No Indefeasible Right Can Be Claimed On Basis Of Grant Which Was Illegal: SC Upholds Withdrawal Of NOC To Commence Ayurvedic Medical Hospital

The appeal before the Apex Court challenged the withdrawal of a No Objection Certificate (NOC) to commence Ayurvedic Medical College and Hospital, in the private sector.

The Division Bench comprising Justice Sudhanshu Dhulia and Justice K. Vinod Chandran held, “A plea of promissory estoppel also would not apply, since on the facts herein, there can be no ground raised of the appellant having arranged its affairs, on the grant being issued, in such a manner as to cause prejudice, on the subsequent withdrawal and unable to resume its earlier position.”

Factual Background

A proposal was made by the appellant Trust, which was established in the year 2012 to start and establish educational and research­ oriented institutions in the medical sector. The proposal was considered by the Department of Ayurveda and a project report was required to be submitted in consonance with the prescriptions of the Central Council of Indian Medicine (CCIM), Government of India. A site inspection was also conducted by the Departmental Committee, pursuant to which as is alleged by the appellant, an NOC was issued. The appellant applied for affiliation and obtained it from the Himachal Pradesh University but later, in 2017, the NOC was withdrawn.

Arguments

It was the case of the appellants that based on the NOC issued by the Department, the appellant Trust had set up a hospital of 60 beds and on that short ground, the High Court ought not to have sustained the withdrawal. It was also pointed out that the State would only benefit by the establishment of an Ayurvedic College and Hospital and the decision to the contrary, taken by the Government would be arbitrary.

The Standing Counsel appearing for the State contended that the NOC itself was issued by the Department without following the Rules of Business; which required a policy decision to be taken after placing it before the Council of Ministers. It was brought to the Court’s notice that the Chief Minister had placed the matter before the Council of Ministers, which was later withdrawn by the Minister of the concerned department and the NOC issued, based on the Minister’s Order, by the Department.

Reasoning

The Bench took note of the fact that the Chief Minister had once placed the matter before the Cabinet, later withdrawn and then again, at the instance of the Minister for Ayurveda placed it before the Cabinet. While the matter was thus pending, the Minister unilaterally called back the files and opined that there is no requirement to place the matter regarding the issuance of NOC before the Council of Ministers and directed the Department to issue the NOC, especially since no financial implication is involved.

Rule 14 of the Rules of Business of the Government provides that every matter included in the Schedule shall be brought before the Council and the Chief Minister also was empowered to bring other matters before the Council at his discretion. Insofar as the matters contained in the Schedule, the only discretion available to the Chief Minister, as per Rule 16, was to take a decision by circulation in the Council of Ministers; that too only if the Council is unanimous. “If there is a dissent and also if the Chief Minister opines that there should be a discussion, it had to be placed before the Council of Ministers”, the Bench added.

The Bench agreed with the view of the High Court that there could not have been an NOC issued as per the Rules of Business of the Government without the concurrence of the Council of Ministers; before which the matter was already placed by the Chief Minister, when the NOC was issued on the orders of the Minister for Ayurveda.The appellant was sanctioned a loan of Rs. 5 Cr. by Baghat Urban Cooperative Bank Ltd. just 11 days before the grant was withdrawn. The Bench refused to accept the contention of the appellant that based on the grant, the Hospital was constructed by the appellant in less than a month’s time.

“There can be no indefeasible right claimed on the basis of the grant issued, which is clearly illegal. There is no promise offered by the State or the Government by reason of the invalid order issued by the Department”, the Bench said.

The Apex Court further observed that an opportunity granted by the Department would have been a useless formality as it could have done nothing against the decision of the Council of Ministers. Finding no reason to interfere in the Judgment of the High Court, the Bench dismissed the Appeal.

Cause Title: Jagdish Chand Memorial Trust v. State of Himachal Pradesh (Neutral Citation: 2025 INSC 232)

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