Statutory Rule Cannot Be Shrunk by Executive Whim: Kerala High Court Quashes NOC Denial for Petroleum Outlet

“If Legislature Did Not Say ‘Small’, Executive Cannot Read It In” — In a judgment that forcefully underscores the primacy of legislative intent over executive interpretations, the Kerala High Court struck down the refusal to grant a No Objection Certificate (NOC) for a petroleum retail outlet proposed to be set up on land assigned under the Kerala Land Assignment (Regularisation of Occupations of Forest Lands prior to 01/01/1977) Special Rules, 1993.

Justice Dr. Kauser Edappagath ruled that: “When the Special Rules, 1993, do not limit the shop in the assigned property as a small shop, the Government cannot, by a Government Order, restrict the usage of the assigned land only for small shops without amending the Rules.”

The Court declared that the rejection of the NOC application solely based on a Government Order (Ext. P5) interpreting the term "shop sites" as “small shops” was legally unsustainable and devoid of statutory backing.

The petitioner, Arun Antony, sought to establish a Class A & B petroleum retail outlet on land in Idukki that he lawfully purchased from a pattadar whose property had been assigned under the 1993 Special Rules.

After receiving franchise approval and clearances from several authorities, including the Pollution Control Board and the PWD, the petitioner approached the Additional District Magistrate (ADM) for a No Objection Certificate. However, the ADM rejected the application (Ext. P4) citing that the land was only eligible for agriculture, personal housing, or "small shops" under the 1993 Rules. This conclusion was based entirely on a 2009 Government Order (Ext. P5), which had unilaterally interpreted “shop sites” as “small shops.”

Court on Forest Land Status: “Assigned Land No Longer Remains Forest”

The State sought to additionally justify the rejection under the Forest (Conservation) Act, 1980, arguing that the land in question still retained its status as forest land.

The Court emphatically rejected this assertion: “The provisions in the Forest (Conservation) Act, 1980 have no retrospective operation... and hence it shall not affect the forest land divested before the coming into force of the Act as per the Special Rules, 1993.”

The Court relied on the authoritative Full Bench decision in Nature Lovers Movement v. State of Kerala (2000 KHC 847), later affirmed by the Supreme Court in (2009) 5 SCC 373, which conclusively held that land assigned under the 1993 Rules loses its character as forest land.

Court on Interpretation of ‘Shop Sites’: “Not For the Executive to Rewrite the Rule”

The core legal question revolved around whether the term “shop sites” under Rule 3 of the 1993 Special Rules could be limited to “small shops” by way of executive clarification.

Rule 3 reads: “The lands under these Rules may be assigned on registry for purposes of personal cultivation or for house sites or for shop sites as the case may be.”

The government relied on Ext. P5, a 2009 Government Order, which claimed that “shop sites” referred only to “small shops.”

The Court categorically rejected this executive gloss: “The term ‘shop sites’ referred to in Rule 3 is not defined anywhere. A reading of Rule 3 would show that the intention of the legislature was to assign land for personal cultivation, house sites or shop sites — not just for small shops.”

It went further to caution against unauthorized executive limitations: “If the intention of the legislature was to limit the assignment for small shops only, it should have been stated so in Rule 3 itself.”

“Ext. P5 is only an expression of opinion and does not have the force of law. The interpretation given in Ext. P5 is against the spirit of the Special Rules, 1993.”

Court Sets Aside Rejection Order and Directs Fresh Consideration

Noting that the rejection (Ext. P4) was based solely on Ext. P5’s interpretation, the Court held: “The 2nd respondent has to consider whether the proposed petroleum outlet would fall within the term 'shop sites' in Rule 3, ignoring the interpretation given to it vide Ext.P5.”

Accordingly, the Court:

• Quashed Ext. P4

• Directed the ADM to reconsider the NOC application afresh, on the basis of Rule 3 alone

• Ordered the process to be completed within two months after hearing the petitioner

Judicial Reinforcement of Legislative Sanctity

This ruling reaffirms the foundational principle of administrative law — that rules framed under legislation cannot be diluted, modified, or overridden by executive instructions unless such instructions are issued through valid statutory amendments.

The Kerala High Court has sent a clear message: “An executive clarification cannot carry more weight than the rule itself. Interpretation must remain faithful to the language of the Rule — not what a department thinks it ought to mean.”

The judgment is a notable precedent in protecting citizens’ statutory entitlements from being chipped away by bureaucratic overreach cloaked as ‘clarification’.

Date of Decision: 23rd May, 2025