M/s Atgc Biotech Vs State of Chhattisgarh

¶1

1

¶2

Digitally signed by SHAYNA KADRI

¶3

2026:CGHC:17645

¶4

NAFR

¶5

HIGH COURT OF CHHATTISGARH AT BILASPUR

¶6

WPC No. 1271 of 2020

¶7

1 - M/s Atgc Biotech Through Its Proprietor Ashish Purena, S/o Amar Das Age 37, R/o Street No. 07, Sector 2, Near Kadam Chowk Professor Colony, Raipur Chhattisgarh Unit Address Plot No. 112 To 115, Industrial Area Tehsil And District Mahasamund Chhattisgarh, District : Mahasamund, Chhattisgarh

¶8

... Petitioner(s)

¶9

versus

¶10

1 - State Of Chhattisgarh Through Its Secretary, Department Of Commerce And Industy, Mahanadi Bhawan, Mantralaya, Atal Nagar Nawa Raipur District Raipur Chhattisgarh, District : Raipur, Chhattisgarh 2 - Chhattisgarh State Industrial Development Corporation Limited Through Its Chiecf Manager (Land Allotment) Raipur First Floor Udyog Bhawan Telibandha Ring Road No. 01 Opposite Khanij Bhawan Raipur Chhattisgarh, District : Raipur, Chhattisgarh

¶11

3 - Office Of District Commerce And Industry Centre Mahasamund District Mahasamund Chhattisgarh, District : Mahasamund, Chhattisgarh

¶12

... Respondent(s)

¶13

(Cause Title is taken from CIS System)

¶14

For Petitioner	: Mr. Pallav Mishra, Advocate
For State	: Mr. Sangharsh Pandey, Govt. Advocate
For Resp. No. 2	: Mr. Ayaz Naved, Advocate

¶15

2

¶16

Hon’ble Mr. Justice Amitendra Kishore Prasad

¶17

Order on Board

¶18

17/04/2026

¶19

The petitioner has filed this writ petition seeking following reliefs:

¶20

“a) Allow the petition by issuing the writ of the Certiorari quashing the impugned order Annexure P-1 alongwith Notice Annexure P-4 as above;

¶21

(b) Grant cost of the expenses caused by the petitioner.”

¶22

Facts of the case, as emerging from the writ petition, are that the petitioner is a firm engaged in the field of biotechnology, particularly specializing in the development and production of tissue culture relating to various flora and fauna. The firm is duly represented through its proprietor, who is competent and authorized to institute the present proceedings. With the objective of establishing its industrial unit, the petitioner, in the year 2008, applied to respondent No. 2 for allotment of land on lease basis. Pursuant thereto, an agreement dated 20.03.2008 was executed between the petitioner and respondent No. 2 for lease of land admeasuring 1.77 acres situated at Birkoni Industrial Area, Tahsil and District Mahasamund. The said agreement contained detailed terms and conditions governing the lease, including provisions

¶23

3

¶24

relating to payment of premium, annual ground rent, development charges, street light charges, and the timeline for commencement of production. After execution of the lease deed, the petitioner took steps to establish its industrial unit on the allotted land and commenced operations. The petitioner has placed on record its Udyog Aadhaar registration to substantiate that the industrial unit was functional. However, on 31.01.2018, respondent No. 2 issued a show cause notice alleging violation of certain clauses of the lease agreement, particularly Clauses 2, 3, and 6. The allegations primarily pertained to non-payment of annual dues such as ground rent and development charges, as well as failure to commence production within the stipulated period of one year from the date of possession. It is the case of the petitioner that without granting adequate opportunity to respond to the said notice, respondent No. 2 proceeded to pass a final order cancelling the lease deed. Aggrieved thereby, the petitioner preferred an appeal before the Appellate Authority (Managing Director), which was registered as Appeal No. 2018/461. The Appellate Authority, by order dated 05.01.2019, allowed the appeal and granted the petitioner an additional period of six months to restart production, taking into consideration the petitioner’s explanation regarding temporary closure due to repair and capacity expansion. However, respondent No. 2, being dissatisfied with the said order, preferred a second appeal before

¶25

4

¶26

the State Government. The State Government, by the impugned order, allowed the appeal and restored the cancellation of the lease deed. Consequent thereto, a notice dated 30.05.2020 was issued directing the petitioner to vacate the leased premises within three months. Being aggrieved by the aforesaid actions, the petitioner has approached this Court by way of the present writ petition.

¶27

Learned counsel for the petitioner submits that the impugned orders passed by respondent authorities are illegal, arbitrary, and contrary to the facts on record as well as settled principles of law. It is contended that the order of cancellation of lease deed suffers from serious procedural and substantive infirmities and is liable to be quashed. It is argued that the show cause notice dated 31.01.2018 was issued on two specific allegations, namely, nonpayment of annual dues under Clauses 2 and 3 of the lease deed, and failure to commence production within the stipulated time under Clause 6. However, both these allegations are factually incorrect and baseless. Learned counsel submits that the petitioner had regularly made payments towards ground rent and other charges, and documentary evidence in the form of receipts has been placed on record to demonstrate that all dues stood cleared up to the date of issuance of the notice. Therefore, the allegation of non-payment is stated to be an afterthought and motivated. Learned counsel for the petitioner further submits that

¶28

5

¶29

the lease rent was paid up to 04.02.2019 and as such the impugned order is not in accordance with law. However, upon a specific query put by this Court, learned counsel fairly submits that at present the unit is not being run and the same is lying closed. He further submits that since 04.02.2019 till date, the factory has remained closed though the petitioner continues to be in possession of the property in question. It is also fairly submitted that no rent amount has been paid after 04.02.2019. Learned counsel candidly states that since the factory has been closed, the petitioner has not paid the rent amount. He has clearly admitted that the factory has been closed since the year 2019. It is also not disputed that the impugned order was passed on 05.02.2020 and the factory had, in fact, been closed for a period exceeding six months prior to the said date. With regard to the second allegation, it is submitted that the petitioner had in fact commenced production on 02.12.2010, after taking possession of the land in March 2008. It is further contended that the unit was duly recognized by the authorities and had even been conferred with the “Rajya Audyogik Puruskar” for the year 2012–2013, which clearly establishes that the unit was operational. The temporary halt in production was only on account of repair and capacity expansion, which was undertaken with due permission from the competent authorities. Learned counsel further submits that the respondent authorities themselves had acknowledged the

¶30

6

¶31

functioning of the petitioner’s unit at various stages. In the year 2016, the petitioner was issued a No Objection Certificate by respondent No. 2 for availing credit facilities from a financial institution, which clearly indicates that the unit was operational and compliant with the terms of allotment. Similarly, permission for expansion of business was also granted by the District Trade and Industry Centre, Mahasamund. In light of these facts, the action of the respondents in alleging non-compliance is stated to be contradictory and unsustainable. It is also contended that the order passed by respondent No. 2 stood merged with the order of the First Appellate Authority dated 05.01.2019, which had granted relief to the petitioner. Therefore, the second appellate authority could not have ignored the findings recorded by the First Appellate Authority without proper justification. It is further submitted that the second appellate authority has upheld the cancellation on grounds which were not part of the original show cause notice, thereby violating the principles of natural justice. Learned counsel emphasizes that the impugned order of the State Government travels beyond the scope of the original notice and introduces new grounds, without affording any opportunity to the petitioner to respond to the same. Such deviation from the original charges is impermissible in law and renders the impugned action arbitrary and violative of principles of natural justice. It is further argued that the entire action of the respondents is governed by

¶32

7

¶33

the provisions of the Chhattisgarh Industries (Allotment of Plots, Sheds and Land) Rules, 1974, and any action taken in contravention thereof is liable to be set aside. The petitioner submits that the respondents have acted in a manner which is not only inconsistent with the statutory framework but also prejudicial to the rights of the petitioner. On these grounds, learned counsel prays that the impugned orders cancelling the lease deed and directing eviction of the petitioner be quashed, and appropriate relief be granted in favour of the petitioner.

¶34

Learned State counsel as well as learned counsel appearing for respondent No. 2 (CSIDC), in a consolidated manner, submit that the petitioner was duly allotted land bearing Survey Nos. 112, 113, 114 and 115 admeasuring approximately 1.77 acres situated at Village Birkoni, District Mahasamund, vide allotment order dated 12.03.2008 for the specific purpose of establishing a biotechnology and tissue culture unit. Pursuant thereto, a lease agreement was executed on 20.03.2008, clearly incorporating the terms and conditions governing the allotment, including the obligation to pay annual lease rent, maintenance charges and to commence commercial production within the stipulated time. It is jointly contended that the petitioner committed clear and admitted violations of the essential conditions of the lease deed, particularly Clauses 2, 3 and 6. Clause 2 pertains to payment of annual lease rent and other charges, whereas Clause 6 mandates timely

¶35

8

¶36

commencement and continuation of production. Due to persistent non-compliance, a detailed show cause notice dated 31.01.2018 was issued to the petitioner granting 21 days’ time to remedy the breaches in terms of Clause 26 of the lease deed. However, despite due service, the petitioner neither submitted any reply nor rectified the breaches within the stipulated period, leaving the authorities with no option but to cancel the lease deed vide order dated 16.10.2018. Learned counsel further submit that the record itself demonstrates that the petitioner had not been making timely payments and, in fact, payments for several years, including 2017, 2018 and 2019, were made belatedly on 04.02.2019, though the same were due on or before 10th January of the respective years. Thus, there was a clear breach of Clause 2, which was not remedied even within the grace period provided under the show cause notice. It is further submitted that after cancellation, the petitioner preferred a first appeal before the Managing Director (Appellate Authority), wherein the petitioner itself admitted that the unit was not functioning and sought time on the ground of repair and capacity expansion. Taking a lenient view, the Appellate Authority, by order dated 05.01.2019, granted a conditional opportunity of six months to restart commercial production and clear all outstanding dues, with a specific stipulation that failure to comply would result in revival of the cancellation order. Learned counsel submit that the petitioner

¶37

9

¶38

failed to comply with the said conditions within the stipulated time and, instead of curing the breaches, preferred a second appeal seeking further extension of time. The State Government, after due consideration, rightly rejected the second appeal vide order dated 05.02.2020, holding that there was continued violation of Clauses 2, 3 and 6 of the lease deed. It was also found, on the basis of inspection dated 04.12.2019, that the industrial unit was non-functional and lying locked. It is further contended that the argument of the petitioner that the second appellate authority has travelled beyond the scope of the show cause notice is misconceived. The cancellation was primarily based on nonpayment of dues, and the subsequent finding regarding nonfunctioning of the unit only strengthens and substantiates the earlier grounds of breach. Moreover, closure of the industrial unit itself constitutes a serious violation of the lease conditions, particularly under Clause 23, justifying termination of the lease. Learned counsel emphasize that ample opportunities were granted to the petitioner at every stage, including issuance of show cause notice and grant of additional time by the Appellate Authority. Despite such opportunities, the petitioner failed to comply with the conditions. Having accepted the conditional order dated 05.01.2019 and failed to adhere to its terms, the petitioner is now estopped from challenging the consequential order passed in second appeal. In sum, it is submitted that the impugned

¶39

10

¶40

orders have been passed strictly in accordance with the terms of the lease agreement and applicable rules, without any procedural irregularity or violation of principles of natural justice. The writ petition, being devoid of merit, deserves to be dismissed.

¶41

Having heard learned counsel for the parties at length and on perusal of the material available on record, this Court proceeds to examine the controversy involved in the present writ petition.

¶42

The undisputed facts reveal that the petitioner was allotted leasehold land for establishment of an industrial unit subject to specific terms and conditions contained in the lease deed dated 20.03.2008. The said lease deed, inter alia, obligated the petitioner to (i) regularly pay annual lease rent and other charges, and (ii) establish and continuously run the industrial unit within the stipulated time. It is also not in dispute that a show cause notice dated 31.01.2018 was issued to the petitioner pointing out violations of the aforesaid conditions and granting opportunity to remedy the breaches. From perusal of the records, it clearly emerges that the lease came to be cancelled on account of violation of essential conditions of the lease deed, which was subsequently upheld by the appellate authorities. The principal issue for consideration is whether the impugned orders suffer from any illegality warranting interference under Article 226 of the Constitution of India.

¶43

11

¶44

From perusal of the records, it appears that on two counts the impugned order has been passed. Firstly, the factory of the petitioner is not being run and has not been in continuous operation for a period exceeding six months without any sufficient or justified reason. Such prolonged closure of the unit is clearly in breach of the conditions of grant of lease, which required the petitioner not only to establish but also to continuously operate the industrial unit. Secondly, it is evident that the lessee has not paid the rent amount since 04.02.2019. The obligation to regularly pay lease rent and other charges is a fundamental condition of the lease agreement, and failure to comply with the same constitutes a material breach justifying cancellation of the lease.

¶45

During the course of hearing, learned counsel for the petitioner fairly submitted that the factory has remained closed since February, 2019 and till date no production work has taken place in the unit, though the petitioner continues to remain in possession of the property. It has also been fairly admitted that the rent amount has not been paid. These admissions go to the root of the matter and substantiate the findings recorded by the authorities below.

¶46

In light of the aforesaid admitted factual position, this Court finds that the petitioner has failed to comply with the essential conditions of the lease deed. The contention of the petitioner regarding arbitrariness or violation of principles of natural justice

¶47

12

¶48

does not merit acceptance inasmuch as sufficient opportunity was granted by issuance of show cause notice and even thereafter by the First Appellate Authority, which granted additional time to the petitioner to revive the unit. Despite such opportunity, the petitioner failed to fulfill the stipulated conditions. This Court is of the considered view that the authorities have acted strictly in accordance with the terms of the lease deed and after affording due opportunity to the petitioner. The impugned orders do not suffer from any jurisdictional error, illegality, or perversity so as to warrant interference in exercise of writ jurisdiction.

¶49

Considering the aforesaid facts and circumstances of the case, this Court does not find the present to be a fit case to interfere with the impugned order. The order has rightly been passed by the competent authorities.

¶50

Accordingly, the writ petition, being devoid of merits, is hereby

¶51

dismissed .

¶52

Sd/-

¶53

(Amitendra Kishore Prasad) Judge

¶54

Shayna

M/s Atgc Biotech v. State of Chhattisgarh

Case brief

What is this about?

What did the court decide?

M/s Atgc Biotech v. State of Chhattisgarh

Case brief

What is this about?

What did the court decide?

What the court decided

Issues for consideration

Statutes considered

Procedural history

Parties & counsel

Coram

Case details

Similar cases

Mahesh Ram Kaiwart Vs State of Chhattisgarh

Sumit Singh Vs State of Chhattisgarh

Meghnath Patel Vs State of Chhattisgarh

Smt. Vidya P. Tandy Vs State of Chhattisgarh

Shiv Prasad @ Paltu Chakradhari Vs State of Chhattisgarh

Bhagwat Das Vs State of Chhattisgarh