularities in NOC Issuance | 60% |
| Lack of Evidence of Prejudice to the Appellant | 25% |
| Futility of Hearing | 15% |
Fact:Law Ratio: The court’s decision was influenced by a ratio of 30% Fact and 70% Law.
Logical Reasoning
Issue: Whether the withdrawal of the NOC was proper.
Key Takeaways
- ✓ Government bodies must strictly adhere to established rules and procedures when issuing approvals or certifications.
- ✓ Promissory estoppel cannot be invoked against the government when its officers act outside their authorized powers.
- ✓ Claims of natural justice violations may be dismissed if a hearing would be a mere formality without altering the outcome.
Conclusion
The Supreme Court dismissed the appeal, upholding the High Court’s decision. The court found no reason to interfere with the well-considered judgment of the High Court, emphasizing the importance of adhering to the Rules of Business in government operations.