The main legal point established in the judgment is that the cancellation of a lease must comply with the principles of natural justice and the terms and conditions of the lease agreement and the relevant legal provisions.

M.Y.Eqbal, J.

1. In this writ application the petitioner has prayed for quashing the order dated 5.2.1999 passed by respondent no. 4 Industrial Development Commissioner, Government of Bihar dismissing the appeal preferred by the petitioner and held that the concerned respondent is justified in cancelling the lease of the petitioner. By filing amendment petition, petitioner has also prayed for quashing the order of cancellation which was communicated by the respondent vide letter dated 13.5.98.

2. Petitioners case in brief is that the land measuring 4.27 acres was allotted to the petitioner vide letter dated 25.11.91. In terms of the allotment order, petitioner deposited full consideration amount of Rs. 4,14,190/- on 25.11.91 and started paying rent regularly for the occupation of the said land. It is stated that the possession of the land was given in December, 1991 but inspite of that lease deed was not executed and registered in favour of the petitioner. But on much pursuance lease deed was executed and registered on 25.6.96. Petitioners case is that after execution of the lease deed petitioner started its Scrap Processing Unit for which several lakhs of rupees were spent for the development of the land. Since the Scrap Processing business was not picking up, petitioner submitted fresh proposal to the respondent for starting Sheet Metal Project business but till date no response was given from the side of the respondent. Surprisingly, by letter dated 12.9.97 respondent issued show-cause notice as to why allotment of the lease be not cancelled as the petitioner was not utilising the land for the purpose the land was transferred to the petitioner. In response to the said notice petitioner informed the Authority that the Managing Director of the Company was outside India in connection with business and request was made for time. Petitioner then vide letter dated 5.1.98 requested the respondent- authority to allow it atleast reasonable time to implement export oriented Sheet Metal project. This letter was given in response to letter of the respondent Authority dated 11.11.97. Petitioners further case is that without taking any decision for extension of time and without giving opportunity of hearing the factory premises of the petitioner was sealed in July, 1998 when the petitioner learnt that the lease was cancelled on 13.5.99. Petitioner then preferred an appeal before the respondent authority which was rejected by the impugned order.

3. In the Counter-affidavit filed by the respondent AIIDA it is stated inter-alia that the land was allotted to the petitioner by Virtue of allotment order dated 25.11.91 coupled with a bond executed by the petitioner. After taking possession of the land there was no satisfactory progress till 1994 towards implementation of the project for which land was allotted. As per the terms of the allotment show cause notice for cancellation of allotment was issued in 1993. In 1995 petitioners Company had applied before the respondent-Authority for approval of fresh proposal of Sheet Metal Job. Respondent with a view to give opportunity to the petitioner to start industry executed registered lease deed in the year 1996. But inspite of that petitioner had not even constructed any work shed nor installed any related machinery on the allotted plot to carry out the job. Again show-cause notice was issued on 12.9.97 followed by another show-cause notice dated 11.11.97. In response to the show cause notice petitioners Company requested for further time of one year without giving any concrete plan and implementation schedule. Since petitioner failed to file any show-cause, respondent Authority cancelled the allotment vide cancellation order dated 13.5.98 and the petitioner was directed to remove the articles from the land. It is further stated by the respondent-Authority that after 2 1/2 months from the date of order of cancellation the premises was sealed on 27.7.98 and detailed inventory list was prepare