Supreme Court Restores Single Judge Order Allowing State To Reclaim Land For IIT; Directs Refund With Interest And Educational-Use Restriction

A bench of Justice Dipankar Datta and Justice Augustine George Masih heard appeals by the Bihar Industrial Area Development Authority (BIADA) and the State of Bihar challenging a Division Bench judgment of the Patna High Court which had allowed an intra‑court appeal by M/s Scope Sales Pvt. Ltd. The appeals concerned the validity of cancellation of allotment of Plot No. C‑347, Patna Industrial Area, allotted to M/s Scope, and whether BIADA or the State could resume possession of the land intended for the temporary campus and future expansion of IIT Patna.

The Court set aside the Division Bench order and restored the Single Judge’s dismissal of the writ petition, holding that the Single Judge’s exercise of discretion was a plausible view and that intra‑court appellate interference was not warranted. The Court accepted that cancellation was bona fide and taken in furtherance of a larger public purpose and directed that the original amount of Rs. 3,38,98,000 paid by M/s Scope be refunded with interest at 7% per annum; the plot would not be put to any commercial use and must be utilised “strictly and exclusively for educational purposes and activities incidental thereto.” The Court, in its reasoning, observed: “It is trite law that the remedy of a writ is discretionary in nature. Even where a writ petition raises a substantial point of law, the High Court may decline to entertain it for a variety of reasons. Inter alia, relief may be denied to the suitor notwithstanding the existence of a strong legal case should grant of such relief not serve or advance public interest. If interfering with an impugned order/decision etc. would result in more harm to society, the writ courts may decline to exercise its jurisdiction.”

Background The dispute arose after BIADA invited bids in June 2007 and allotted Plot C‑347 to M/s Scope, which paid Rs. 3,38,98,000 and took possession in October 2007 to construct a multiplex‑cum‑shopping mall. Soon after, the State decided to set up IIT Patna on the campus of a nearby Government Polytechnic. BIADA sent a stop‑work direction in March 2008 and, following State instructions to reserve the land for IIT expansion, issued show‑cause notices proposing cancellation of allotment. The notice stated that the land was contiguous to the IIT temporary campus and that “this greater public interest needs to be addressed.”

M/s Scope replied that no statutory provision under the BIADA Act authorised cancellation on public‑interest grounds in the absence of default and sought either quashing of the cancellation order or “actual compensation and not fanciful compensation.” BIADA cancelled the allotment on 4 April 2009, refunded the cost of land with 5% interest, and later offered alternate plots which M/s Scope declined. A Single Judge of the Patna High Court dismissed M/s Scope’s writ petition, finding cancellation bona fide and within public interest and relying on Section 9(3) of the BIADA Act. A Division Bench, on intra‑court appeal, reversed that order holding that once third‑party rights were created BIADA could not restore land to the State, that Section 9(3) did not permit cancellation to restore land, and that allotment constituted “property” within the meaning of Article 300A of the Constitution.

On appeal to this Court, counsel for BIADA and the State argued that BIADA retained a general power of cancellation under Section 6 and, once cancelled, the land vested in BIADA and could be restored to the State under Section 9(3). Counsel for M/s Scope argued that the Act did not permit cancellation absent default and that permitting cancellation for public purposes without clearer statutory sanction would deter investment. The Supreme Court analysed the exercise of writ jurisdiction, intra‑court appellate restraint and the balance between individual rights and larger public interest, and concluded that interference by the Division Bench was not justified. The Court restored the Single Judge’s order, allowed the appeals, directed refund with 7% interest, and imposed the restriction that the plot be used only for educational purposes. No remand or other interim directions were made beyond the refund and use restriction.

Case Details: Case No.: CIVIL APPEAL NOS. 929 & 930 OF 2020 (2026 INSC 89) Case Title: Bihar Industrial Area Development Authority & Ors. v. M/s Scope Sales Pvt. Ltd. & Anr.; State of Bihar v. M/s Scope Sales Pvt. Ltd. & Ors. Appearances: For the Petitioner(s): Mr. Sudhir Nandrajog, Senior Counsel (for BIADA); Mr. Azmat Hayat Amanullah, Advocate (for State) For the Respondent(s): Mr. Satyabir Bharti, Senior Counsel (for M/s Scope)