1. Factual Background and Procedural History
The dispute in Estate Officer, HUDA v. Nirmala Devi arose from the cancellation of a residential plot allotment by the Haryana Urban Development Authority (HUDA), now known as HSVP (Haryana Shahari Vikas Pradhikaran).
The respondent, Nirmala Devi, had been allotted Plot No. 155, Sector 21, Panchkula, under the authority’s residential scheme. She duly deposited the initial allotment amount as required. However, due to personal and financial constraints, subsequent instalments were not paid within the stipulated time.
Without serving a show cause notice or affording an opportunity of hearing, the Estate Officer cancelled the allotment and forfeited the amount already deposited. The respondent’s representation for restoration was summarily rejected.
Aggrieved, Nirmala Devi approached the District Consumer Forum, which ruled in her favour and directed restoration of the plot. The State Consumer Commission affirmed the order. However, on appeal, the National Consumer Disputes Redressal Commission (NCDRC) reversed the concurrent findings, holding that the authority acted within its contractual rights.
Nirmala Devi thereafter approached the Supreme Court, challenging the NCDRC’s decision.
The case was decided on 14 July 2025, wherein the Supreme Court allowed the appeal, set aside the cancellation, and reaffirmed that administrative authorities must comply with the principles of natural justice before cancelling allotments.
2. Identification of Legal Issues
The Supreme Court addressed the following key legal questions:
- Whether an administrative authority, such as HUDA, can cancel an allotment of land or plot without giving prior notice or hearing to the allottee?
- Whether the absence of procedural fairness vitiates such cancellation even if the authority’s contractual terms allow forfeiture?
- Whether such allotment disputes fall within the jurisdiction of consumer fora under the Consumer Protection Act?
3. Arguments of the Parties
Appellant (HUDA / Estate Officer)
- The allotment letter contained explicit terms and conditions permitting cancellation for non-payment of instalments.
- The authority acted strictly in accordance with the contractual stipulations; hence, no notice or further opportunity was required.
- The respondent defaulted repeatedly, and her conduct disentitled her from claiming equitable relief.
- Consumer fora could not interfere with administrative or contractual decisions of statutory development authorities.
Respondent (Nirmala Devi)
- No show cause notice or personal hearing was granted prior to cancellation.
- The authority’s unilateral cancellation was arbitrary and violated audi alteram partem—a fundamental principle of natural justice.
- The act of forfeiting the deposited amount without hearing amounted to unfair trade practice and deficiency in service under the Consumer Protection Act.
- The respondent relied on prior Supreme Court decisions, including:
- State of Orissa v. Dr. Binapani Dei (AIR 1967 SC 1269)
- A.K. Kraipak v. Union of India (1969) 2 SCC 262
- Canara Bank v. Debasis Das (2003) 4 SCC 557
- State of Orissa v. Dr. Binapani Dei (AIR 1967 SC 1269)
4. Court’s Analysis and Reasoning
(a) Requirement of Natural Justice
The Supreme Court held that even in contractual or administrative matters, the authority must adhere to principles of natural justice unless expressly excluded by statute.
Cancellation of an allotment and forfeiture of amount involves civil consequences, and therefore, a show cause notice and opportunity of representation are indispensable.
The Court reaffirmed that:
“A person cannot be condemned unheard, and any administrative decision affecting civil rights, even if arising from contract, must meet the test of fairness.”
(b) Interpretation of Contractual Clauses
While the allotment letter permitted cancellation for default, the Court clarified that contractual power does not override procedural fairness.
The Estate Officer’s failure to issue notice rendered the action ultra vires.
(c) Consumer Jurisdiction Upheld
The Court reiterated that where a statutory authority renders services for consideration—such as developing and allotting plots—it acts as a service provider under the Consumer Protection Act.
Hence, disputes concerning deficiency in service or arbitrary cancellation fall within the jurisdiction of consumer fora.
(d) Reference to Precedents
The Court relied on a consistent line of authority, including:
- HUDA v. Orchid Infrastructure Developers (P) Ltd., (2017) 4 SCC 243
- Kumari Shrilekha Vidyarthi v. State of U.P., (1991) 1 SCC 212
- S.L. Kapoor v. Jagmohan, (1980) 4 SCC 379
These decisions collectively affirm that administrative actions involving deprivation of rights must observe natural justice.
(e) Administrative Accountability and Fair Play
The Bench emphasized that development authorities, being public bodies, are bound by constitutional standards of fairness, non-arbitrariness, and reasonableness under Article 14 of the Constitution.
Thus, their decisions must reflect transparency and procedural propriety, irrespective of contractual clauses.
5. Final Conclusion and Holding
The Supreme Court held that:
- Cancellation of the plot allotment without notice or hearing is invalid.
- The decision violated principles of natural justice and fair play.
- The consumer fora were justified in granting relief, and the NCDRC erred in reversing their concurrent findings.
Accordingly, the Supreme Court:
- Set aside the order of the NCDRC,
- Restored the orders of the District and State Commissions, and
- Directed restoration of the allotment to Nirmala Devi, with consequential benefits.
FAQs:
1. Can a housing authority cancel an allotment without notice?
No. Any cancellation without affording notice and hearing violates the principles of natural justice and is legally invalid.
2. Does the Consumer Forum have jurisdiction over development authorities like HUDA?
Yes. When such authorities offer services like land development and plot allotment for consideration, they are deemed service providers under the Consumer Protection Act.
3. Are administrative authorities bound by natural justice in contractual matters?
Yes. Even in contractual dealings, if the action affects civil rights, authorities must observe fairness, notice, and opportunity of hearing.
4. Can forfeiture clauses override principles of natural justice?
No. Contractual forfeiture clauses cannot justify arbitrary or unilateral cancellation. Due process must still be followed.
5. What is the effect of violating natural justice in administrative decisions?
Any decision made in breach of natural justice is void and unenforceable, regardless of the merits or contractual terms.
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