Partly allowed

Sri R v. Ramachandra Rao v the State of Karnataka

Karnataka HC9 Feb 2023WP/14078/2022

Case brief

AI extract

What is this about?

This warrant of petition challenged an order resuming possession of industrial land by the Karnataka Industrial Area Development Board. The Court quashed the impugned order for violating Section 34B(2) of the KIAD Act, as the Board failed to issue a mandatory show-cause notice. The writ is allowed in part, reserving liberty for the Board to proceed lawfully.

What did the court decide?

The impugned order dated 08.06.2022 stands quashed. The respondent-KIADB is given liberty to proceed from the stage of Section 34B(1), notice the allottee, hear them, and pass appropriate orders.

Sri R v Ramachandra Rao Vs the State of Karnataka — Writ and Judicial Review | Karnataka HC (2023)

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WP No. 14078 of 2022

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IN THE HIGH COURT OF KARNATAKA AT BENGALURU

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DATED THIS THE 9^TH DAY OF FEBRUARY, 2023

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BEFORE

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THE HON'BLE MR JUSTICE M.NAGAPRASANNA WRIT PETITION NO. 14078 OF 2022 (GM-KIADB)

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BETWEEN:

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SRI R V RAMACHANDRA RAO S/O LATE R VITTAL RAO AGED ABOUT 57 YEARS R/AT NO.3376, 7TH MAIN ROAD TILAK NAGAR, MANDI MUHALLA MYSORE - 570 007

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SRI R V LAKSHMAN RAO S/O LATE R VITTAL RAO AGED ABOUT 52 YEARS R/AT NO. 3376, 7TH MAIN ROAD TILAKNAGAR, MANDI MUHALLA MYSORE - 570 007

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Digitally signed by PADMAVATHI B K Location: HIGH COURT OF KARNATAKA

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PROPRIETOR OF M/S PANDURANGA VITTAL POWER WEAVING AND DYEING FACTORY, PROPT. SRI R V RAMACHANDRA RAO AND R V LAKSHMAN RAO.

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…PETITIONERS

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(BY SRI RAGHUPATHY T.N., ADVOCATE)

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AND:

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THE STATE OF KARNATAKA REPRESENTED BY PRINCIPAL SECRETARY DEPARTMENT OF INDUSTRIES, KHANIJA BHAVANA, RACE COURSE ROAD, BENGALURU 560001

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WP No. 14078 of 2022

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CHIEF EXECUTIVE OFFICER AND EXECUTIVE MEMBERS KARNATAKA INDUSTRIAL AREA DEVELOPMENT BOARD KHANIJA BHAVANA RACE COURSE ROAD

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KARNATAKA INDUSTRIAL AREA DEVELOPMENT BOARD BY ITS DEVELOPMENT OFFICER MYSURU - 570 001

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…RESPONDENTS

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(BY SMT. SHWETHA KRISHNAPPA, AGA FOR R1; SRI B.B.PATIL, ADVOCATE FOR R2 AND R3)

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THIS WP FILED UNDER ARTICLE 226 AND 227 OF THE CONSTITUTION OF INDIA, PRAYING TO QUASH THE ORDER AT ANNEXURE-E DATED 08.06.2022 RECEIVED BY THE PETITIONER ON 22.06.2022 ISSUED BY R2 AND GRANT AN INTERIM ORDER TO STAY ALL FURTHER PROCEEDINGS PERTAINING TO THE ORDER ISSUED BY R2 AT ANNEXURE-E DATED 08.06.2022

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THIS PETITION, COMING ON FOR PRELIMINARY HEARING IN 'B' GROUP, THIS DAY, THE COURT MADE THE FOLLOWING:

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ORDER

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Heard Sri. T.N.Raghupathy, learned counsel appearing for

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the petitioners, Smt. Shwetha Krishnappa, learned Additional Government Advocate for respondent No.1 and Sri. B.B. Patil,

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learned counsel appearing for respondent No.2 and have perused the material on record.

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The learned counsel appearing for the petitioners submits that the issue in the lis stands covered by an order passed by a Co-ordinate Bench in W.P.No.46678/2017 disposed on 21.06.2022, which the learned counsel, Sri. B.B. Patil, appearing for the respondent - Board would accept on instructions and verification of the records that there was no notice issued to the petitioner in terms of Section 34B(2) of the Karnataka Industrial Areas Development Act, 1966 and would accept that a Co-ordinate bench of this Court has passed the aforesaid order.

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In the light of the issue standing covered by a judgment rendered by a Co-ordinate Bench, this Court need not delve deep into the matter. A Co-ordinate Bench on the very issue as held as follows:

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"5. Learned counsel Sri.B.B.Patil appearing for respondent-KIADB submits that the petitioner was given an opportunity by issuing notice under Section 34B(1) and he was also afforded an opportunity of hearing by 3rd respondent. Learned counsel would submit that notice issued by the respondent-KIADB was under sub-

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sections (1) and (2) of Section 34B and there is no violation of Section 34B as contended by the learned counsel for the petitioner. It is also submitted that, admittedly the petitioner had not commenced the construction work within the timeline stated in clause (5) of the Lease-cum-Sale agreement. According to the learned counsel, the same is not disputed by the petitioner. Further, learned counsel would submit that having appeared before the 3rd respondent in pursuance of the notice at Annexure-Q dated 30.01.2017, it is not open for the petitioner to submit that the action of the respondentKIADB is in violation of Section 34B(1) and he had no opportunity under Section 34B(2). Thus, he prays for dismissal of the writ petition.

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6. Having heard the learned counsel for the parties and on perusal of the writ petition papers, I am of the view that the action of the respondent-KIADB in passing resumption order at Annexure-S dated 26.05.2017 and Annexure-T dated 07.06.2017 are in contravention of Section 34B(2) of 1966 Act for the following reasons:

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Section 34B of Chapter VIII of 1966 Act provides for resumption of possession of the premises including residential tenements on breach of terms and conditions of lease or holding without authority. The lease agreement requires an allottee of industrial plot/lessee to commence the civil construction work within 3 months from the date of taking possession of the industrial plot and after obtaining license from Chief Inspector of Factories and Boilers of Karnataka State. Further, it states that the lessee shall complete the civil construction works, erect machineries and commence production within 24 months from the date of taking possession of the allotted industrial plot. Admittedly, for the reasons best known to the petitioner, the petitioner has not commenced the civil work within 24 months from the date of taking possession of the industrial plot.

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7. Section 34-B of 1966 Act reads as follows:

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“34-B. Resumption of the possession of premises including the residential tenements on breach of terms and conditions of lease or holding without authority.- (1) Where the Board is of the opinion that an allottee of any premises or part thereof or residential tenement in an industrial area or industrial estate has violated any of the terms or conditions of allotment or holds it without any authority it may, without prejudice to Section 25 give notice to such allottee and Banks or Financial Institutions, in whose favour the Board has permitted the mortgage or leasehold rights of the premises, or residential tenement specifying the breaches of the terms and conditions of the allotment calling upon the allottee to remedy such breaches within a time stipulated in the notice.

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(2) If the allottee fails to remedy the breaches within the time so stipulated, the Board shall serve a notice upon the allottee under intimation to such Bank or Financial Institutions to show cause within thirty days from the date of service of notice, why the possession of the premises or part thereof or residential tenement should not be resumed.

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(3) After considering the cause, if any, shown by the allottee and after giving him an opportunity of being heard, the Board may pass such orders, as it deems fit.

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(4) Where the Board passes an order under sub-section (3), for resuming possession of the premises or part thereof or residential tenement in the industrial area it may, by notice in writing, order any allottee to surrender and deliver possession thereof to the Board or any person duly authorised in this behalf within the date specified in the notice.

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(5) If any allottee refuses to surrender or deliver the possession of the premises or part thereof or residential

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tenement within the time specified in the notice, the Board or any officer authorised by it in this behalf may resume the possession of the premises or part thereof or residential tenement free from all encumbrances and for that purpose may use force as may be necessary".

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A careful reading of sub-Section (1) of Section 34B , it is seen that if the Board is of the opinion that an allottee of an industrial plot has violated any of the terms or conditions of allotment or holds it without any authority, it may, without prejudice to Section 25, give notice to such allottee specifying the breaches of the terms and conditions of allotment, calling upon the allottee to remedy such breaches within the time stipulated in the notice. Sub-section (2) of Section 34B would state that if the allottee fails to remedy the breaches pointed out under Section 34B (1) within the time stipulated, the Board shall serve a notice upon the allottee to show cause within 30 days from the date of service of notice as to why the industrial plot or residential tenement should not be resumed.

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8. Annexure-Q notice dated 30.01.2017 issued under Section 34-B(1) of 1966 Act would call upon the petitioner to remedy the specific breaches noted within a period of 90 days from the date of issue of notice. Further it would state that failing which, further steps would be taken to terminate the lease and resume possession of land by the Board for violation of terms and conditions of agreement. Notice also calls upon the petitioner to submit his reply within 30 days from the date of notice. The petitioner in his reply has explained as to why he could not implement the project in time. In that, the petitioner had sought for one more acre of land and there was delay in plan approval from the KIADB. Under the impugned order, the respondent Board has failed to consider the cause shown by the petitioner towards delay in implementation of the project. There is total non- application of mine by the respondent-Board while passing the impugned orders at Annexures-S and T. None of the grounds urged by the petitioner are considered by the respondent-Board while passing the order under Section 34B(1). Thereafter, no notice is issued under Section 34B(2) of 1966 Act,

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calling upon the petitioner as to why industrial plot should not be resumed for non-compliance of the breaches as indicated in Annexure-Q/notice dated 30.01.2017. But, the 3rd respondent proceeded to pass impugned order dated 26.05.2017 to pay Rs.99,97,652/- and complete the project within 9 months from the date of the order, failing which, the respondent-authority would resume the industrial plot allotted to the petitioner. However, it is a fact that no notice under sub-Section (2) of Section 34B is issued to the petitioner which is mandatory requirement under Section 34B(2) of 1966 Act. Once the allottee fails to comply or remedy the breaches or defects pointed out under Section 34B(1), it would be necessary for the 3rd respondent-KIADB to issue notice under Section 34B(2) to resume the industrial plot. Non-compliance of the procedure prescribed under Section 34B(2), the impugned resumption order at Annexure-S dated 26.05.2017 is liable to be quashed, with liberty to the respondent- KIADB to issue proper notice from the stage of Section 34B(1), hear the petitioner and pass appropriate orders. If the petitioner submits satisfactory reply or if the petitioner has completed the project, the same shall be taken note by the 3rd respondent while hearing the petitioner in pursuance of notice under Section 34B(2) of 1966 Act.

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9. The co-ordinate Bench of this Court in W.P.No.2016/2017 disposed of on 12.06.2019 had an occasion to consider similar fact situation and at paragraphs 10 and 11 has held as follows:

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10. It is the specific case of the petitioner that, before resumption, the first respondent has not followed the procedure as contemplated under Section 34B(2) of the KIAD Act, which reads as under:

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“(2) If the allottee fails to remedy the breaches within the time so stipulated, the Board shall serve a notice upon the allottee under intimation to such Bank or Financial Institutions to show cause within thirty days from the date of service of notice, why the possession of the premises or part

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thereof or residential tenement should not be resumed.”

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11. A careful perusal of the impugned order on resumption passed by the first respondent dated 21.12.2016, there is no reference for the compliance of provisions under Section 34B(2) of the KIAD Act. The order sheet produced along with the statement of objections by the respondentsKIADB clearly depicts in Annexure ‘R5’ that, the case was called on 3.10.2016 and posted the matter to 21.10.2016. On 21.10.2016, the case was called and recorded that ‘final orders could not be made ready and posted the matter for hearing on 11.11.2016’. Unfortunately, there was no hearing on 11.11.2016. Even the order sheet does not depicts, what has happened on that day. But, very strangely, the matter was taken on 2.12.2016. Subsequently, the final order came to be passed on 21.12.2016. Therefore, the procedure adopted by the first respondent before passing the impugned order clearly indicates that they have not followed the procedure as contemplated under the provisions of Section 34B(2) of the KIAD Act. Before resumption, even though the petitioner appeared before the authorities, they have not followed the procedure as contemplated under the provisions of Section 34B(2) of the KIAD Act. In support of the same, no material is produced the Court.

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