Supreme Court Upholds Withdrawal of No Objection Certificate for Ayurvedic College

The Supreme Court of India has recently ruled on the withdrawal of a No Objection Certificate (NOC) issued to Jagdish Chand Memorial Trust for setting up an Ayurvedic Medical College and Hospital in Himachal Pradesh. The judgment, in Jagdish Chand Memorial Trust vs. State of Himachal Pradesh, clarifies the government’s power to withdraw an improperly issued NOC and the limits of the doctrine of promissory estoppel. The case highlights the significance of following due process in policy decisions and the importance of approval from the Council of Ministers in government decisions.

The Trust had initiated the process of establishing an Ayurvedic college and hospital based on the NOC granted by the Himachal Pradesh government. However, the government later revoked the NOC, citing procedural lapses. The Trust challenged this withdrawal in the High Court, which upheld the government’s decision. The Trust then appealed to the Supreme Court, arguing that the withdrawal was arbitrary and violated the principles of natural justice.

Background of the Case

The case arose from the Himachal Pradesh government’s withdrawal of an NOC granted to Jagdish Chand Memorial Trust for setting up an Ayurvedic Medical College and Hospital.

Key facts of the case:

The Trust was established in 2012 with the objective of setting up medical and educational institutions.
In 2014, during an investment summit, the Trust submitted a proposal to the government for an Ayurvedic College and Hospital.
The proposal was reviewed by the Department of Ayurveda, and an NOC was granted on February 20, 2017.
The Trust secured affiliation from the Himachal Pradesh University on March 2, 2017.
However, on March 14, 2017, the government withdrew the NOC, citing procedural irregularities.
The Trust challenged the withdrawal before the Himachal Pradesh High Court, which ruled in favor of the government.
The Trust then appealed to the Supreme Court.

Legal Issues Considered

The Supreme Court examined several legal questions:

Whether the withdrawal of the NOC was legally valid.
Whether the government was bound by the doctrine of promissory estoppel after granting the NOC.
Whether the withdrawal of the NOC violated the principles of natural justice.
Whether the Trust had acquired an indefeasible right based on the NOC.

Arguments of the Appellant (Jagdish Chand Memorial Trust)

The Trust, represented by its counsel, argued:

The Trust had already made substantial investments based on the NOC.
The government’s withdrawal was arbitrary and against public interest, as the college and hospital would benefit the region.
The government could not revoke the NOC after the Trust had acted upon it.
The withdrawal was done without granting the Trust an opportunity to be heard, violating natural justice.

Arguments of the Respondent (State of Himachal Pradesh)

The government defended its withdrawal on the following grounds:

The NOC was issued without approval from the Council of Ministers, making it legally invalid.
The Minister for Ayurveda unilaterally issued the NOC, bypassing the required procedure.
The withdrawal was necessary to maintain transparency and accountability in government decision-making.
The doctrine of promissory estoppel did not apply, as an invalid grant cannot create enforceable rights.

Supreme Court’s Observations

The Supreme Court analyzed the legality of the NOC and its subsequent withdrawal.

On the Requirement of Approval by the Council of Ministers

“The NOC was issued without following the Rules of Business, which required a decision by the Council of Ministers. Any such approval must be taken before granting an NOC, and failure to do so renders the NOC invalid.”

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On the Doctrine of Promissory Estoppel

“There can be no promissory estoppel against the government when an action is taken outside the scope of its authority. The government is not bound by an unauthorized decision of a minister that bypasses legal procedures.”

On the Alleged Violation of Natural Justice

“Since the NOC itself was invalid, the withdrawal did not require a fresh hearing. The grant of an opportunity to be heard would have been a mere formality, as the decision of the Council of Ministers would prevail.”

Final Ruling

The Supreme Court upheld the withdrawal of the NOC and dismissed the Trust’s appeal. The key conclusions were:

The NOC was issued improperly and had no legal validity.
The government had the authority to withdraw the NOC to correct a procedural error.
The Trust could not claim a vested right in an illegally granted NOC.
There was no violation of natural justice, as the Trust was not entitled to a hearing.

Conclusion

The Supreme Court’s ruling underscores several key legal principles:

Government decisions must follow due process: No individual minister can unilaterally issue approvals without proper authorization.
Promissory estoppel does not apply to illegal grants: If a government approval is issued outside its legal authority, it can be revoked without consequence.
Procedural irregularities can invalidate approvals: A decision taken without proper approvals from higher authorities is legally void.

By dismissing the appeal, the Supreme Court reaffirmed the principle that government approvals must be lawfully obtained and cannot be used to claim rights when issued improperly. This ruling serves as a cautionary precedent for individuals and organizations relying on government approvals that bypass necessary legal procedures.

Petitioner Name: Jagdish Chand Memorial Trust.
Respondent Name: State of Himachal Pradesh.
Judgment By: Justice Sudhanshu Dhulia, Justice K. Vinod Chandran.
Place Of Incident: Himachal Pradesh.
Judgment Date: 17-02-2025.

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