Local Authority Can't Deny Citizen's Constitutional Right To Establish Industrial Unit Due To Unfounded Public Resistance/ Protest: Kerala HC

Justice P.V. Kunhikrishnan, made the observation while delivering a judgment in a writ petition filed by two entrepreneurs whose licensed hot mix plant project had been stalled for years due to resistance from a section of local residents.

The petitioners had invested over ₹5 crore in establishing a modern hot mix plant after securing all necessary permissions, including clearances from the Pollution Control Board and health authorities. Despite this, the local Panchayat repeatedly denied or delayed licensing, citing public protests and apprehensions of health hazards.

“Simply because there is a hue and cry from a section of people without any basis, a local authority cannot deny the petitioners' valuable constitutional right as a citizen to establish a unit.” the Court said.

The Court noted that the materials on record show that the petitioners have invested several crores of rupees in establishing the industrial unit in the State after securing clearances, licenses, and permits mandated by the applicable statutes, rules, and regulations, except the Panchayat's permission.

The Court emphasized that public dissent, while legitimate in a democracy, cannot override lawful approvals granted under statutory frameworks, particularly when no environmental or regulatory violations are established.

“While public dissent is an acknowledged and protected facet of a democratic society, it cannot, in the absence of any proven illegality, be permitted to wholly thwart a venture that has complied with every statutory requirement. If such a situation is allowed to persist, it is not merely the petitioners who will suffer; our state economy will suffer as well. The wider message conveyed to law-abiding investors is that compliance may still not secure their operational endeavours.” the Court said.

“What was envisaged as a lawful enterprise intended to generate employment and contribute to the local economy has, due to sustained public protest, been reduced to a silent complex of concrete, steel, and idle machinery. The more serious concern that emerges from the records is the erosion of faith in the efficacy of statutory approvals and in the protection promised by the rule of law. When permissions granted by competent authorities in strict conformity with the legal framework are rendered meaningless by extra-legal resistance, the credibility of that framework itself comes under strain.” the Court added.

The Court also examined whether the Panchayat retains the power to refuse permission under Section 233 of the Kerala Panchayat Raj Act after its 2018 amendment. The Section 233 of the Act deals with the permission for the construction of the factories and installation of machinery. The petitioners argued that according to the amendment to Section 233 (4) of the Act, Panchayat cannot reject the application but can only impose conditions while considering the application.

The respondent, Panchayat submitted that amendment carried out in Section 233 was not applicable to the petitioners' application, as the machinery was already installed by the petitioners before the Act of 2018 came into force.

The Court noted that even though the first petitioner had submitted an application alone in the year 2017 under Section 233 of the Act, another application was submitted by the petitioners together after forming a partnership firm in 2025. It further noted that the ultra model hot mix plant was purchased only in 2022 based on the invoice submitted before the Court.

“How can a new piece of machinery purchased as per Ext.P17 invoice on 25.03.2022 be installed in 2017 by the petitioners? That shows that the Panchayat is trying to find a reason to reject the application.” Court noted.

The Court also reinforced the doctrine of “deemed permission” under Section 236(3). According to deemed permission, where a Panchayat fails to act within the prescribed time, the application is deemed approved by operation of law. Subsequent rejection or obstruction is legally unsustainable.

The Court noted that after the application seeking permission for license was submitted, there was no intimation from the Panchayat within 30 days as statutorily mandated and hence the deemed permission kicked in after the prescribed 30 days. The Court relied on Abdul Shafeek v Asamannoor Grama Panchayath and Another [2018 (3) KHC 170] to hold that the petitioner was holding a deemed license.

The respondents have also argued that since alternative remedy is available before the petitioner, the Court need not entertain a Writ Petition under 226 of the Constitution. But, the Court stated that if the Court does not interfere in this case, invoking the powers under Article 226 of the Constitution of India, it will be injustice to genuine entrepreneurs.

“Here is a case where an entrepreneur is behind the Panchayat for obtaining permission, and the Panchayat dismissed that application even though the Ext.P1 judgment is there and the amended Section 233 of the Act, 1994, is also there. If this Court does not interfere in this case, invoking the powers under Article 226 of the Constitution of India, it will be an injustice to a genuine entrepreneur who has invested crores of rupees.” Court added

Even though the party respondents submitted that the investment of crores of rupees is not a reason to interfere with the order rejecting the application citing environmental hazards; the Court noted that all statutory authorities have found that there is no environmental hazard.

“All statutory authorities have found that there is no environmental hazard. These are only apprehensions of the party respondents.” Court noted.

The Court thus set aside the impugned Panchayat order which rejected the application and directed the respondents to allow the application filed by the petitioners under Section 233 of the Act after imposing appropriate conditions.

Case Title: Sudheer. S and Anr. v State of Kerala and Ors.

Case No: WP(C) 34275/ 2025

Citation: 2026 LiveLaw (Ker) 229

Counsel for Petitioner: Ajith Krishnan, Renjith Thampan (Sr.)

Counsel for Respondent: M H Hanil Kumar, Kaleeswaram raj, Thulasi K, Raj, Aparna Narayan Menon, Chinnu Maria Antony