Case Background
The dispute arose from cancellation of an industrial plot allotted by the Bihar Industrial Area Development Authority (BIADA) to a private company, I.G. Foods and Beverage Pvt. Ltd.
The company had earlier filed a writ petition, C.W.J.C. No. 8521 of 2023, before the Patna High Court. That writ petition led to Letters Patent Appeal (L.P.A.) No. 1418 of 2023. In the L.P.A., a Bench of the High Court passed a judgment on 08.01.2025.
In that judgment, the Court questioned whether the Managing Director of BIADA had the legal authority to cancel the allotment of land in favour of the writ petitioner. The Court relied on an older decision of the Patna High Court in Deepak Paints (P) Ltd. & Ors. vs. The State of Bihar & Ors. [2008 (2) PLJR 293], which had held that only the “Authority” as a body, and not the Managing Director alone, could cancel allotments.
Feeling aggrieved by this finding about lack of power in the Managing Director, BIADA filed Civil Review No. 37 of 2025 seeking review of the L.P.A. judgment dated 08.01.2025. The review was heard by a Bench comprising Hon’ble the Acting Chief Justice and Hon’ble Mr. Justice Partha Sarthy, and decided on 29.04.2025.
What the Court Examined and Decided
In the review proceedings, BIADA, through its learned Senior Advocate, focused on one central point: the law governing BIADA’s powers had changed after the Deepak Paints judgment of 2008. Therefore, the earlier L.P.A. judgment, which simply followed Deepak Paints without considering the amendment, needed reconsideration.
The Court first noted the basis of the earlier view. In Deepak Paints, the Patna High Court had looked at Section 6 of the Bihar Industrial Area Development Authority Act, 1974 (Act of 1974), as it then stood. Section 6 falls in Chapter 3 of the Act and sets out the general duties and powers of the Authority.
At that time, Section 6(2) clearly said that the “Authority” itself would be responsible for various functions connected with industrial areas, including:
planning, development, and maintenance of industrial area and amenities; allotment of land, factory sheds or buildings; execution, modification, and cancellation of such allotment or lease; and realization of fees, rent, charges and related matters.
On a plain reading, the Deepak Paints court held that since the power of modification and cancellation of allotment or lease was given to the “Authority”, a collective body comprising the Chairman, Managing Director and other officials, the Managing Director alone could not exercise that power. An order of cancellation passed only by the Managing Director would be null and void.
In the present review, BIADA argued that this position changed after the Amendment Act of 2017. By that amendment, sub-Section (4a) was added to Section 3 of Chapter 2 of the Act of 1974.
Sub-Section (4a) provides that the Authority may, by general or special order in writing, delegate to any officer of the Authority, subject to conditions specified in the order, such of its powers and functions under the Act as it may deem necessary.
The key question before the Court was whether this new sub-Section (4a) in Section 3 controls or affects the earlier understanding of Section 6, and whether, after the amendment, the Authority can delegate even the power of cancellation of allotment/lease to an officer such as the Managing Director or Joint Managing Director.
The Court examined how Section 6 and the new sub-Section (4a) fit together. It reiterated that Section 6, in Chapter 3, still clearly intends that cancellation of allotment or lease is a function of the Authority. However, with the insertion of sub-Section (4a), Section 3 now expressly allows the Authority to delegate its powers and functions under the Act to any officer, by a written general or special order, subject to terms and conditions.
The learned Senior Advocate for BIADA further argued that sub-Section (4a) cannot be read ejusdem generis (of the same kind) with Section 3(4). Section 3(4) lists certain functions that the Managing Director, as the Chief Executive Officer of the Authority, may perform. These include:
(a) receiving all money on behalf of the Authority, issuing receipts and maintaining proper accounts;
(b) drawing money from the Authority’s fund for salaries, allowances and other expenses;
(c) authenticating any order of the Authority; and
(d) performing any other duty assigned to him by the Authority or the State Government from time to time.
It was pointed out that clause (d) of Section 3(4) already recognizes that the Managing Director can perform any other duty assigned to him by the Authority or the State Government. According to BIADA’s counsel, the list of duties in clauses (a) to (d) is illustrative, not exhaustive. Therefore, with the new sub-Section (4a), the Authority can delegate even broader powers, including cancellation of lease, to the Managing Director or any other officer, as long as such delegation is made by a proper general or special written order and subject to conditions.
The Court accepted this reasoning. It held that:
Sub-Section (4a) of Section 3 permits the Authority to delegate its powers and functions to the Managing Director or any other officer, subject to terms and conditions fixed by the Authority.
The controlling provision in Section 3(4), setting out duties (a) to (d), is only illustrative. There is no caveat limiting the Managing Director’s powers only to those four duties. Therefore, with proper delegation under Section 3(4a), powers under Section 6, including cancellation of lease, can be exercised by the Managing Director or Joint Managing Director as delegatees of the Authority.
On this basis, the Court found force in the submission of BIADA’s counsel. It held that the earlier L.P.A. judgment had applied Deepak Paints without taking into account the 2017 amendment, and therefore required modification.
The judgment dated 08.01.2025 in L.P.A. No. 1418 of 2023 was accordingly modified. The Court clarified that:
The Managing Director or Joint Managing Director can pass an order pertaining to cancellation of a lease deed as a delegatee of the Authority, provided he is authorized by the Authority by a general or special order.
In such a situation, the ratio of Deepak Paints (P) Ltd. would not apply, because that judgment was delivered when the Act of 1974 had not been amended and there was no provision like Section 3(4a) allowing such delegation.
At the same time, the Court also emphasized procedural fairness. It clarified that the Authority or its delegatee (Managing Director or Joint Managing Director) would be entitled to consider cancellation of the plot only after giving the respondent company an opportunity to be heard.
The respondent is to file an objection, if not already filed. The issue must then be considered on the basis of available inspection reports as well as the objection. The Authority or its delegatee may, if necessary, conduct further inspection.
The Court also directed that the Authority should consider any request of the respondent company for some time to establish the industry. Ultimately, any order passed must be a “speaking order” – that is, it must give reasons and show proper application of mind to the materials and submissions.
With these clarifications and modifications, the Patna High Court disposed of the review petition.
Why This Judgment Matters
This judgment is important for industries and entrepreneurs who obtain land or sheds from BIADA, as well as for BIADA officials and the State. It clarifies who can legally cancel an industrial allotment after the 2017 amendment to the BIADA Act.
The ruling makes it clear that the Managing Director or Joint Managing Director can cancel allotments, but only if the Authority has formally delegated that power through a general or special written order. This prevents disputes based solely on technical objections about who signed the cancellation order.
At the same time, the Court safeguards allottees by insisting on fair procedure. Before any cancellation, the allottee must be given a chance to file objections, inspection reports must be considered, further inspection may be done if needed, and the allottee’s request for time to set up the industry must be examined. The final decision must be reasoned and in writing.
For people facing possible cancellation of BIADA plots, this means that they cannot simply challenge cancellation orders on the ground that the Managing Director signed them. Instead, they must look at whether proper delegation exists and whether due opportunity and a fair hearing were given.
Legal Issues and Answers
- Issue: After the 2017 amendment to the BIADA Act, can the Managing Director or Joint Managing Director validly cancel an allotment or lease, or does only the collective “Authority” have that power under Section 6?
Answer: Yes. The Managing Director or Joint Managing Director can cancel an allotment or lease as delegatees of the Authority, provided the Authority has authorized them through a general or special written order under Section 3(4a). In such a case, the earlier ratio of Deepak Paints does not apply. - Issue: What procedure must the Authority or its delegatee follow before cancelling an industrial plot allotment?
Answer: They must give the allottee an opportunity to file objections, consider inspection reports and objections, may conduct further inspection if required, consider any request for time to establish the industry, and then pass a reasoned, speaking order.
Cases Cited by the Court
- Deepak Paints (P) Ltd. & Ors. vs. The State of Bihar & Ors., 2008 (2) PLJR 293
Case Details
Case Number: Civil Review No. 37 of 2025 in Letters Patent Appeal No. 1418 of 2023, arising out of C.W.J.C. No. 8521 of 2023
Case Title: The Bihar Industrial Area Development Authority & Ors. vs. I.G. Foods and Beverage Pvt. Ltd. & Ors.
Coram: Hon’ble the Acting Chief Justice; Hon’ble Mr. Justice Partha Sarthy
Citation: 2025(3) PLJR 657
Advocates:
- For the petitioners (BIADA and its officers): Mr. Lalit Kishore, Senior Advocate; Mr. Sanchay Srivastava, Advocate; Mr. Sushant Srivastava, Advocate; Mr. Kanishka Shankar, Advocate; Mr. Ashish Kumar Palit, Advocate
- For Opposite Party No. 1 (writ petitioner company): Mr. Alok Ranjan, Advocate
- For the State of Bihar: Mr. Amish Kumar, Advocate
Nature of the Case: Civil review petition of a Letters Patent Appeal judgment dealing with cancellation of industrial land allotment under the BIADA Act, 1974
Link to Judgment: Click here to View full judgment on Patna High Court
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