Authority Can't Reject Application For Document Not Required By Brochure, 'Rules Of The Game' Apply: Allahabad High Court

The Allahabad High Court has held that a statutory authority administering a public allotment scheme cannot reject an application because the applicant did not file a document which the scheme brochure never made mandatory.

It held that the principle that the rules of the game cannot be changed after the game has started is not limited to recruitment and applies equally to allotment schemes.

The Court quashed orders of the New Okhla Industrial Development Authority (NOIDA) and the State Government which had rejected an industrialist's 2006 application for a residential plot on the ground that Form-32 was not attached to it, and directed allotment at the original 2006 rate.

Justice Irshad Ali held,

“Once a scheme has been publicly notified and applications have been invited thereunder, the authority must adhere to the conditions declared by it. The authority cannot alter the framework of the scheme to the prejudice of an applicant after the applicant has acted upon the terms of the original scheme. 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.”

Petitioner, a whole-time Director of M/s Charu Apparels Manufacturing Company Pvt. Ltd., which has an industrial unit in NOIDA, applied on 16.06.2006 for a plot in Sector-100 under the industrial category of NOIDA's Residential Plots Scheme, 2006 (1), which was open till 19.06.2006. Along with the deposit, she filed the unit's functional certificate, a Board Resolution, the list of Directors and shareholders and the company's Memorandum and Articles of Association.

In the provisional seniority list, NOIDA declared her “Not Eligible” on the ground that her status in the unit was not shown and her photograph was not attached. After the High Court directed fresh consideration, NOIDA rejected her claim in 2009 on the ground that she was not a Director on the cut-off date of 31.03.2006. In 2011, the High Court quashed that order, noting that the brochure provided no such cut-off date and that she had become a Director before the last date for applying.

On reconsideration in 2012, NOIDA rejected her claim again, this time because she had not filed a copy of Form-32 submitted before the Registrar of Companies along with her application. The High Court relegated her to the revisional remedy under Section 41(3) of the U.P. Urban Planning and Development Act, 1973, as adopted by Section 12 of the U.P. Industrial Development Act, 1976. The Principal Secretary, Industrial Development dismissed her revision on 17.03.2017 on the same ground.

Challenging the revisional order, petitioner pleaded that the brochure only required proof of directorship, which she had furnished, and nowhere required Form-32. It was argued that NOIDA had shifted its ground at every stage and that adding a document requirement after applications were submitted amounted to changing the rules midway, in violation of Article 14 of the Constitution of India.

Counsel for NOIDA argued that applying within time gave petitioner no vested right to allotment, and that Form-32 was relevant for verifying her status as Director, so considering its absence did not add a new eligibility condition.

The Court accepted that an application alone creates no vested right and that the authority may scrutinise the documents filed, but held that this power cannot be stretched into a power to add a new mandatory document after applications have been invited. It noted that NOIDA had not shown any clause in the brochure making Form-32 mandatory or the sole proof of directorship.

“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.”

The Court observed that once the cut-off date ground was set aside in 2011, NOIDA could not replace it with another ground having no basis in the brochure.

Referring to K. Manjusree v. State of Andhra Pradesh and Tej Prakash Pathak v. Rajasthan High Court, the Court held that though the principle arose in selection matters, it rests on fairness, transparency and non-arbitrariness, and bars a public authority from inviting participation on declared terms and then altering them midway.

It noted that in Delhi Development Authority v. Joint Action Committee, Allottee of SFS Flats, the Supreme Court had held in the context of an allotment scheme that terms not forming part of the original offer, and not communicated, could not be imposed later.

Rejecting NOIDA's contention that petitioner had no vested right, the Court observed,

“The petitioner is not claiming that the mere filing of her application automatically created an indefeasible right to a plot. Her claim is that her application was required to be considered under the terms of the scheme as they existed when she applied and that the respondents could not reject her application by imposing a condition which was not prescribed at that time. There is a material distinction between a 'right to automatic allotment' and a 'right to fair consideration in accordance with the declared terms of the scheme'. It is the latter right which has been infringed in the present case.”

On the revisional authority's reliance on other applications rejected for missing documents, the Court held, “Uniform application of an unlawful or undisclosed condition cannot make that condition lawful.”

Holding that the delay since 2006 resulted from NOIDA's own successive orders, the Court quashed the orders dated 17.03.2017 and 10.09.2012. NOIDA was directed to allot the plot applied for at the original premium under the 2006 scheme after adjusting the amount already deposited, and, if that plot is genuinely unavailable, an alternative plot of the same type, category, size and nature, preferably in Sector-100 or at a comparable location, at the original rate.

The Court barred rejection on the ground of non-submission of Form-32 or the cut-off date of 31.03.2006, and directed that the exercise be completed preferably within eight weeks.