Case Background
The case arose from an industrial plot allotted by the Bihar Industrial Area Development Authority (BIADA) to M/s Prerna Agro Food Products. The plot, bearing No. O-7(P) and measuring 5000 square feet, was allotted under a lease deed dated 07.06.2018.
According to the petitioner, the unit could not start commercial production due to unavoidable circumstances, including Covid-19 and other reasons beyond its control. BIADA, however, proceeded on the basis that the unit had failed to commence production within the stipulated time.
On 29.12.2022, the Deputy General Manager, Industrial Area, Patna Cluster, BIADA (respondent no. 6) passed an office order, Memo No. 801, cancelling the petitioner’s plot allotment. The petitioner challenged this cancellation in appeal before the Principal Secretary, Department of Industries, Government of Bihar, who is the appellate authority under the scheme.
On 07.03.2023, in Appeal No. 102 of 2023, the Principal Secretary (respondent no. 2) affirmed the cancellation order and rejected the appeal. Faced with loss of its industrial plot, the petitioner invoked the writ jurisdiction of the Patna High Court under Article 226 of the Constitution by filing Civil Writ Jurisdiction Case No. 5269 of 2023.
In the writ petition, the petitioner sought quashing of both the cancellation order dated 29.12.2022 and the appellate order dated 07.03.2023. The petitioner also sought protection against any further allotment of the plot to third parties and against any coercive steps by BIADA regarding the allotment, till final disposal of the case.
What the Court Examined and Decided
The matter came up before Hon’ble Mr. Justice A. Abhishek Reddy of the Patna High Court. Arguments were heard from the petitioner’s counsel and from the counsel representing BIADA and the State authorities.
The central grievance of the petitioner was that cancellation of the allotment was harsh because the failure to commence commercial production was not deliberate. Learned counsel for the petitioner submitted that circumstances like Covid-19 had severely affected the ability of small industrial units to start or run operations, and the petitioner’s case fell within this hardship.
The petitioner requested the Court to grant an opportunity to start commercial production instead of letting the cancellation stand. The emphasis was on the plea that the unit was willing and ready now to comply with all conditions, including payment of dues, and that the default was due to reasons beyond its control.
To support this request, learned counsel for the petitioner drew the Court’s attention to an earlier decision of a Division Bench of the Patna High Court in C.W.J.C. No. 15567 of 2022, titled M/s Maa Kali Food Products Industrial Growth Centre, Maranga Vs. The State of Bihar & Ors., decided on 02.12.2022.
In that case, under similar circumstances of non-commencement of production by an industrial unit, the Division Bench had set aside BIADA’s cancellation order. It did so on the basis of a detailed undertaking given by the concerned unit to start commercial production within a stipulated time. The Court in that matter treated the undertaking as a decisive factor in giving the unit a second chance.
Following that precedent, the petitioner in the present case also filed a written undertaking on affidavit before the Court. The undertaking, which the judgment reproduces in full, contained several specific promises:
First, the petitioner undertook to start commercial production within 90 days from the date on which BIADA recalls the cancellation order dated 07.06.2018. Secondly, the petitioner promised that within nine months, the industrial unit would be fully operational and functional, achieving at least 80% production capacity as per the original terms of allotment.
Thirdly, the petitioner committed to clear all admitted dues, if any, payable to BIADA within four weeks from the date of handing over possession or recall of the cancellation order. Fourthly, the petitioner agreed to furnish a performance bank guarantee of Rs. 1,00,000, identified by Bank Guarantee No. 4403IPEBG230002 dated 04.10.2023, in favour of BIADA.
Fifthly, the petitioner undertook to clear all dues relating to GST and electricity charges. Most importantly, the petitioner acknowledged that in case of failure to comply with the undertaking, BIADA would be entitled to take vacant and peaceful possession of the premises, with liberty to re-allot it to a third party, and the petitioner would lose all rights over the land and premises.
The undertaking also stated that the petitioner would be liable for initiation of contempt proceedings if it violated the undertaking given to the Court, and that the petitioner would abide by its contents.
Having considered this undertaking and the earlier Division Bench judgment in C.W.J.C. No. 15567 of 2022, the Court noted that the Division Bench had already accepted this approach of granting a conditional opportunity based on a solemn undertaking. The Court was persuaded that a similar course of action would meet the ends of justice in the present case as well.
The Court also took into account the submissions made by learned counsel for BIADA. Although the detailed submissions of BIADA’s counsel are not recorded in the text, it is clear that the Court balanced BIADA’s concern for enforcement of industrial norms with the petitioner’s plea for a last opportunity.
The Court, therefore, formed the opinion that accepting the undertaking and granting the petitioner a time-bound opportunity to start commercial production would be an appropriate and just solution. It would save the industrial unit while still protecting BIADA’s interest through strict conditions and consequences in case of default.
On this basis, the Court issued a series of clear directions.
First, as BIADA had already taken possession of the plot after cancellation, the Court directed that possession of the premises be handed back to the petitioner immediately after receipt of the Court’s order.
Secondly, the Court directed that the petitioner must furnish a bank guarantee for Rs. 1,00,000 within one week from the date of handing over possession. This requirement translates the earlier undertaking into an enforceable condition.
Thirdly, the petitioner was directed to clear all outstanding dues of BIADA, if any, within two weeks from the date of handing over possession.
Fourthly, the Court mandated that the petitioner must start commercial production within ninety days from the date of handing over possession and must commence manufacturing as approved under the Bihar Industries Commercial Policy, 2016. This links the petitioner’s obligations to the applicable industrial policy framework.
The judgment records that the consequences of breach of the undertaking, including possible contempt proceedings, were explained to the petitioner through counsel. The Court expressly accepted and took on record the petitioner’s undertaking dated 11.10.2023.
The Court further clarified that in the event of default of the undertaking, the petitioner must hand over vacant and peaceful possession of the allotted property to BIADA within two weeks. If the petitioner fails both to start full commercial production within the stipulated time and to hand over possession within two weeks thereafter, BIADA would be free to take possession of the premises in question.
Finally, having set these conditions, the Court quashed and set aside the cancellation order dated 29.12.2022 issued vide Memo No. 801 by the Deputy General Manager, Patna Cluster, BIADA, as well as the appellate order dated 07.03.2023 passed by the Principal Secretary-cum-Appellate Authority in Appeal Case No. 102 of 2023.
With these observations and directions, the writ petition was allowed.
Why This Judgment Matters
This judgment is significant for entrepreneurs and small industrial units operating on BIADA land in Bihar. It shows that the Patna High Court can give a second chance to units that failed to start production, especially where the failure is explained as arising from circumstances like Covid-19 and is not shown to be deliberate.
However, the relief is not unconditional. The Court insisted on a detailed, time-bound undertaking and imposed strict conditions: bank guarantee, clearance of dues, fixed timelines for starting production, and clear consequences in case of breach.
For BIADA and similar authorities, the judgment strikes a balance. It does not deprive them of control over industrial plots but requires them to consider genuine hardship when a unit is willing to comply and invest. At the same time, if the unit again defaults, BIADA is expressly authorised to retake possession and proceed with further allotment.
For ordinary readers, the case shows that approaching the Patna High Court with a clear plan, commitment to timelines, and readiness to accept serious consequences can sometimes save an industrial allotment that has been cancelled. But once such an undertaking is given, failure to comply can lead not only to loss of land but also to contempt of court.
Legal Issues and Answers
- Issue: Whether BIADA’s cancellation of the petitioner’s industrial plot allotment and the appellate affirmation should stand, despite the petitioner’s failure to start production within time.
Answer: The Patna High Court quashed both the cancellation order and the appellate order, but only on the basis of a strict written undertaking by the petitioner and subject to compliance with detailed conditions and timelines. - Issue: What conditions should govern restoration of possession and continuation of the allotment in favour of the petitioner.
Answer: The Court directed re-delivery of possession, furnishing of a bank guarantee of Rs. 1,00,000, clearance of outstanding dues, commencement of commercial production within 90 days, achievement of full commercial production within the stipulated period, and surrender of possession to BIADA in case of default, with the possibility of contempt proceedings for breach of undertaking.
Cases Cited by the Court
- C.W.J.C. No. 15567 of 2022, M/s Maa Kali Food Products Industrial Growth Centre, Maranga Vs. The State of Bihar & Ors., judgment dated 02.12.2022, Division Bench of the Patna High Court.
Case Details
Case Number: Civil Writ Jurisdiction Case No. 5269 of 2023
Case Title: M/S Prerna Agro Food Products through its Proprietor Shri Ashutosh Kumar Sinha vs. The Bihar Industrial Area Development Authority (BIADA) & Ors.
Citation: 2024 (1) PLJR 305
Court: High Court of Judicature at Patna
Coram: Hon’ble Mr. Justice A. Abhishek Reddy
Date of Judgment: 06.11.2023
Advocates:
For the petitioner: Mr. Rajesh Kumar, Advocate
For BIADA: Mr. Girijish Kumar, Advocate
For the respondents/State: Mr. P.K. Shahi, Advocate General; Mr. Manish Dhari Singh, AC to AG
Nature of the Case: Writ petition challenging cancellation of industrial plot allotment and dismissal of statutory appeal.
Link to Full Judgment: Patna High Court Judgment in CWJC No. 5269 of 2023
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