Holding that a statutory development authority cannot introduce unadvertised documentary conditions retrospectively after an allotment process has commenced, the Lucknow Bench of the High Court of Judicature at Allahabad, presided over by Justice Irshad Ali, has quashed rejection orders issued by the New Okhla Industrial Development Authority (NOIDA) and the State Government. The Court allowed the writ petition filed by an industrial applicant seeking allotment under a 2006 residential scheme, ruling that public authorities must strictly adhere to the declared terms of a scheme and directing NOIDA to allot the residential plot at the original 2006 rates within eight weeks.
Opening the judgment with a fundamental legal maxim, Justice Irshad Ali observed: “The fundamental principle of justice is that there must be a final end to litigation. No person should be trapped repeatedly in a web of lawsuits for the same cause of action, because endless litigation is an injustice in itself.”
The petitioner was represented by advocates Anurag Singh and Abhinav Srivastava, while the State of Uttar Pradesh and NOIDA were represented by the Chief Standing Counsel (C.S.C.), along with advocates Ashok Shukla and Utkarsh Srivastava.
Background of the Dispute
The petitioner, Nalini Khandelwal, a shareholder and whole-time Director of M/s Charu Apparels Manufacturing Company Pvt. Ltd. (situated at Industrial Plot No. A-26, Sector-2, NOIDA), applied on June 16, 2006, for a residential plot under Plot Category-3 (250 to 300 square meters) in Sector-100, NOIDA, under the “Residential Plots Scheme, 2006 (1)”. The scheme invited applications from April 20, 2006, to June 19, 2006, and included a reserved category under Clause 1(I)(A)(b) for industrialists whose units were operational in NOIDA.
Along with her application form submitted through Canara Bank, the petitioner deposited the requisite registration fee of Rs. 1,20,000/- through a demand draft drawn on HDFC Bank. She also submitted supporting documents, including a functional certificate of the industrial unit dated April 1, 1987, a Board Resolution authorising her to apply, a list of directors and shareholders, a bank-attested photograph, and a certified true copy of the Memorandum and Articles of Association.
Despite submitting these documents, NOIDA published a provisional seniority list placing her name at Serial No. 504 with the remark “No Status of Applicant in Unit and photo not attached”, declaring her “Not Eligible”.
The petitioner promptly lodged objections on October 26, 2006, and November 9, 2006, accompanied by relevant records, while the Managing Director of the company also submitted a separate objection on October 30, 2006. With no redress forthcoming, this initiated prolonged litigation spanning two decades.
The petitioner initially filed Misc. Writ Petition No. 63153 of 2006, wherein the High Court granted an interim stay on November 22, 2006, restraining allotments in the reserved category. Disposing of the petition on September 19, 2009, the Court directed the CEO of NOIDA to reconsider the matter. Upon reconsideration, NOIDA rejected her claim on May 26, 2009, asserting that she was not a director as on a purported cut-off date of March 31, 2006.
The petitioner challenged this in Civil Misc. Writ Petition No. 33634 of 2009. By an order dated November 26, 2011, the High Court quashed NOIDA’s rejection, explicitly holding that the brochure contained no cut-off date of March 31, 2006, and that the petitioner had become a director on May 6, 2006, prior to the scheme’s closing date of June 19, 2006.
Following this judicial invalidation, NOIDA passed another order on September 10, 2012, setting up a fresh ground of rejection: that the petitioner had failed to submit statutory Form-32 (filed before the Registrar of Companies evidencing appointment of directorship) along with her original application form in 2006.
When this was challenged in Writ-C No. 60782 of 2012, the High Court disposed of the matter on February 12, 2016, granting liberty to pursue statutory remedies. The petitioner then filed a revision petition under Section 41(3) of the U.P. Urban Planning and Development Act, 1973 (as incorporated under Section 12 of the U.P. Industrial Development Act, 1976). However, the Principal Secretary, Department of Industrial Development, dismissed the revision on March 17, 2017, affirming NOIDA’s stance that Form-32 was not enclosed with the original application and citing other similar rejections. Aggrieved, the petitioner filed the present writ petition before the High Court.
Arguments of the Parties
Appearing for the petitioner, advocate Abhinav Srivastava argued that the brochure for the 2006 scheme never prescribed the submission of Form-32 along with the application form. The scheme merely required proof establishing the directorship status in the industrial unit, which was duly satisfied by the functional certificate, Board Resolution, list of directors and shareholders, and constituent documents.
Counsel contended that NOIDA had adopted shifting and contradictory stands over years of litigation: first alleging a lack of status and missing photo, then setting up an unsustainable cut-off date of March 31, 2006, and finally introducing the requirement of Form-32 retrospectively after the cut-off date ground was quashed by the High Court. Relying on Article 14 of the Constitution, counsel submitted that a public authority cannot change the “rules of the game” after the process has commenced.
In support of his submissions, counsel placed reliance on K. Manjusree v. State of Andhra Pradesh, the Constitution Bench ruling in Tej Prakash Pathak v. Rajasthan High Court, Delhi Development Authority v. Joint Action Committee, Allottee of SFS Flats, and the Division Bench ruling in Naresh Chandra Gupta v. The Collector, U.P.. Counsel further urged that because the delay was solely attributable to the authorities’ successive unsustainable decisions, the petitioner had a legitimate expectation and was entitled to an allotment at the original 2006 premium rates.
Opposing the petition, advocate Utkarsh Srivastava, appearing for NOIDA, argued that mere submission of an application and registration fee does not confer an indefeasible or vested right to allotment. He submitted that NOIDA was duty-bound to scrutinize whether the applicant satisfactorily proved her status in the industrial unit. Form-32 was an indispensable document for verifying directorship, and its absence at the time of the original application justified the finding of ineligibility.
Counsel maintained that the revisional order was a reasoned decision, denied that the authority acted arbitrarily or altered the eligibility framework, and noted that the same standard was applied to other applicants whose forms were deficient.
The Court’s Analysis
Examining the record, the Court framed the primary issue as whether NOIDA could reject the application for non-submission of Form-32 when the brochure did not make it a mandatory condition precedent, and whether an authority could introduce an additional requirement retrospectively.
While acknowledging that merely applying under a scheme does not confer an automatic right to an allotment, the Court drew a sharp distinction between verifying an existing condition and inventing a new one:
“The distinction between verification of an existing eligibility condition and introduction of a new eligibility/documentary condition is of considerable significance in the present case.”
The Court held that the brochure contained no clause prescribing Form-32 as the sole or mandatory method of establishing directorship. Rejecting NOIDA’s defense that Form-32 was merely sought for verification, the Court observed:
“The power to verify an eligibility condition does not authorise the authority to rewrite the conditions of the scheme. If the documents furnished by an applicant were considered insufficient, the authority could have called upon the applicant to furnish additional material for verification, as indeed happened subsequently. But such subsequent production of Form-32 cannot retrospectively establish that its submission along with the original application was an essential condition when no such condition existed in the brochure.”
The Court took serious exception to NOIDA’s shifting grounds, noting that once the earlier reason regarding the March 31, 2006 cut-off date was quashed in 2011, the authority substituted it with an unadvertised ground:
“The respondents cannot be permitted to cure one unsustainable ground of rejection by discovering another condition which was never communicated to the applicant and was not part of the advertised scheme.”
Addressing the doctrine that the “rules of the game” cannot be altered midway, Justice Irshad Ali relied extensively on the binding precedents cited by the petitioner:
- In K. Manjusree v. State of Andhra Pradesh, the Supreme Court held: “the rules of the game, meaning thereby, that the criteria for selection cannot be altered by the authorities concerned in the middle or after the process of selection has commenced… Here, not only the rules of the game were changed, but they were changed after the game had been played and the results of the game were being awaited. That is unacceptable and impermissible.”
- In Tej Prakash Pathak v. Rajasthan High Court, the Constitution Bench reaffirmed: “the rules of the game must not be changed midway, or after the game has been played”, noting that public selection criteria and eligibility conditions cannot be tinkered with once the process commences.
- In Delhi Development Authority v. Joint Action Committee, Allottee of SFS Flats, the Supreme Court ruled: “A party to the contract cannot at a later stage, while the contract was being performed, impose terms and conditions which were not part of the offer and which were based upon unilateral issuance of office orders, but not communicated to the other party to the contract and which were not even the subject-matter of a public notice.”
- In Naresh Chandra Gupta v. The Collector, U.P., the Division Bench reiterated that once proceedings are initiated, amended or new criteria cannot be applied to the prejudice of participants.
Applying these principles to the allotment scheme, the Court held:
“The doctrine ‘Rules of the Game cannot be changed, once the Game has started’ is, therefore, fully attracted to the facts of the present case. The ‘Game’ in the present matter is the process of consideration of applications under the Residential Plots Scheme, 2006 (1). The rules of that process were contained in the scheme brochure. The petitioner entered the process by submitting her application on 16.06.2006 in accordance with those declared conditions. The respondents could certainly scrutinize and verify the petitioner’s claim, but they could not, after commencement of the process, transform Form-32 into a mandatory condition of eligibility when no such requirement has been demonstrated from the brochure.”
The Court also rejected the revisional authority’s reasoning that other applicants had also been rejected on similar grounds, observing that the uniform application of an unlawful condition does not make the condition lawful.
Addressing the consequences of prolonged litigation, the Court underscored that the petitioner could not be penalized for delays caused entirely by the authorities’ successive unsustainable decisions:
“The respondents cannot be permitted to take advantage of the passage of time caused by their own successive decisions. To hold otherwise would result in a situation where an applicant, whose claim was required to be considered under the 2006 scheme, would ultimately lose the benefit of that scheme merely because the authorities rejected her claim successively on grounds which did not survive judicial scrutiny.”
Decision and Directions
The High Court allowed the writ petition and quashed both the revisional order dated March 17, 2017, and NOIDA’s order dated September 10, 2012.
The Court issued the following operative directions:
- NOIDA and the State authorities must reconsider and give effect to the petitioner’s application dated June 16, 2006, under the Residential Plots Scheme, 2006 (1), in accordance with the original terms, without insisting upon Form-32 as a mandatory initial document and without applying any eligibility condition not originally prescribed.
- If the original plot/category applied for is available, NOIDA shall allot the same to the petitioner at the original premium rate applicable under the 2006 scheme, adjusting the amount already deposited.
- If the original plot is genuinely unavailable, NOIDA shall allot an alternative residential plot of the same type, category, size, and nature, preferably in Sector-100, NOIDA, or at a comparable location, strictly at the original 2006 premium rate. The Court held that the petitioner shall not be compelled to pay current or enhanced rates.
- The entire exercise must be concluded expeditiously, preferably within eight weeks from the date of production of a certified copy of the order, communicating a reasoned decision without introducing fresh inconsistent conditions.
Concluding the judgment, the Court emphasized:
“The principle that ‘The Rules of the Game cannot be changed, after the Game has started’ is, therefore, not confined to a technical rule of recruitment; it is a facet of the broader constitutional requirement of non-arbitrariness and procedural fairness in State action.”
Case Title: M/S Nalini Khandelwal Versus State Of U.P. Thru. Prin. Secy. Ministry Industrial Development and another
Case No.: WRIT-C No. 9739 of 2017
Bench: Justice Irshad Ali
Date: September 29, 2026
