[ 3488 ]

IN THE HIGH COURT FOR THE STATE OF TELANGANA

AT HYDERABAD

MONDAY, THE THIRD DAY OF AUGUST

TWO THOUSAND AND TWENry SIX

PRESENT

THE HONOURABLE THE CHIEF JUSTICE APARESH KUMAR SINGH

AND

THE HONOURABLE SRI JUSTICE G.M. MOHIUDDIN

WRITAPPEAL NO: 102 OF 2026

Writ Appeal under clause 1 5 of the Letters Patent preferred against the order

dated 08/01/2026 in W.P.No. 9604 ot 2025 on the file of the High Court.

Between:

PATANJALI FOODS LIMITED, (Formerly known as Ruchi Soya lndustries

Limited) Represented by its authorized representative Suryaprakash Puppala

Aged about 59 years, Occupation- General Manager - Plant Operations R/o

'1-2-

33lMEl28, Meridian Enclave, Villa No. 28, Hydernagar, Old age home road,

Hyderabad - 500085.

Having its registered office at 616, Tulsiani Chambers, Nariman Point, Mumbai -

400021 , Maharashtra Also, at- Plot No. 764, PJ Reddy Pearl, 3rd Floor, Road

No. 39, Jubilee Hills, Hyderabad - 500037

...APPELLANT

AND

1. DEPARTMENT OF HORTICULTURE, Represented by Director Horticulture,

Public Gardens, Nampally, Hyderabad - 500004.

2. DEPARTMENT OF AGRICULTURE AND COOPERATION (HORTI AND SERI),

Represented by: APC and Secretary, Agriculture and Cooperation 4th Floor, C-

Block, BRK Bhawan, Secretariat, Hyderabad - 500063.

3. THE STATE OF TELANGANA, Represented by its Department of Horticulture,

Represented by its Secretary, Secretariat Buildings, Hyderabad, Telangana.

4. TELANGANA COOPERATIVE OIL SEEDS GROWERS FEDERATION LIMITED,

(Also known as TG Oilfed) 9th Floor, Parishram Bhavan, Basheerbagh,

Hyderabad - 500004.

...RESPONDENTS

LA. NO: 2OF 2026

Petition under Section 151 CPC praying that in the circumstances staled in the

affidavit filed in support of the petition, the High Court may be pleased to direct the

Respondents not to give effect to GO Ms. Nos. 1 3 and 14 dated

'l

5 March 2025 and the

subsequent letter bearing Lr No. OP/8912020 daled 20 March 2025 pending the

disposal of the Writ Appeal

Counsel for the Appellant: SRI S. SRIRAM, SENIOR COUNSEL

FOR M/s. TLH ADVOCATES AND SOLICITORS

Counsel for Respondent Nos. 1 to 3: SMT. B. MOHANA REDDY,

GP FOR AGRICULTURE

Gounsel for Respondent No. 4: SRI SANNAPANENI LOHITH

The Court made the following: JUDGMENT

",

IN THE HIGH COT,RT F.IORTTIE STATEOF TEIIINGANA

AT ITYDERABAI)

TTIE HONBLE TTIECHIEAJI'SflCE SRI APARESH KI,'MAR SINGH

AND

THE HON'BLE SRI JT'STICE G.M.MOHIUDDIIT

WRIT APPEAL No.lO2 of2O26

DATE:05.O8.2026

Between:

Patanj ali Foods Limited

Represented by its authorized representative

Suryaprakash Puppala

....Appellant

And

Department of Horticulture and 3 others

....Respondents

JUDGMENT

Heard Mr. S. Sriram, learned Senior Counsel representing

M/s. TL,H Advocates and Solicitors, appearing for the appellant; Mrs.

B.Mohana Reddy, learned Government Pleader for Agriculture and

Cooperation Department, appearing for respondent Nos.l to 3; and

Mr.Sannapaneni Lohith, learned counsel appearing for respondent

No.4 and perused the record.

2. This writ appeal is preferred under Clause 15 of the Letters

Patent, against the order dated 08.01.2O26 passed by the learned

Single Judge in W.P.No.9604 ol 2025. By the said order, the learned

Single Judge dismissed the Writ Petition filed by the appellant

herein. The appellant in the Writ Petition challenged the cancellation

of its factory zone in Suryapet District uide G.O. Ms. No. 13 dated 15

March 2025 and its re-ailotment to respondent No. 4 uide G.O. Ms.

2

No. 14 dated 15 March 2025, along with the consecluential letters

dated 20.03.2025.

Factual matrix

3. The appellant, is a leading edible oii and FI\{CG company

engaged in oil palm cultivation in the State of Telangana (formerly

part of the erstu.hile State of Andhra pradesh)

since the year 2OO9,

initially operating under the name and style of MAC Oil palm

Limited. The prcsent appeal arises out of proceedings under the

Telangana Oil Palm (Regulation of production

and processing)

Act,

1993 (for short 'rhe 1993 ActJ and the Memorandum of Agreement

dated i 5.03.2017 (bereinafter referred to as the 2nd MOAJ executed

between the appellant and the State Government represented bt.the

Commissioner of Horticulture.

4. In the year 202 1, the Government of India launched the

National Mission on Edibre oils-oil palm (NMEo,op) r.r-ith a view to

augment domestic palm oil production. Under the Sche.me, oil palm

growing States, including Telangana, were identified for financial

assistance from the Clentrnl and the respective State Governments.

5. In the year 2009, MAC Oil palm

Limited was allotted factory

zones comprising four mandals in Nalgonda District and one mandal

n Krishna District of the erst,,l.hile State of Andhra pradesh.

lfursuant thereto. a Memorandum of Agreement dated 16.O4.2OlO

J

(hereinafter referred to as the lst MOA) was executed between the

Government of Andhra Pradesh and MAC Oil Palm Limited.

6. In the year 2012, MAC Oil Palm Limited amalgamated with the

appellant. The amalgamation and consequential change in name

were acknowledged by the Government of Andhra Pradesh uide

G.O.Rt.No.347 dated 03.O4.2OI2, pursuant to which a Memorandum

of Understanding dated 25.04.2012 was executed.

7. In the year 20 1 5, certain mandals earlier allotted to Sarada

Yelishala Agrotech India Private Limited were re-allotted to the

appellant vide l*tter No. RKW/OPl73l2Ol3 dated 06.10.2015,

which was subsequently confirmed uide Memo No.3256/H&S/2015

dated 09.01.2017. Consequently, by the year 2017, the appellant

was operating in eleven mandals of Nalgonda District.

8. Pursuant to the Office Memorandum dated 12.06.2O20 issued

by the Ministry of Agriculture and Farmers Welfare, Government of

India, expanding the potential area for oi1 palm cultivation in

Telangana to 3,09,431 hectares, the Government of Telangana, uide

Letter No. NFSM/89/2020 dated 18.o6.2020, invited fresh

applications for operation in the newly identified areas. Thereafter,

the appellant was allotted 7,738 hectares in Nalgonda District and

11,3OO hectares in Suryapet District (excluding the mandals already

operational under respondent No.4) urde G'O.Ms.No.60 dated

16.12.2O2O. Subsequently, uide G.O.Ms.No.24 dated 10.06.202 1,

4

Iour mandals earlier

to the appellant,

operated

by respondent

No.4 were also aliotted

9. On 28.06.202

i , the appellant

furnished

undertaking

to abicie by the terms of the 2na MOA in

extended

areas in Nalgonda

andSuryapet

Districts and setting out

the proposed

area o1. cultivation

under the said districts

lO. The 2na n,r64

dated IS.O3.2O1Z

,tnter qlia,

required

the

appeilant

to establish

aprocessing

mili within the

identify and finalize:

periodical

information

t:stabiishment

of the pr

p,rocessing

of Fresh

stipu lated period,

Processing unit, furnish

Fruit Bunches (FFBs)

fromlarmers

1na:cordance

with the termsof the Agreement

anaffidavit

respect of the

ther si te for the

regarding

the progress

of area expansion

and

ocessing facility, and ensure procurement

and

t l. By letter

dater

Drstrict collector and

13 11 2021' the appellant

requested

the

Magistrate,

Suryapet

District, to allot 5O acresof land for establishment

of the processing

mill. Accordrng

to theapcellant,

no response

was received

thereto.

12, During the year 2022, the appellant

claims to have faced anacute shortage of seedlings

and seed sprouts owing to severescar.city,

droqgll

conditions

and increased

internadonal

demand.

According

to the appellant,

notwithstand.

constraints,

it continuea ,r"

^^^ -..'

'rLllDtarlo1ng the aforesaid

correspondence

with ,n.

o operations

and remained

in regular

office of respondent

No. l

5

13. On 12.12.2022, respondent No.l issued a Show Cause Notice,

inter alia, alleging that:

a) The appellant had failed to achieve the plantation targets for

the year 2022-23 due to shortage of planting material;

b) It had not established the processing mill as required under

the 2"d MOA; and

c) It had consequently violated the terms and conditions of the

2"d MOA.

14. The appellant submitted its reply on 17.12.2022 explaining the

measures undertaken to achieve the prescribed targets, inciuding

procurement of planting material, establishment of nurseries and

identification of suitable sites for the proposed processing mill.

Thereafter, a 2nd Show Cause Notice dated 19.12.2023 was issued by

respondent No. 1 reiterating the earlier allegations. The appellant, by

its reply dated 22.12.2023, attributed the delay to dehcit rainfall,

fluctuations in market prices and the enforcement of the Model Code

of Conduct during elections, while aiso informing respondent No.1

that it had identified approximately 220 acres of land in Nalgonda

District for establishment of the processing mill.

15. The appellant thereafter addressed letters dated O9.O9.2O24

and 08.1O.2024 to the Telangana Industrial Infrastructure

Corporation Limited (TGIIC) and the Director, Telangana Food

Processing Society, respectively, requesting allotment of suitable Iand

6

for establishment of theprocessing mill. According to the appellant,

no response was rcceived from either authorit-v.

16. On O5. 1O.2O,24, a 3.d Show Cause Notice came to be issued.

The appellant submitted its reply on 14.1O.2024 seeking an

extension of three months time for establishment of the processing

mill. Respondent No.1, thereafter, issued a notice dated 19.12.2024

fixing a personal hearing on 30. 12.2024. The appellant appeared

pursuant thereto and informed the authorities that the land for the

proposed processing unit r.vas in the process of being fir_ralized.

17. By letters dated 22.01..2025 and, 1g.O3.2O25, rhe appellant

informed respondent No. 1 that it had purchased land admeasuring

4c.16.24 Gts situzrted at yacharam

Village, Anumula Mandal,

Nalgonda District, lor establishment of the processing rnill.

18. Notv,.ithstanding the aforesaid deveiopments, respondent No. l,

uide Lerter No.Op t89

/2O2O dated 2O.O3.2O25, informed the

appellan t that

i) By c.O.Ms.No.13 dated 1S.03. 2025, the allotrnent of the

facton, zone in Suryapet District stood cancelled; and

ii) By G.O.Ms.No. t4 dared 1S.O3.2025, the said fact()ry zone had

been allotted ro respondent No.4.

19. Aggriei,ed thereby, the appellant instituted the unclerlying ,"r.rit

p,etition before the learned Single Judge challenging G.O.Ms.Nos.

l3

and 14, bolh darecl 1S.03.2025,

and the cor.rsequential

7

communication dated 2O.O3.2O25. The iearned Single Judge after

hearing the parties dismissed the said underlying writ petition inter

alia, with the following observations:

i) The Writ Petition was held to be maintainable, as the actions of

the State in the realm of contractual matters are amenable to

judicial review on the ground of arbitrariness. In arriving at the

said conclusion, the learned Single Judge relied upon the

precedents cited by the appellant.

ii) On merits, the learned Single Judge held that Clauses 5 and 6

of the 2"d MOA cast a mandatory obligation upon the appellant

to establish the processing mitl within a period of 24 months.

It was further observed that the appellant had not informed

the Government, prior to the issuance of the impugned

Government Orders, either about the purchase of land or the

initiation of proceedings for conversion of the land under the

Telangana Non-Agricultural Lands Assessment Act (hereinafter

referred to as 'NALA Act').

iii) While interpreting Clause 13 of the 2"d MOA, the learned

Single Judge held that the obligation thereunder was not

confined to furnishing information and documents, but also

extended to compliance with the requirement of establishing

the processing mill. Therefore, it was held that non-compliance

with Clauses 5 and 6 would also attract the consequences

8

contemplated under Clause 13, including cancellation of the

factory zone.

iv) The learned Single Judge further held that the respondents

had acted u.ithin the scope of their powers in cancelling the

allotmenr of the Suryapet factory zone, particularly since the

appellant continued to retain the Nalgonda factory zone where

the proposed processing mill could be established.

20. Aggrieved tht:reby, the appellant has preferred the present Writ

Appeal.

Submissions on behalf of appellant

21. Learned Senior Counsel appearing for the appellalt, assailed

the impugned order and has advanced the following submissions:

i) Thar Clause 13 is conhned to the obligation of furnishing

.,all

the relevant information and documents,, as mav be called for

by responden t No. 1 from time to time to satisfo itself that the

appellant u,as taking effective steps towards area expansion,

establishment o[ nurseries, setting up of the oil palm mill and

refinery. The consequence of forfeiture of deposit and

cancellation ol'the lactory zone is attracted only upon failure to

furnish the information and documents sought for. It was

therefore contended that the interpretation placed by the

lcarned Singre Judge, namely, that crause r 3 indepenclently

mandates the establishment ofthe processing mill and

9

provides for cancellation upon failure to establish the same, is

contrary to the plain language ofthe clause.

ii) That Clause 15 specifically provides the consequences of

failure to commence processing within the stipulated period. In

such an event, the appellant is obligated to procure FFBs from

the farmers in the allotted factory zone at the prices notified by

the Government, establish collection centres, and transport the

FFBs to the nearest processing unit at its own cost.

Signihcantly, Clause 15 does not contemplate cancellation of

the factory zone as a consequence of delay in establishing the

processing mill.

iii) That the appellant had at all times complied with Clause 15 in

its true letter and spirit by continuously procuring FFBs from

farmers in the Suryapet factory zone through its collection

centres and processing the same at its existing processing unit

at Ampapuram, Andhra Pradesh, entirely at its own cost,

thereby ensuring that no prejudice or loss was caused to the

farmers either by way of price or weightage'

iv) That the 2"d MOA is a standard-form contract formulated by

the Government under a statutory scheme, where there is no

parity of bargaining power between the parties' Consequently,

the principle of contra proferentem would apply and any

ambiguity as to whether non-establishment of the processing

mi11 within twenty-four months constitutes an independent

10

ground lor cancejlation ought to be constn,red against the

(]overnmenr,

being the author of the document.

v) That r,,,hen the con tract itself contemplates extension of time

and prescribes specific consequences for delayt:d performance,

time cannot be regarded as the essence of the contract. Mere

dclay would not render the contract voidable unless the case

falls u'ithin the ambit of the first paragraph of Sr:ction 55 of the

Indian Contract Act, 1872.

vi) That time w,rs nevcr rntendedto be the essence of the 2no

MOAIn support thereof, it was submitted that

a) Clause 15 itself proceedson the premise that the

to operate even if the

agreement would continue

processrng mill isnot established

withir_rtwenfv,four

months by rcquiring the appellant to continue

purchasing FFBs from the farmers at the prices hxed by

respondr:nts Nos.1 to 3 and to

processing at its own cost.

b) The conduct of the respondents

in

ailotment immediately

upon expiry

period, but instead permitting the appellant to

arrange for their

not cancelling the

of the stipulated

contrnue

operatrons, issuing repeated showcause notices and

granting opportunities

tocomply, clearly dcmonstrates

that thc twentv_four

month period was nevei

mandaton

treated

as

11

c) The repeated extensions granted by the respondents and

their continued correspondence with the appellant are

wholly inconsistent with the contention that time was

intended to be the essence of the contract.

vii) That the impugned action of cancellation is grossly

disproportionate to the alleged default, and it was submitted

that:

a) The appellant has continuously procured FFBs from

farmers in the Suryapet factory zote at the prices

notified by the Government through its collection

centres, thereby fully safeguarding the interests of the

farming community.

b) The appellant has made substantial investments in

establishing nurseries, procuring planting material,

expanding the cultivation area and undertaking farmer

awareness programmes. It was submitted that, as on the

date of institution of the writ petition, the appellant had

invested approximately Rs.49.53 crores towards its

operations in Nalgonda and Suryapet Districts.

c) In the circumstalces, the extreme measure of

cancellation and re-allotment bears no rationa,l nexus

and is disproportionate and unconscionable in relation

to the alleged delay in establishing the processing mill.

t2

d) The cancellation of the factory zone and its re-allotment

to respondent No.4 would not advance the object of the

Scheme or <;onfer any tangible benefit upon the farmers,

since there is no assurance that respondt:nt No.4 would

establish the processing mi11 any earlier and, in any

event, respondent No.4 would necessarily require

considerable time to establish t,he requisite

infrastructure.

e) The proposed processing mi11 at Nalgondar was designed

with sufhcient capacity to cater to both the Nalgonda

and Suryapet factory zones and, therefore, the learned

Single .Judge erred in proceeding on the premise that the

proposed mill was intended exclusively for the Nalgonda

factory zone.

t) The :rppellant ranked fourth amorlgst fourteen

companies implementing the NMEO-OP Scheme despite

operating onlf in two districts, wherezLs Respondent

No.4, clespite operating for a longer period and in more

districts, had achieved only about hfty oer cent of its

plantarion targets.

g) The pJantation targets lxed under the Scheme were

merely tcntative and indicative in nature and not

mandatorv. In the absence of any contractual or

statutorv- stipulation providing that non_zLchievement of

13

such targets would entail cancellation, the same could

not have constituted a valid ground for the impugned

action.

That the primary object of the 1993 Act, the Rules framed

thereunder and the 2'd MOA is to ensure assured procurement

of FFBs from farmers at Government-notified prices, whereas

establishment of a processing mill is only a facilitating

mechanism. It was contended that neither the Act nor the

Rules authorises cancellation of a factory zone solely on the

ground that a processing mill was not established within

twenty-four months so long as procurement of FFBs at the

notilied prices continued unintermpted.

That the writ petition was maintainable under Article 226 of

the Constitution of India notwithstanding the contractual

relationship between the parties, since the dispute involved

arbitrary action on the part of the State and its

instrumentalities. It was further submitted that no efficacious

alternative remedy *^"

"util"bl.

to the appellant, particularly

when the cancellation of the factory zone and its simultaneous

re-allotment to respondent No'4 left the appellant remediless'

That, during the pendency of the proceedings, the appellant

had made substantial progress towards establishment of the

processing mill, thereby demonstratin g its bona fides ard

continued commitment to comply with the obligations under

viii)

ix)

x)

t4

thc 2"4 MOA. In support thereof, reliance was placed on the

following subsequent developments:

a) Purchase of land admeasuring Ac.16.24 Gts in Nalgonda

District;

b) Execution of a registered Sale Deed dated 16.07 .2025 for

purchase of an additional extent of Ac.5.20 Gts;

c) Execution of an Agreement of Sale dated 23.05.2025 for

acquisition of a further extent of Ac. l. 16 Gts;

d) Approval of the applications for conversion under the

Telangana Non-Agricultural Lands Assessment Act by

the Tahsildar-cum-Joint Sub-Registrar, Anumula

Mandal, uide Proceedings Nos.2500342O61 and

25OO5O2274, both dated O2.O8.2O25; and

e) Submrssion of an application under the TS_iPASS

system for obtaining all requisite statutory approvals

zrnd permissions for establishment of the processing mill.

xi) That thc aforesaid subsequent deveiopments clearly establish

that the appellant has taken concrete and substantial steps

tor.r-ards establishment of the processing mill and, therefore,

the impugned action of cancellation of the factorv zone no

longer sun,ir.es on facts.

xii) The learned Senior Counsel in support of his ,:ase has relied

upon the following decisions:

15

a) Ananya Kocha Shettg u. Lakshmibhai Naragan Santosel

Q Ten Oat Estate Put Ltd. u. uT, Chandigarh and others2

c) Subodh Kumar Singh Rathour u. The CEO and otters3

d) Arosan Enterpises Ltd. u. union of India and anothel

e) Andhra Pradesh Industrial Infra.structre Corporotion

Limited and others u. S.N.Rai Kumar and anotLrcrs

Subnissions on behalf of the respondents

22. karned Government Pleader appearing for respondent Nos. 1

to 3 and learned counsel appearing for respondent No.4 have

advanced the following submissions:

i) That the scope of judicial review under Article 226 of the

Constitution in matters arising out of commercia-l or

contractual decisions of the State is extremely limited. Unless

the impugned action is shown to be arbitrary, mala fide'

irrational or in violation of statutory or constitutional

provisions, this Court cannot sit in appeal over administrative

or commerciai decisions taken by the executive.

ii) That G.O.Ms.No.60 dated 16.12.2O2O prescribed various

conditions governing the allotment of factory zones, including

the obligation to establish and commission a fully operationai

oil palm processing unit within thirty-six months from the date

1

IZOZS;

SCC OnLine SC 758

'

(zoo4) 2 scc 130

'

(2024) 1s scc 461

o

(1999) 9 scc 449

'

(zoto) o scc

qto

16

oF first plantation and to execute a MOA in the prescribed

format annexed to the said Government Ordt:r. According to

the respondcnts, the appellant failed to executf such a MOA in

terms of (i.O.Ms.No.60.

iii) That G.O.Ms.No.24 dated 10.06.2021 itself records rhat the

appeJlant had not executed the MOA contemplated under

G.O.Ms.No.(r0. Consequently, while allotting the four

additional mandals to the appellant, the Government directed

that the alk;tment u'ou1d remain subject to the existing MOA

and upon the appellant furnishing an affidavit incorporating

the requisite conditions together with the balance Earnest

Money Deposit.

iv) That thc appellant executed an affidavit dared 2g.06.2021

undertaking to bring an extent of 49,03g hectares under oil

palm cultiva[ion b1, the year 2026-27. The appellant further

acknor,"4edgcd therein that failure to fulhl the stipulated

conditions u.ould entail forfeiture of the Earnest Money Deposit

and cancellation of the factory zone.

v) That the performance of the appellant was periodicalty

revieu'ed b-r,. the Government and was found to be

unsatisfactor_\.. It u'as submitted that the appellant achieved

onl1' abour

)_ 4%o of the targeted plantation in the Suryapet

factory zone. u.hereas in Nalgonda District the performance

was approximately

36oa. Taking into consideration the

t

L7

comparatively better perfornance in Nalgonda, the

Government retained the appellant in respect of the Nalgonda

factory zone while cancelling the allotment relating to Suryapet

District.

That the District Collector, Suryapet, by letter dated

O2.O8.2O22, informed respondent No.1 that several farmers

who had initially opted for oil palm cultivation were reverting

to paddy cultivation owing to the appellant's inability to supply

adequate planting material. In view thereof, the District

Collector recommended re-allotment of the targeted area from

the appellant to respondent No.4.

That, despite having been allotted the Nalgonda factory zone

even prior to the bifurcation of the erstwhile State of Andhra

Pradesh, the appellant had failed to establish the processing

mill. Instead, the appellant continued to procure FFBs from

Telangala and transport the same to its processing unit

situated in the State of Andhra Pradesh, resulting in

substantial loss of revenue to the State of Telangana.

That the appellant was afforded adequate and repeated

opportunities to explain its position through issuance of

multiple show cause notices, consideration of its replies and

grant of a personal hearing. Therefore, the allegation of

violation of the principles of natural justice is wholly

misconceived.

vi)

vii)

viii)

18

rx) That the appellant had sought to place selectiv(r reliance upon

the 2nd MOA dated 15.03.2017 while completely overlooking

the binding obligations flowing from G.O.Ms.No.60 dated

16.12.2O2O, the Model Memorandum of Agreement appended

thereto. G.O.Ms.No.24 dated 10.06.2027 an<l the afhdavit

dated 28.06.202 1 executed by the appellant. It was submitted

that when lhe impugned Government Orders are read in

conjunction $'ith the aforesaid documents, the authority of the

State Government to cancel the factory z<rne is clearly

estabiishcd.

x) That the cancellation of the Suryapet factory zone was not

foundcd mert:1v on the delay in establishment of the processing

mill. but also on the appellant's unsatisfactory performance in

achieving the plantation targets. The show cause notices

issued from timc to time consistently referred to both

deliciencies, name15,, non-achievement of the stipulated targets

ancl failure to establish the processing mill within the

prescribed period.

xi) That the subsequent steps relied upon by the appeilant, such

as purchase of agricultural land in Nalgonda District,

exccution of further sale transactions, filing of applications for

conversion under the NALA Act and initiation of the process for

obtaining statutory approvals, are all belated developments

lr'hich cannot cure the admitted default.

I'

19

23, We have taken note of the respective contentions urged and

perused the material on record.

Consideration by this Court

24. Before adverting to the merits of the controversy, it is

necessary to first consider the preliminary objection raised by

respondent No.4 regarding the maintainability of the Writ petition.

The legal position governing the exercise of writ jurisdiction in

contractual matters is no longer res integra. Though disputes arising

purely out of private contracts ordinarily do not warrant interference

under Article 226 of the Constitution, the position stands

considerably qualihed where the action of the State or its

instrumentalities is alleged to be arbitrary, unreasonable or violative

of Article 14 of the Constitution.

25. It ABL Internatlonal Ltd.. o. Erytort Credit euorontee

Corporation of Indla Ltd.o, the Hon'bie Supreme Court, held as

under:

27. From the aboue discussion of ours, the following legal

pinciples emerge as to ttLe maintoinabilitg of a u.tit petttion:

(a) In an oppropiate cose, a uit petition as ogainst a State or an

instntrnentality of a State orising out of a crntractual obligation is

maintainable.

(b) Merelg because some disputed questions of fact aise for

consideration, same cannot be a ground to refuse to entertain a

u.tit petition in all ctr.ses as a matter of rule.

(c) A u-tit petition inuoluing a consequential relteJ of monetary

doim is also maintainable.

28. Hotueuer, while entertaining an objection as to the

mointainabilitg of a tr,tit petition under Article 226 of the

Conshhttion of India, the court should beor in mind the fact that

the polDer lo rlssue prerogotiue uits under Articte 226 of the

6

lzoo+; s scc ss3

20

ConstittttLon ts plenary tn nature and is not limited b11 anA other

provisions oI the Constitution. The High Court hauing regard to

the facts of the case, has a discretion to entertabt or not to

entertain a tDit petition. The Court has imposed upon itself

c:ertain resticttons in. the exercise of tltis pouer. (See Whirlpool

()orpn. u. Registrar of Trade Marks

[(1998) 8 SCC 1] .) And this

plenary nght of the High Court lo issue a prerogatiue LUit tLill not

normallg be exercised bg the Court to the exclusion of other

auailable rerrtedtes unless such action of the State or its

lftstntmentolitt) is arbitrary and unreasonable so as ta nolate tLrc

cottstihltional mandate of Article 14 or for other ualid and

legitimate reasons, for uthtch the Courl thinks it necessary to

e.rercise the snid lunsdiction.

26. ln Subod.h Kumar Singh Rathour (supra 3), the Hon'ble

Supreme Court rt:iterated that where the action of the State is

challenged as bcing arbitrary, unfair or unreasonable, the

requirements of Article 14 necessarily come into play. It was further

observed that thc distinction between matters gover.ned purely by

private lau'and those involving a public law element depends upon

the nature of the controversy. Where the challenge is directed against

the decision-making process of a public authority or the exercise of

statuton' or executive pou,er, judicial review is available to ensure

that such authoritv acts fairly, reasonably and within the bounds of

1aw.

27. In the prescnr case, the appellant has assailed the cancellation

of the allotment of Lhe factory zone on the ground that the impugned

action is arbitrary, disproportionate and actuated by considerations

extraneous to the terms governing the allotment. The challenge is

directed not mercl.y against the contractual consequences flowing

from thc 2"d MoA. but against the decision of the state and its

authorlties in excrcr sing executive power to cancel the allotment and

7

2l

simultaneously re-a1lot the factory zone to respondent No.4.

Therefore, the controversy transcends the realm of a pure

contractual dispute and involves a distinct public law element

amenable to judicial review under Article 226 of the Constitution.

2A. Once the action of the State is found to involve a public law

element, the exercise of executive power, even in the contractuai

sphere, must satisfu the requirements of faimess, reasonableness

and non-arbitrariness embodied in Article 14 of the Constitution' In

this regard, the writ jurisdiction of this Court cannot be excluded

merely because the dispute arises in the backdrop of a contractual

relationship.

29. The principal issue that arises for consideration in the present

Writ Appeal is the proper interpretation of the 2od MOA, particularly

Clauses 5(b), 6, 13 and 15 thereof, and whether the respondents

were justified in cancelling the allotment of the Suryapet Factory

Zote on the basis of the obligations contained therein.

30, lt Provo,sh Cho:ndra Do,lui a. Blsutonath BanerteeT, ll:,e

Hon'ble Supreme Court while elucidating the interpretation of

contracts, has held as under:

"10

inte

'Ex praecedentibus etconsequentibus oDtima fit

on The best interpretation is made from the cofiert

Eueru cantractis to be construeduith reference to its obiect and

the uholeof its terms. The uhole @ntext must be corsidered to

ascertain the intention of the pdrties. It is an accepted pinciple of

corLstruction tlnt the sens; and meaning of tlrc porties in any

porticutar part of instrument mag be collected 'ex antecedentibus

et conseqtentibus; euery pan of it may be brought into action in

7

AIR tg89 sc 1834

2l

simultaneously re-allot the factory zone to respondent No.4.

Therefore, the controversy transcends the rezrlm of a pure

contractual dispute and involves a distinct public law element

amenable to judicial review under Artrcle 226 of the Constitution.

2f3. Once the zrction of the State is found to involve a public 1aw

element, the cxercise of executive power, even in the contractual

sphere , must satisfy the requirements of fairness. reasonableness

and non-arbitrariness embodied in Article 14 of the Constitution. In

this regard, the writ jurisdiction of this Court cannot be excluded

merely because the drspute arises in the backdrop of a contractuai

relationship.

29. The principal issue that arises for consideration in the present

Writ Appeal is the proper interpretation of the 2".r MOA, particularly

Clauses 5(b), 6, 13 and 15 thereof, and whether the respondents

were justified in cancelling the allotment of the Suryapet Factory

Zone on the basis of the obligations contained therein.

30. ln Proaq.sh Chand.ra Dalul u. Biswanath BanerjeeT, tine

Hon'blc Supreme Court while elucidating the ir-rterpretation of

contracts, has held as under:

'10.'Ex praecedentibuset conseeuentibus ootimafit

ntemretal{onThe best nterDretdtion is made from the contert

be constnted u.tith reerence to' its obiect and

lhe uthole of its terms. Thetuhole context must be cott sid ered. to

Qscertain the intention of the porttes. It is an acceptec) principle of

conshltction that the sens; and meaning oy the paiies ii ang

partianlar part o;f instrument mag be mllictid.

,ex

antecedentibu"s

et conseqLtentibrs, euery part of it mag be brought i,to actton in

' etR 1989 sc 1 83.1

I

ct

22

order to collect from the uhole one uniform and mnsistent sense,

if that is possible.

As Lord. Daueg said in N.E. Railutag u. Hastings (1900) A.C. 260

,

"The deed must be read as a uthole in order to ascertain the true

meantnq of its seueral clauses.and the uords of each clause

should be so intetDreted as to binq them into Lto urith the

other prouisionso'[ the deed if that interpretationdoes no uiolence

to ttte meaninq of uthich theu arenaturallu susceptible." In

construinga controct the Court must look at tLLe words used in the

contract unless theu are such thatone mau susped that theu do

not conueu the intentton conectlu. Ifthe uords are clear, ttlere is

ueru little the Courtcan do about itIn the anstruction of a

uritten instrument it is legittmate in order to ascertain the true

meaning of the utords used and. if that be doubtful it is legitimate

to haue regard to the circumstances sutounding their creation

and the subject matter to u.thich it uas designed. and intended

theg should applg."

(Emphasb supplied)

31, At this juncture, it would be apposite to reproduce the relevant

clauses of the 2nd MOA dated 15.03.2017, which have a direct

bearing on the controversy involved in the present case.

32. Clause 5(b) and 6 of the 2"d MOA is extracted hereunder:

Clause 5band 6

5) To establish of Oil Palm Processing Units compising Oil

MilL/ Refinery/ Frodionation Units of s MT/ hr capacitA

respectiuelg as per the sclrcdule giuen belotu.

SI

No

Proposed

distict fo,

establishing

processing unit

Name of

the

Unit/ Firm

CapacitA

in

MT/ Hour

Year of

Commissioning

INalgonda Ruchi SoAa

Industies

Limited

5 2018-2019

a) The allotted Compang should deposit an Eamest Moneg

Deposit of Rs.S.OO Lakts in fauour of Commissioner of

Horticulture, Gout of Telongana.

b) The alLotted Compang should establish the processing

unit uithin 24 months afier enteing into the agreement-

The allotted compdnA should bear dll the inuestment at

its oun rnst for purchase of land, setting up of process[ng

unit obtaining other licences etc. Tlrc Department of

Horticulhre u.till not prouide ang loans and subsidies for

setting up of processing units.

)?

6) To identfg an.d ll.nal]"se the site for location of the

processing

u.nit uithin tuo Aears from the date of receipt of .final order if

allotment zones

A plain readrng of the aforesaid clauses leaves no room for

ambiguity. They impose a clear contractual obligation upon the

appellant to identify the site and establish the processing unit within

the stipulated period, The obligation itself is explicit and

unequivocal.

33. The contention advanced on behalf of the appellant that time

,as not of the essence of the contract does not dilute or obliterate

the existence of the aforesaid obligation. Whether time is to be

regarded as thc essen<:e of the contract pertains to the consequences

of delaved performance and not to the existence or enforceabilirv of

the contractual obligation itself.

34. Clause 13 of the 2"d MOA is extracted hereunder:

Clause 1 3:

13) The' ()canpter of the factory should submit to the

Oommlssioner of Hortiallture all the releuant iTfomation and

d.ocuments <:alled bg him from time to time to satisfg himself that

the Occupier of the factory ts taking effectiue steps jor.

i)Arect expansiort

i) Setting up of Nursery

iii)Setting oI Oit Palm MiU

iu)Setting up of Refinery

Fatlure to comply tuith the information, leads to the cnnclusion

that the occLtprcr of the factory is uiotating the temls and

conditiorts af the MoA made with the Commissioner of

ItorticLtlhtre, Telangana and attracts forfeiture of deposit and

concellatron of Factory Zone uithout assigning aig ,"ason

t herefor.

35. The said Clause 13 obligates the occupier of the factorv to

furnish t. the commissioner of Horticulture a1r relevant information

24

and documents as may be called for from time to time in order to

satisfy the Commissioner that the occupier is taking effective steps

towards: (il area expansion; (ii) establishment of nurseries;

(iii) establishment of the oil palm processing mill; and

(iv) establishment of the rellnery.

36. The clause further stipulates that failure to comply with the

information sought by the Commissioner would lead to the

conclusion that the occupier has violated the terms and conditions of

the 2.d MOA, thereby attracting forfeiture of the deposit and

cancellation of the factory zone.

37. The appellant's contention that Clause 13 is confined only to

the furnishing of information and documents and that the

consequence of cancellation can arise only upon failure to fumish

such information, does not merit acceptance.

38. It is pertinent to note that Clause 13 cannot be read in

isolation. The requirement of fumishing information and documents

is not an end in itself but serves the purpose of enabling the

Commissioner to satisfy himself that the occupier is taking effective

steps towards fulfilment of the obligations expressly enumerated

therein, including establishment of the oil palm processing mill and

rehnery. The expression "effective steps" occurring in Clause 13

necessarily derives its content from the substantive obligations

contained in Ciauses 5(b) and 6. Therefore, failure to demonstrate

compliance with those obligations through effective steps would

')<

legitimately attract the regulatory consequences contemplated under

Clause

.13.

39. Further, acceptance of the interpretation canvassed by the

appellant would substantially d ute the efficacy of orause 13. rf the

provision werc (.onstrued as requiring only the submission of

information and documents, irrespective of whether effective steps

had in fact been taken tou,ards establishment of the processing mill,

the regulatory mechanism envisaged under the 2.d MOA would be

rendered largely ineffective. Such an interpretation 'a.ourd defeat the

object underlying the agrcement and, therefore, cannot be accepted.

40. Clause 15 of the 2".1 MOA is extracted hereundcr:

Clause I 5:

1_5) The_ocatpier of the foctory zone is responsible

for

purchose of

].resh Fruit Bunches from the existing plantations in iheir facfory

zone as per the rates fued bg the Gouemment of Telangana froi

trme to time In case ang ocanpier of the factorU does not

commen(.e processtng o;f oil ertraction uni| tttithin the hme timit,

theA are supposed to purchase Fresh Fruit Bunches tn that

factory zone (1s per t.he rates

fLxed_ bg the Gouemment through

tlrcir collecttort centers and arrange processing u,tithout suffeing

the farmers produce 1.e., /oss m weightage of Fresh Fruit

Bunches. Theu are responsible for onangirg iotLeition centers in

their respectiue Jactory zone- ancl to arange transportation of

Fresh Fruit Bunches from collection centers {o nearesi processing

units at their ot n cost.s.

It is pertinenr to note rhat crause 15 provides that where.the

occupier lails to commence processing within the stipuJated period, it

shall continue to procure FFBs from farmers in the allotted factory

zone at the prices r-rotihed by the Government, establish collection

centres zrnd arrange transporta[ion of the FFBs to the nearest

26

processing unit at its own cost, so that the farmers do not suffer any

loss.

41. The appellant's contention that since Clause 15 specihcally

prescribes the consequences of delay in commencement of

processing, namely procurement and transportation of FFBs, the

cancellation of the factory zone cannot be implied as an additional

consequence, particularly when cancellation is expressly referred to

only in Clause 13, cannot be accepted.

42. It is to be noted that Clause 1 5 and Ciause 13 operate in

distinct helds and address different aspects of the contractual

arrangement. Clause 15 is intended to safeguard the interests of the

farmers by ensuring unintermpted procurement and processing of

FFBs pending establishment of the processing unit. Ciause 13, on

the other hand, provides the regulatory consequence where the

occupier fails to satisfy the Commissioner that effective steps are

being taken towards compliance with the obligations undertaken

under the 2"d MOA. The operation of one provision does not exclude

or render otiose the other.

43. It must also be borne in mind that the 2'd MOA is not a purely

commercial contract executed between two private parties. It is an

instrument executed pursuant to the statutory framework under the

1993 Act, for implementation of the objectives contemplated

thereunder. The reciprocal obligations contained in the 2nd MOA are

inextricably linked with the allotment of the factory zone under the

27

Act. The appellant, as an occupier of the factory within the meaning

of the Act, is governed not merely by the contractuai stipulations but

aiso bl' the statutory obligations flowing from the Act, the Rules

framed thereunder and the Government Orders governing the

scheme .

44. Considerable importance is also attached to the Affidavit dated

28.06.2021 executed by the appellant. Under the s:rid Affidavit, the

appellar-rt expressly undertook to adhere to Lhe provrsions of the 2.d

MOA governing the area expansion programme for oil palm

development. The appellant further acknowledged that failure to

comply with the requirements stipulated under the 2.a MOA would

attract lorfeiture .f the deposit and cancellation of the factory zone.

The said undertzrking reinforces the contractual and regulatory

obligations underl aken by the appellant. Thus, the learned Single

Judge has rightlv held that Clauses 5(b),6, 13 and 15 must be read

harmonioush' and as part of an integrated contractual framework.

45- The submission advanced on behalf of the appr:rlant that time

was not of the essence .f the 2"d MoA requires carefur consideration.

Arosan Enterprises .Ltd. (supra 4), the Hon,ble Supreme Court,

has held as under:

" 22. Wry fuajon o deli atiin reqard

tlrcreto does butselt

thetimeo.s nce of the

contro ctbut reenlentS to in ifs

entrretLl and

tltc clotlsenco

releuant terms o-f th

perspect[ue so as

allreem?nt must be read as a

ra

ed The stateof facts and the

c, agreement oughtto be noticed in theirproper

ao assess fheintent of theparties. The

tuhole uitltconesponding

28

oblig.ations of the parties so as ,o ascertain the true inte of the

parties. ...

13. These presumptions of the H,igh Court in our uieuL are whollg

unuotranted in the contertual

factsfor the reasons detaited.

b.elout but before so doingit is to be noted that in the euent the

time isthe essence of thecontractouestion of there beinoanu

presumption orpresumedertension orpresumed.acceDtance ofa

renelued. date u.touldnot drise. Theertensioni.fthere beanu.

should. andouqhtto be cateaorirxtl in nafure rother than

oron the anuil of oresumntions..... "

(EmpLnsis supplied)

46. In M/s. Hlnd Const :rtctlon Contractors bg its SoIe

Proprletor Bhlkolrrrchand. Mulchand Jatn (Dead) bg Lrs. u. State

or Marura'shtros, t]^e Hon'bie supreme court further herd that even

where a contract prescribes a speciflc period for performance, the

question whether time is of the essence must be determined upon a

holistic reading of the contract. The existence of crauses providing for

extension of time or prescribing the consequences of delayed

performance may indicate that strict adherence to the stipulated

time was not intended to be an essential condition of the contract.

The relevant portion of the said decision is extracted hereunder for

ready reference:

"In the latest 4th edn. of Halsbury,s Lauts of Dngtand. in regard. to

b^uildtng and en@neering contracts the staiemeit of lau i to be

foundinVol.4,

para j

179, tuhich runs thus:

1 179. Where time is ofthe essenceof thecontract. The

exDression time is ofthc essencemeans thata breaclt

ofthe conditionas to the time ulillr

entitle thetnnocent Dar1uto cortsider thebreach as a

othe cont Exceptionally, theract.

completion of the uork b'g a specified date maA be a

condition preced.ent to the contractor's ight to cloim

paAment The parties may expresslg prouide ttat time

ISof the essence of thecontract and u.there there is

pouer to deterTnine t

'1rszs;

z scc zo

he antract on a failure to

29

complete by the spectfied date, the stipulation as to

ttme, utill be fundamental. Other prouisions of the

contrect maA, on the constntction of the c.ontract,

exclude an tnference tLnt the comple.tion of the uorks

bg ct partianlar date is fundamental, time is rutt of the

€ssence uhere a sum is pagable for each ueek that

the work remains incomplete afrer the dote ftxed, nor

u.there the partles contemplate a postponetnent of

conpletion.

Where time ha.s not been made of the essence of the

contract or, by reason of u,taiuer, ttLe time fixed has

ceased to be applicable, the emploger mag bq notice

frx a reasonabLe time for the completion oJ th.e uork

anri dismis.s the contractor on a failure to complete bg

the date so ftxed.

(Emphosis supplied)

8. It tuill be clear from the aforesaid statement of lau that euen

where the parties haue expresslu prouided that tine is of the

to be reod

alonq uitlt other prouisions of the contract and such other

prouisions fiLau, on construction of the contract, exclude the

inference that the completion of the uorlqbu a pqrti;atldr date uas

ttended to bendomentalor instance, if the contract uere to

include couses prouiding for ertension oJ time in certain

cotltingencies or Jor

paAment of fine or penaltA for euery dag or

Loeek the uork undertaken remains unfinished on th.e expiry of

the time prouided in the contract such clauses uould be u)nsttued

as rendeirtg inefJbctiue the express prouision relating to the time

being of the essence of contract. The emphasised portion of the

aforesaid stotement of latu is based on Lamprell t. Billeicoy

Union [1849] 3 Ex 283, Webb u. Hughes [1870] L.R. 10 Eq 281

anrl CLtarles l?ickards Ltd. u. Oppenheim [1950]

1 KB 616.'

(Emphnsis supplied)

47 . Examining t he present case in the light of the aforesaid

principles, the fr>llorving aspects assume significance:

i) Clause 5(b) of the 2nd MOA unequivocally obligates the

appellant to establish the processing unit within twenw-four

months from the date of execution of the agreement.

ii) The 2"d MOA does not contain any provision expressly

permitting extension of the stipulated period for estabiishment

of the processing unir. Equally, Clause 15 does rlot provide for

extension of timc or prescribe a contractual penatty for delayed

essence of the contract such a stipulation u.till tnue

30

establishment of the processing mill. It merely ensures

continuity in procurement and processing of FFBs so that the

interests of the farmers remain protected during the

intervening period.

iii) The appellant itself acknowledged the applicability of the

stipulated timeline in its replies to the show cause notices by

repeatedly seeking extension of time for establishing the

processing mill. Such conduct clearly indicates that the

appellant understood the obligation under Clause 5(b) to be

binding.

iv) The fact that the respondents did not immediately proceed to

cancel the factory zone cannot, by itself, be construed as a

waiver of the contractual obligation. On the contrary, the

issuance of successive show cause notices and the grant of

personai hearing demonstrate that the respondents afforded

adequate opportunity to the appellant to fulfil its obiigations

before taking the impugned decision.

48. It is to be noted that, it is unnecessary to determine whether

time, in the strict legal sense, constituted the essence of the 2"d

MOA. Even assuming that time was not of the essence, the

contractual obligation cast upon the appellant under Clauses 5(b)

and 6 remained binding. Admittedly, the appellant failed to establish

the processing unit within the stipulated period and continued to

remain in default despite repeated opportunities and extensions

31

afforded by the respondents. Thus, the respondents were justified in

invoking the consequences flowing from the contractual framervork,

including Clause 13 of the 2"d MoA.

49, Further, the appellant has also assailed the imllugned action

on the ground that the cancellation of the Suryapet factory zone is

arbitrary and disproportionate. The doctrine of proportionality

requires that an administrative measure must bear a reasonable

nexus with the object sought to be achieved and that the means

adopted should not be excessive in relation to the purpose intended.

50. ln Teri Oat Estates (supra 2), the Hon'ble Sttpreme Court

held that the question whether the extreme power of resumption or

forfeiture has been validlv cxercised depends upon the lactual matrix

of each case and that thc Court, while exercising judicial review,

must examine whether a proper balance has been maintained

betrveen the rights of the affected party and the public interest

sought to bc achieved.

51. The Hon'ble Supreme Court further observed that judicial

review in such matters is directed not against the rnerits of the

decision rtself, but against the legaliry of the clecision-making

process. Administrative action is liable to interference only on the

well-recognised grouncls of illegaliry, irrationality, procedural

improprietl, or manift'st arbitrariness.

32

52. Examined in the light of the aforesaid principles, we are unable

to hold that the impugned action suffers from arbitrariness or

disproportionaliqy. The following circumstances assume significance:

i) The appeliant was aliotted the Suryapet Factory Zone subject

to a specihc contractual obligation to establish a processing

mill within the stipulated period. Admittedly, the said

obligation remained unfulhlled for several years.

ii) The respondents did not resort to cancellation immediately

upon expiry of the stipulated period. On the contrary, multiple

show cause notices were issued, the appellant's explanations

were considered and a personal hearing was also afforded

before the impugned decision was taken. Despite repeated

opportunities, the appellant failed to establish the processing

mill.

iii) The purchase of iand, execution of subsequent sale

transactions, approval of applications under the Telangana

NALA Act and initiation of the TS-iPASS process are all

developments intimated to respondent No.1 subsequent to the

issuance of the impugned Government Orders and, therefore,

cannot invalidate the decision which was otherwise lawful on

the date it came to be taken.

iv) The material placed on record further indicates that the

appellant's performance in achieving the plantation targets in

.).)

the Suryapet Factory Zone remained unsatisfactory, with only

about 14%o of thc proposed area having been covered.

v) The decision to cancel the allotment was not arbitrary or

capricious, but \.as founded upon the contractual obiigations

contained in rhe 2"d MOA, the undertaking ftrrnished by the

appellant in its affidavit dated 28.06.2021 and the appellant,s

continued non compliance despite repeated opportunities.

vi) lt is also rek'vant to note that rhe Appellant continues to retain

the Nalgonda Factory Zone and remains at liberty to establish

the processing unit there in accordance with law. Therefore,

the impugned action does not prevent the appellant from

carrying on its operations in the State of Telangana.

53. lt is pertinent to note that the appellants contention on its

overall ranking under the NMEO-Op Scheme, does not advance its

case. The issue for con sideration is not the appellanl,s comparative

perform:tnce under the Scheme as a whole, but whether it

discharged the specilic obligatrons undertaken in respect of the

Suryapet l.-actory Zone.

54. Further, this court find no merit in the contention that the re-

allotment of the Suryapet Factory Zone would not adv^nce the object

of the Scheme or that respondent No.4 may not perform any better.

The validity of the impugned action is required to be tested on the

basis of the legalitl, of the decision_making

process adopted b1r the

respondents

and not on a comparative

assessment of the future

34

performance of the allottee. Once the appellant failed to comply with

the conditions goveming the allotment, it was open to the State to re-

allot the factory zor,e to another eligible entity in furtherance of the

objectives of the statutory scheme.

55. It is to be noted that the appellant contented on the

subsequent developments that took place during the pendency of the

proceedings, namely, the purchase of land for establishment of the

processing mill, the approval of applications for conversion under the

Telangana NALA, and the submission of an application under the TS-

iPASS system for obtaining the requisite statutory approvals. In this

regard, it is relevant to note the following:

i) The steps relied upon by the appellant were undertaken only

after repeated show cause notices had been issued by the

respondents and, in substantial measure, after the issuance of

the impugned Government Orders. The approval of the

applications for conversion under the Telangana NALA was

granted only on 02.08.2025, severai months after the

impugned Government Orders dated 15.03.2025.

ii) As rightly observed by the learned Single Judge, the appellant

had not intimated the Government regarding the purchase of

the land prior to the issuance of the impugned Government

Orders. The learned Single Judge has further noticed that the

appellant communicated the purchase of the land only by its

35

letter dated lg.O3.2O2S, subsequent to the cancellation of the

allotment uide G.O.Ms.No. l3 dated 1S.03.2025.

i ii) The aforesard subsequentdeveiopments

can not efface the

default in complying with its

appellanrs pre-existing

conlractual obligarions.The obligation to establish the

processlng unit w.ithin the stipulated period under the 2,d

MOA remained unfulfilled for several years prior to the

rmpugned action.

56. It is apposite ro note that the subsequent developments

relied

upon by the appellant do not render the impugned Government

orders vulnerable to challenge. The validity of an administrative

decision rs required to be tested on the basis of the facts and

circumstances prevailing on the date on which the riecision was

taken The belated steps initiated by the appellant cannot invalidate

itn action which was otheru'ise justihed

on the basis of the material

available before the respondents at the relevant point of time.

57. The appellant,s contention that the principle of contra

p'roferentem ought to be applied while construing the 2nd MOA, as it

is; a s1rrr6r.d-form rigreement drafted by the Government and

executed without anv real parity in bargaining power, does not merit

a(:ceptance. The doctrine of contra proferentem is attracted only

where the contractual terms are genuinely

ambiguous

and are

ca_cable of more than one rea

discussed,

Clauses 5(bJ, o and

sonable interpretation.

Asalready

13 of the 2".1 MOA are clear and

36

unambiguous. Clause S(bl unequivocally mandates the

establishment of the processing unit within twenty-four months,

while Clause 13 .stipulates the consequences of failure to comply

with the obligations undertaken thereunder. In the absence of any

ambigrrity in the contractual provisions, the doctrine of contra

proferentem has no application. The appeliant, having voluntarily

entered into the 2"d MoA and accepted the obligations embodied

therein, cannot seek to avoid the consequences of its admitted non-

compliance by invoking the said principie.

58. Further, the appellants contention that the allegation

regarding "poor performance" being introduced for the hrst time in

the counter Afhdavit and did not form the basis of the impugned

Government Orders, does not advance its case' The record reveals

that right from the issuance of the l"t Show Cause Notice dated

12.12.2022, the respondents had consistentiy adverted to the

appellant's failure to achieve the stipulated targets for area

expansion under the Oil Palm Development Programme The

subsequent Show Cause Notices dated 19'12'2023 and 05

'1O '2024

also reiterated the appellant's inability to achieve the prescribed

cultivation targets, while furnishing the relevant performance data'

The targets undertaken by the appellant also formed part of the

Aflrdavit dated 28.06.202 i and constituted an integral component of

its contractual obligations. Therefore, the allegation of poor

performance was neither an afterthought nor a new ground

17

rntroduced in the Counter Affidavit, but formed part of the material

on the basis of which the respondents evaluated the appellant,s

performance. In an1.- event, the principal ground 1br cancellation

remains thc appelant's fairure to comply with its obligations under

the 2"d MOA, u,hile the unsatisfactory performance in achieving the

cultivation targets only reinforces the decisron taten by the

respondents

59. The submission founded on the doctrine of legitimate

expectation is equally devoid of merit. The doctrine embodies a

principle o[ fairness in administrative action and does not confer an

independent or enforceable legal right contrary to the governing

statutory. or contractual framework. The apperllant cannot

legitimatelv expect the respondents to indehnitely continue the

allotment despite its admirted failure to discharge the obligations

undertaken under the 2n,r MOA. The continued procure.ment of FFBs

in terms of Clause 15 cannot create a legitimate expectation that the

respondents r.,",ould forbear from exercising the po.ers available to

them under the contractual and statutory framework.

60. We are conscious that commercial agreements entered into by

the State or its instrumentalities

must inspire conhdence amongst

private participants

and that arbitrary or capricious termination of

such arrangemenrs

u.ould undermine the credibility of public_private

partnerships.

However, the sanctitlz of such agreements

rests upon

reciprocal adherence to the obligations

voiuntarily

unrlertaken

by

38

both parties. In the present case, the impugned action cannot be

characterised as arbitrary or disproportionate. The respondents

proceeded only after issuing successive Show Cause Notices'

affording the appellant an opportunity of personal hearing, and

considering its explanations. The canceilation of the Suryapet

Factory Zone was ultimately founded upon the appellant's continued

'-.on-compliance with the obligations under the 2nd MOA, particularly

its failure to establish the processing unit within the stipulated

period and its unsatisfactory performance in achieving the agreed

targets.

Conclusion

61. For the foregoing reasons, this Court is of the considered view

that the appellant failed to discharge its contractual obligations

under the 2tuci MoA by not establishing the processing unit within the

stipulated period despite repeate'J opportunities afforded by the

respondents. The decision to cancel the Suryapet Factory Zone was

ibunded on the terms of the 2'd MOA, the undertaking furnished by

the appellant, and the rnaterial on record demonstrating its

continued non-compliauce and unsatisfactory performance The

learned Single Judge has correctly appreciated both the factual and

legal aspects of the matter and has rightiy declined to interfere with

the impugned Governrrrent Orders. Therefore, this Court hnd no

ground warranting interference in the present Writ Appeal'

a

39

62, Accordingly. the Writ Appeal is dismissed. The impugned order

dated 08.O1.2026 passed by the Learned Sir-rgle Judge in

W.P.No.9604 of 2025 is affirmed.

As a sequel, miscellaneous petitions, pending if any, stand

closed. No costs.

SD/-MOHD.ISMAIL

EPUTY REGISTRAR

//TRUE COPY//

\P

't\',

SECTION OFFICER

To,

'1 . One CC to M/s. TLH Advocates And Solicitors Advocate [OPUC]

2. Two CCs to GP For Agriculture High Court for the Slate of Telangana, at

Hyderabad [OUT]

3. One CC to Sri Sannapaneni Lohith Advocate [OPUC]

4. Two CD Copies

f\i1BC / BSK

L)L

HIGH COURT

DATED: 0310812026

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JUDGMENT

WA.No.102 OF 2026

DISMISSING THE WRIT APPEAL

WITHOUT COSTS

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