Promissory estoppel cannot compel illegal allotment; equitable redress and fair classification of affected allottees were upheld.

SC held that allottees acquired no vested right to possession of industrial plots where the underlying land was subject to forest and airbase restrictions, and the Administration could not be compelled to act contrary to law. Promissory estoppel and legitimate expectation could not override statutory prohibitions, though equitable redress was warranted for the mistaken scheme. The Court upheld a rational distinction between consentees and non-consentees for alternative allotment, but protected consentees from being charged a higher price caused by administrative delay. Persons who had not pursued the matter before the High Court were denied the same relief.

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Issues: (i) Whether the allottees acquired a vested right to possession of the originally allotted industrial plots and could compel the Administration to act contrary to forest and airbase restrictions; (ii) whether the doctrines of promissory estoppel and legitimate expectation could be invoked against the Administration; (iii) whether consentees and non-consentees formed different classes for the purpose of allotment of alternative plots and pricing; and (iv) whether persons who were not parties before the High Court could claim the same relief.

Issue (i): Whether the allottees acquired a vested right to possession of the originally allotted industrial plots and could compel the Administration to act contrary to forest and airbase restrictions.

Analysis: The scheme framed under the Capital of Punjab (Development and Regulation) Act, 1952 and the Chandigarh Lease Hold of Sites and Building Rules, 1973 did not create an enforceable right to insist on allotment or possession where the underlying land could not lawfully be used for industrial development. A public authority cannot be compelled to violate statutory prohibitions or restrictions imposed in public interest. The Administration's mistake in including land covered by forest notification and airbase restrictions could not convert an illegal or impracticable allotment into a vested legal entitlement.

Conclusion: No vested right to the original plots was established, and the claim for delivery of those plots was rejected.

Issue (ii): Whether the doctrines of promissory estoppel and legitimate expectation could be invoked against the Administration.

Analysis: Those doctrines may operate against public authorities in appropriate cases, but not where their application would require breach of law or harm larger public interest. The Administration's representations could not override statutory restrictions or justify directions to act unlawfully. At the same time, fairness required some redress for the loss caused to the allottees by the mistaken scheme, making administrative accommodation more appropriate than compelling illegal performance.

Conclusion: The doctrines could not be used to compel allotment of the original plots, though the Administration remained bound to provide fair alternative redress.

Issue (iii): Whether consentees and non-consentees formed different classes for the purpose of allotment of alternative plots and pricing.

Analysis: The consentees accepted alternative plots at an early stage, while the non-consentees resisted the revised arrangement and challenged the policy and restrictions. That difference in conduct justified differential treatment under Article 14 of the Constitution of India. However, consentees should not be burdened with a higher price for the alternative plots merely because of delay caused by the Administration. Fairness required that they be charged the original allotment price, while non-consentees could be offered plots in the new industrial area at the prevailing price, with adjustment of amounts already deposited and refund with interest if they declined or failed eligibility requirements.

Conclusion: Differential treatment between consentees and non-consentees was upheld, but the higher pricing direction against consentees was modified in their favour.

Issue (iv): Whether persons who were not parties before the High Court could claim the same relief.

Analysis: Those who had not pursued their remedies before the High Court and were only later seeking to join the litigation could not be allowed to enter the competition for limited alternative plots. Long inaction and absence from the original proceedings disentitled them to share in the equitable relief fashioned for the litigating parties.

Conclusion: No relief was granted to non-parties who were not before the High Court.

Final Conclusion: The directions of the High Court were substantially modified. Original plot possession was refused, consentees were protected against an unfair price burden, non-consentees were given a limited option in the new industrial zone, and claims of non-parties were rejected.

Ratio Decidendi: A public authority cannot be compelled by estoppel or legitimate expectation to perform an allotment in violation of statutory restrictions, but equitable redress may be fashioned in a manner consistent with law and public interest, including reasonable classification among affected allottees.

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