Dismissed

Kvn Property Holdings v. the State of Karnataka

Karnataka HC9 Nov 2022WP/1883/2020

Case brief

AI extract

What is this about?

The court dismissed a writ petition seeking allotment of an industrial plot. The government order enabling allotment expired before the Board could issue an allotment letter. The deposit was unauthorizedly made by the petitioner without Board communication. The court directed the Board to handle allotments uniformly and ordered a refund of the deposit.

What did the court decide?

Petition dismissed; Board directed to refund the deposit amount to the petitioner within 10 days.

Kvn Property Holdings Vs the State of Karnataka — Specific Performance | Karnataka HC (2022)

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IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 09^TH DAY OF NOVEMBER, 2022 BEFORE

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THE HON'BLE MR. JUSTICE M. NAGAPRASANNA WRIT PETITION No.1883 OF 2020 (GM - KIADB)

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BETWEEN:

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KVN PROPERTY HOLDINGS NO.2011, EMBASSY HABITAT VASANTHANAGAR PALACE CROSS ROAD BENGALURU – 560 052 REPRESENTED BY ITS MANAGING PARTNER.

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... PETITIONER

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(BY SRI J.D.KASHINATH, ADVOCATE)

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AND:

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1 . THE STATE OF KARNATAKA BY PRINCIPLE SECRETARY DEPARTMENT OF COMMERCE AND INDUSTRIES VIDHANA SOUDHA BENGALURU – 01.

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2 . THE KARNATAKA INDUSTRIAL AREA DEVELOPMENT BOARD BY ITS CHIEF EXECUTIVE OFFICER AND EXECUTIVE MEMBER 4^TH AND 5^TH FLOOR, EAST WING KHANIJA BHAVAN, RACE COURSE ROAD BENGALURU – 01.

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3 . THE SECRETARY - I KARNATAKA INDUSTRIAL AREA DEVELOPMENT BOARD 4^TH AND 5^TH FLOOR, EAST WING KHANIJA BHAVAN, RACE COURSE ROAD BENGALURU – 01.

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... RESPONDENTS

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(BY SRI N.VINOD KUMAR, AGA FOR R1; SRI VIJAY KUMAR A.PATIL, ADVOCATE FOR R2 & R3)

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THIS WRIT PETITION IS FILED UNDER ARTICLES 226 AND 227 OF THE CONSTITUTION OF INDIA PRAYING TO DIRECT THE RESPONDENTS HEREIN TO ISSUE THE ALLOTMENT LETTER TO THE PETITIONER IN CONNECTION WITH PLOT NO.R-12 (25 ACRES) IN THE HOUSING AREA OF HI-TECH, DEFENSE AND AEROSPACE PARK, BENGALURU AS PER THE GOVERNMENT ORDER DATED 04.09.2018 AS MARKED ANNEXURE-C ETC.,

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THIS WRIT PETITION HAVING BEEN HEARD AND RESERVED FOR ORDERS ON 31.10.2022, COMING ON FOR PRONOUNCEMENT THIS DAY, THE COURT MADE THE FOLLOWING:-

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ORDER

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The petitioner is before this Court seeking issuance of a writ in the nature of mandamus directing the 2^nd respondent/Karnataka Industrial Areas Development Board (‘the Board’ for short) to issue a letter of allotment in favour of the petitioner in respect of plot No.R-12 measuring 25 acres in the Housing Area of Hi-tech Defense

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and Aerospace Park, Bengaluru (‘the Park’ for short) as per Government order dated 04-09-2018.

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Heard Sri J.D. Kashinath, learned counsel appearing for the petitioner, Sri N.Vinod Kumar, learned Additional Government Advocate appearing for respondent No.1 and Sri Vijay Kumar A. Patil, learned counsel appearing for respondent Nos. 2 and 3.

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Brief facts leading to the filing of the present petition, as borne out from the pleadings, are as follows:-

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It is the case of the petitioner that the Board is established for development and promoting of industries in industrial areas for which purpose the State Government would acquire lands and hand them over to the Board for allotment. A State High Level Committee would clear the project proposal of any entrepreneur relating to any industrial or other projects to be setup in the State with an investment of Rs.500/- crores and above in any case. In terms of Section 14 of the Act any applicant can make an application seeking allotment of an industrial plot in a prescribed format along with payment of requisite earnest money deposit and on receipt of the

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application in terms of the procedure the Board would consider the same under Section 10 of the Act.

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The petitioner in order to establish affordable housing project with amenities with an investment of Rs.494 crores and generating employment to about 450 persons in the housing area of the Park approached the State Single Window Clearance Committee for allotment of 25 acres of plot in the Park. The application of the petitioner was placed before the 53^rd meeting of the Land Audit Committee held on 21-07-2018 and the petitioner claims to have appeared before the said Committee and sought allotment.

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The plot, on consideration, was allotted to one M/s Tata Housing Development Company Limited on 04-07-2012. The said company could not execute the project and the allotment stood cancelled on 17-10-2017. The cancellation was challenged before this Court, but was withdrawn by M/s Tata Housing Development Company Limited. After withdrawal of the writ petition by Tata Housing Development Company Limited, a Government order came to be issued in favour of the petitioner to an extent of 25 acres in

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plot No.12 at the Park pursuant to which the petitioner deposits Rs. 18.75 crores in furtherance of Government order so issued in favour of the petitioner. The petitioner has now knocked the doors of this Court that despite Government issuing order, the Board has not issued any letter of allotment in favour the petitioner to start the project.

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The learned counsel appearing for the petitioner would contend that the petitioner has deposited Rs.18.75 crores without any loss of time and since M/s Tata Housing Development Company Limited had failed to execute the project, the petitioner had evinced interest and deposited the amount. The case of the petitioner was cleared before the Land Audit Committee and once the Land Audit Committee clears, the Board has no power to decline allotment. He would contend that if a direction is issued for issue of letter of allotment in favour of the petitioner, the project would be commenced any moment.

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On the other hand, the learned counsel representing the 2^nd respondent/Board would vehemently refute the submissions to contend that the Government order on which the petitioner seeks

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support has spent itself as it was only up to the period of two years from the date of its issuance and the Board has not issued any letter of allotment. The petitioner on his volition pays Rs.18.75 crores without there being any communication from the Board seeking such payment. He would submit that the plot cannot be allotted after 2 years, as the Government order itself is no longer is in existence. There are several other applicants for the very same plot and allotment will have to be made in accordance with law, since the petitioner has lost his opportunity for issue of letter of allotment.

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I have given my anxious consideration to the submissions made by the respective learned counsel and perused the material on record.

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Before embarking upon the consideration of the case of the petitioner, I deem it appropriate to notice the process of allotment in the 2^nd respondent/Board. The Karnataka Industries (Facilitation) Act, 2002 was promulgated to come into effect from 27-10-2003 (‘the 2002 Act’ for short). The 2002 Act was brought in to provide for promotion of industrial development and

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facilitation of new investments to simplify the regulatory frame work by reducing procedural requirements. The Act envisages constitution of a committee to provide for single point clearance to be called the State High Level Clearance Committee (‘the Committee’ for short) in terms of Section 3 of the 2002 Act. The Committee is to examine and consider the proposals received from any entrepreneur relating to any industrial and other projects to be set up in the State. Section 8 deals with powers of the committee and reads as follows:

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8. Powers of the Committee .- The State Level Single Window Clearance Committee shall be the final authority in granting approvals for the projects placed before it. The approvals given by the Committee shall be binding on the departments or authorities concerned and such departments or authorities shall issue the required clearance within the stipulated time subject to compliances by the entrepreneurs with the provisions of the applicable Central or State Acts or rules made thereunder.”

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(Emphasis supplied)

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The approvals given by the Committee would be binding on the Departments or Authorities concerned and such Departments have to issue required clearance within the stipulated time. The Board functions in terms of the Karnataka Industrial Areas Development

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Act, 1966 (‘the Act’ for short). Section 14 of the Act deals with general powers of the Board and clauses in sub-section (f) of Section 14 read as follows:

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“14. General powers of the Board . - … … …

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(f) (i) to allot to suitable persons premises or parts thereof including residential tenements in the industrial areas established or developed by the Board;

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(ii) to modify or rescind such allotments, including the right and power to evict the allottees concerned on breach of any of the terms or conditions of their allotment;

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(iii) to resume possession of premises or part thereof including residential tenements in the industrial area, or industrial estate in the manner provided in Section 34B.

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(Emphasis supplied)

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Sub-section (f) of Section 14 empowers the Board to allot premises or part thereof to suitable persons. Therefore, the scrutiny is by the Board as well. Under the Act, Regulations have been framed called the Karnataka Industrial Areas Development Board Regulations, 1969 (‘the Regulations’ for short). The Regulations were notified to govern disposal of lands by the Board. Regulations 6, 10, 11, 12 and 13 of the Regulations which are germane to be noticed read as follows:

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“6. Reservation of Plots . – The Board may reserve any area or plots in any area for allotment to any specified class of industry or industries or for any purpose in furtherance of the objects of the Act or for the purpose of carrying out the duties and functions of the Board.

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10. Allotment. – (a) The Board on being satisfied that the person, firm or company who has made an application is likely to start production within a reasonable period, and is not one which is declared obnoxious under Regulation 14 may make an allotment in his/their favour;

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(b) The Board may constitute sub-committees for considering allotment or plots and also delegate its power to the Executive Member, if necessary;

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(c) The Executive Member shall notify such applicant to whom an allotment is made to execute the agreement in Form 3 or 4 as the case may be with such modification as may be necessary in each case on such date, time and place as may be fixed by the Executive Member and to pay the consideration for the occupancy of the land as fixed by the Board within the time fixed by the Board.

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(d) Failure to execute the agreement or to pay the sums demanded by the Executive Member as per the notice given under Regulation 10(c) will render the allottee to have deemed to have declined the allotment.

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(e) The Board or with the authority of the Board, the Executive Member will have the discretion to grant extension of time for complying with the terms of the notice issued under Regulation 10(c) with or without payment of interest at nine per cent on the sums payable in terms of the said notice for the extended period.

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11. Decision of the Board.- The Board shall have the right to reject any application without assigning any reasons. In case where there are more than one applicant for a plot and if all the applicants satisfy the conditions for

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allotment, the Board shall have the right to allot the plot to any one of the applicants without assigning any reasons. The decision of the Board shall be final and binding on every applicant.

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12. Revocation of proposal for disposal of land . – The Board may at any time revoke any proposal to dispose of any plot or area under these Regulations, if in its opinion, the land covered by such plot or area has to be reserved for any purpose in furtherance of the objects of the Act.

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13. Allotment of plots in Special cases. - Notwithstanding anything contained in these Regulations the Board in consulting with the State Government may allot any plot or area other than those in respect of which applications are called for under Regulation 7 to any individual or company for the establishment or any industry or for the provision of any amenity required in the Industrial Area.”

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(Emphasis supplied)

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Regulation 6 deals with reservation of plots and empowers the

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Board to reserve any area or plots in any area for allotment. Regulation 10 deals with decisions of the Board for allotment. Regulation 12 deals with revocation of proposal for disposal of land and Regulation 13 deals with allotment of plots in special cases. In cases where there are more than one applicant for a plot and if all the applicants satisfy the conditions for such allotment, the Board is also empowered to revoke the proposal for allotment of land in terms of Regulation 12 and also allot points in special cases. Therefore, the right of the petitioner will have to be considered on a

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conjoint reading of the provisions of the Act, the Regulations, the 2002 Act and the Rules thereof. In terms of what is quoted hereinabove, the 2002 Act comes about for speedy clearance of investment projects. The decision for allotment is by the Board taking note of the approval of the project by the State High Level Clearance Committee. In this broad frame work of the statutes, the facts in the case at hand are required to be noticed.

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The afore-narrated facts are not in dispute. The right of the petitioner to seek the prayer as sought springs from 53^rd meeting of the Land Audit Committee held on 21-07-2018. The proceeding of the Land Audit Committee was pursuant to issuance of Government order dated 04-09-2018. The relevant portion of the Government order reads as follows:

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“GOVERNMENT ORDER NO.CI 173 SPI 2018, BENGAURU, DAED 4-09-2018.

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Government is pleased to accord in-principle approval to the investment proposal of M/s KVN Property Holdings to establish “Affordable Housing Project with Amenities” with an investment of Rs.494/- crores generating employment to about 450 persons at Housing area of Hi-tech Defence and Aerospace Park, Bengaluru with the following infrastructure assistance, incentives and concessions.

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Land KIADB to allot 25 acres land at Plot No.R-12 in Housing area of Hi-tech. Defence and

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	Aerospace Park, Bangalore.
Water	750 KLD from KIADB
Power	5000 KVA from BESCOM
Incentives & Concessions	As per applicable Policy of the State.

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Sanction of the above infrastructure assistances, incentives and concessions is subject to the following terms and conditions:

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1. Environment : The company to obtain Consent for Establishment and Consent for Operation from KSPCB and environmental clearance from MoEF, Government of India or the Department of Forest, Ecology & Environment, Government of Karnataka, if applicable.

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2. Employment : The Company shall comply with the provisions of applicable Policy of the State of Govt. of Karnataka with respect to local employment on the project. Prepare a plan for development of Human Resources required for the project, train local people. A copy of Human Resources Development plan shall be sent to the Commissioner for Industrial Development & Director of Industries and Commerce for monitoring.

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3. Vendor Development : Wherever there is scope for vendor development for the project, the company shall prepare a vendor development plan, develop local vendors and procure the required inputs, components and sub-assemblies from these local vendor units. A copy of the vendor development plan shall be sent to the Commissioner for Industrial Development & Director of Industries and Commerce for monitoring.

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4. Social Infrastructure Development : The Company is advised to take up social infrastructure development projects in the vicinity of the proposed location of the unit and comply with the stipulation of Company Act, 2013. A copy of such projects shall be sent to the Commissioner for Industrial Development & Director of Industries and Commerce for monitoring.

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5. Others:

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a. The company shall adopt rainwater harvesting, waste water recycling and water conservation techniques. Zero discharge facility should be adopted wherever applicable.

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b. The company shall take all statutory and other necessary clearances from the competent authorities including Government of India.

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c. As part of ‘Ease of Doing Business’ Government vide order No.CI 89 SPI 2013, dated 20-12-2014 has accorded approval to operationalise e-Udyami Phase II for obtaining various clearances/approvals/ licenses etc. through common e- platform for the projects approved through District Level Single Window Clearance Committee (DLSWCC) or State Level Single Window Clearance Committee (SLSWCC) or State High Level Clearance Committee (SHLCC) w.e.f. 1-012015.

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d. The approvals/NOCs of following Departments have been covered under Phase-II of e-Udyami.

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i. Karnataka Industrial Areas Development Board. ii. Karnataka Small Scale Industries Development Corporation.

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iii. Karnataka State Pollution Control Board. iv. Factories, Boilers, Industrial Safety and Health Department.

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v. Industries and Commerce Department. vi. Town Planning Department and Local Planning Authorities.

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vii. Municipal Administration Department.

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viii. BESCOM/GESCOM/HESCOM/CESCOM/MESCOM ix Karnataka State Fire and Emergency Services Department.

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x. Water Resources Department.

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e. The login and passwords which are used for filing application through e-Udyami Phase I are also applicable for filing application through e-Udyami Phase-II. E-Udyami Phase II web application may be accessed through www.ebizkarnataka.gov.in and online application along with

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necessary documents may please be filed for any of above Departments’ approval/NOCs.

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f. Karnataka Udyog Mitra (KUM) would provide the necessary escort services for the speedy implementation of your project. You are requested to inform the progress made in the implementation of the project every quarter in the proforma.

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This approval is valid for a period of two years from the date of issue of this Government order.”

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(Emphasis supplied)

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Certain obligations were cast upon the petitioner in terms of the Government order. The Government order was the Government granting in-principle approval to the investment project of the petitioner and it was made valid for a period of two years from the

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date of issuance of the Government order. Therefore, the Government order ceased to exist on and from 03-09-2020. It is within this period proceedings ought to have been taken up before the Board by the petitioner. In principle approval was for the investment project and there was no decision of granting allotment of plot in favour of the petitioner. Without there being any communication directing the petitioner to make payment, the petitioner on his volition deposits Rs.18.75 crores. This is an

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undisputed fact. The fact remains that the deposit was made without any communication from the hands of the Board.

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The Government order having spent itself, the field now becomes open to be considered by the Board qua applications that have been received at the Board’s end concerning this very plot. Therefore, the petitioner cannot claim that he should be allotted the plot by way of a writ in the nature of mandamus directing the Board to grant such allotment. The Board will have to now take a decision, which becomes uniformly applicable to every person, as the Government order which is the sheet anchor of the petitioner has spent itself. There is no extension of the period that is stipulated in the Government order for the petitioner to claim that the Government order is still subsisting and his right in terms of the Government order is subsisting. He cannot be seen to claim that he has a right over the plot without there being any allotment from the hands of the Board. If the Board had allotted the property in a manner known to law under the Act, the mandamus sought by the petitioner could have been considered to be granted. That is not the case at hand. There is no allotment made in favour of the

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petitioner. Merely because he has deposited the amount on his own, he cannot claim that the allotment should be made in his favour. No mandamus would lie, more so in the light of the fact that two years period stipulated in the Government order is over about 2 years ago.

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No doubt, the State High Level Clearance Committee has cleared the investment project proposal of the petitioner, but allotment was not made by the Board. If the Board had passed a resolution or any decision had fructified into allotment, it would have been a circumstance altogether different. Without any allotment letter, on the strength of what the Government notified supra , the petitioner deposits the amount and the period of two years was also over notwithstanding the fact that the writ petition was pending. What was directed was that the plot shall not be allotted to anybody else. No order of extension by Government with regard to the extension of time of two years is granted by the Government during the pendency of the petition. The prayer in the petition is not to the effect that the said period should be extended. On these factors the right of the petitioner to retain the plot was yet

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to get crystallized. It was still inchoate. Therefore, his case will have to be considered along with all other applicants, in a manner known to law, as the land still vests with the Board, as the Board has not yet issued any allotment in favour of the petitioner.

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The contention of the learned counsel for the petitioner that once the Single Window clears the project of the petitioner, it can never be cancelled need not be gone into at this juncture. The right of the petitioner flows from the Government order. But, the Government order has lost its efficacy or has spent itself on 03.09.2020. Though the petitioner was before this Court and an interim order was granted to the effect that the plot shall not be allotted to anybody, the fact, as contended by the learned counsel for the Board, remains that as on date there are several applicants. Therefore, it is for the Board to take a uniform decision with regard to the allotment of plot in accordance with law qua the pending applications. The counsel for the Board has filed his objections. The objections insofar as the statement with regard to pending applications reads as follows:

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“10. It is humbly submitted that Tata Housing Development Company Ltd, has withdrawn the Writ Petition with

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liberty to file fresh writ petition, however they are making request to refund the entire amount and the said request is pending consideration before the answering Respondents. It is humbly submitted that the recommendations of the Land Audit Committee of the Karnataka Udyog Mitra and the decision of the SLSWCC and consequential Government Order dated 04.09.2018 are only in the nature of recommendations and as on this date the said Government order and decision of the SLSWCC are not in force, hence petitioner cannot the allotment of subject land as a matter of right. It is humbly submitted that there are various applications pending before the answering Respondent BOARD for the purpose of allotment of the land. Hence, the Petitioner cannot claim allotment of the subject land as a matter of right. It is the answering Respondent who has to consider the same, keeping in mind the other applications and various all other factors and take appropriate decision in the matter. On this ground alone, the above Writ Petition is liable to rejected.”

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In the light of the preceding analysis and the affidavit of the Board with regard to pending applications, I deem it appropriate to direct the Board to follow the procedure of uniform allotment of plots considering all the applications. I, therefore, decline to entertain the petition for issuance of a writ in the nature of mandamus directing allotment of plot to the petitioner, only on the ground that the Government order on which entire case of the petitioner falls has spent itself, as it was only to be in operation up to 03.09.2020. The petitioner has throughout the petition contended that he has paid the afore-quoted amount to the Board which is still with the Board. Therefore, it becomes necessary to direct the 2^nd

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respondent-Board to refund the amount that is paid by the petitioner, as is observed in the course of this order, without any loss of time.

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For the aforesaid reasons, I pass the following:

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O R D E R

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(i) The Writ Petition is dismissed.

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(ii) The amount in deposit with the Board paid by the petitioner, shall be refunded to him, as expeditiously as possible, at any rate within 10 days from the date of

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receipt of the copy of this order.

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Sd/JUDGE

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bkp CT:MJ

Kvn Property Holdings v. the State of Karnataka

Case brief

What is this about?

What did the court decide?

Kvn Property Holdings v. the State of Karnataka

Case brief

What is this about?

What did the court decide?

What the court decided

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