Allowed

Arihant Industries v. the Principal Secretary to

Karnataka HC10 Jun 2024WP/107341/2014

Case brief

AI extract

What is this about?

A petitioner allotted an industrial plot by KIADB challenged cancellation of his allotment and the re-allocation of the same plot to another party through a lease-cum-sale agreement and sale deed executed while his allotment subsisted. The court found the respondents' actions arbitrary, inconsistent and violative of contractual terms.

What did the court decide?

Cancellation order quashed; lease-cum-sale agreement dated 19.09.2011 and sale deed dated 01.04.2013 quashed; respondents directed to deliver Plot No.553D to petitioner within three months.

Arihant Industries Vs the Principal Secretary to — Writ and Judicial Review | Karnataka HC (2024)

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IN THE HIGH COURT OF KARNATAKA, DHARWAD BENCH

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DATED THIS THE 10^TH DAY OF JUNE, 2024

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BEFORE

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THE HON'BLE MR JUSTICE SACHIN SHANKAR MAGADUM WRIT PETITION NO.107341 OF 2014 (GM-KIADB)

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BETWEEN:

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ARIHANT INDUSTRIES A PROP CONCERN REP/BY ITS PROPRIETOR, MR. SUNNY AMARNATH JAIN, AGE: 39 YEARS, OCC: BUSINESS, R/O. PLOT NO. 289, SECTOR 25, PRADHIKARAN NIGADI PUNE-44

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…PETITIONER

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(BY SRI. PRAKASH K. JAWALKAR, ADVOCATE) AND:

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THE PRINCIPAL SECRETARY TO GOVERNMENT OF KARNATAKA (COMMERCE & INDUSTRIES DEPARTMENT) & EX-OFFICIO CHAIRMAN, KARNATAKA INDUSTRIAL AREAS DEVELOPMENT BOARD, M.S. BUILDING, AMBEDKAR VEEDHI, BANGALORE-01.

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THE CHIEF EXECUTIVE OFFICER AND EXECUTIVE MEMBER, KARNATAKA INDUSTRIAL AREAS DEVELOPMENT BOARD, NO.14/3, 2^ND FLOOR, RASTOTHANA PARISHAT BUILDING, NRUPATHUNGA ROAD, BANGALORE-560 002.

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THE DEVELOPMENT OFFICER, KIADB ZONAL OFFICE, LAKKAMMANAHALLI INDUSTRIAL AREA, PONA BANGALORE ROAD,

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DHARWAD-580004.

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THE ASSISTANT SECRETARY, KARNATAKA INDUSTRIAL AREAS DEVELOPMENT BOARD, LAKKAMMANAHALLI INDUSTRIAL AREA, POONA BANGALORE ROAD, DHARWAD-580 004.

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MS/ R.R. ENTERPRISES, A PARTNERSHIP FIRM R/BY ITS PARTNERS SMT. ROOPA B.G. AND SMT. RAJESHWARI S.G., D2-504 , SWAPNANAGARI, UDYAMNAGAR, PIMPRI, PUNE-411018.

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…RESPONDENTS

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(BY SRI. V.S. KALASURMATH, HCGP FOR R1; SRI. P.N. HATTI, ADV. FOR R2-R4; SRI. S.D. RATHOD & SRI. P.S. KADADEVAR, ADVOCATES FOR R5)

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THIS WRIT PETITION IS FILED UNDER ARTICLES 226 AND 227 OF THE CONSTITUTION OF INDIA PRAYING TO ISSUE A WRIT/ ORDER/ DIRECTION IN THE NATURE OF A WRIT CERTIORARI QUASHING THE IMPUGNED ORDER BEARING NO.KIADB/DWD/AS/991/14-15 DATED 17-07-2014 PASSED BY RESPONDENT NO.4 CLAIMING TO BE ON BEHALF OF RESPONDENTS NO.1 TO 3 AGAINST THE PETITIONER VIDE ANNEXURE-K TO THIS WRIT PETITION; ISSUE A WRIT/ORDER/DIRECTION IN THE NATURE OF A WRIT CERTIORARI QUASHING THE LEASE CUM SALE AGREEMENT DATED 19-09-2011 ANNEXURE-G AND SALE DEED DATED 01-04-2013 ANNEXURE-H EXECUTED BY RESPONDENT NO.4 CLAIMING TO BE ON BEHALF OF RESPONDENTS NO.1 TO 3 IN FAVOUR OF RESPONDENT NO.5.

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THIS PETITION HAVING BEEN HEARD AND RESERVED FOR JUDGMENT ON 06.06.2024, COMING ON FOR PRONOUNCEMENT OF JUDGMENT THIS DAY, THE COURT DELIVERED THE FOLLOWING:

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ORDER

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This writ petition is filed under Articles 226 and 227 of the Constitution of India, wherein the petitioner seeks quashing of the cancellation order regarding the allotment of industrial plot No.553D and requests the setting aside of the lease-cum-sale agreement and the sale deed executed in favor of Respondent No. 5. The petitioner argues that the Karnataka Industrial Areas Development Board (KIADB) and other respondents acted arbitrarily and violated procedural norms in the cancellation of the allotment and subsequent transactions.

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FACTS OF THE CASE:

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The petitioner, with an intention to establish an industry, applied for an industrial site and made an initial payment of ₹2,41,000/- to KIADB. Following this payment, KIADB issued an allotment letter on 15.01.2009 for plot No. 553P. To secure the plot, the petitioner deposited the balance amount of ₹9,69,800/- on the same day, which KIADB acknowledged by issuing a receipt on 19.01.2009. Subsequently, KIADB provided a possession certificate for Plot No.553D, along with a sketch clearly indicating the

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description of Plot No.553D. A lease agreement for Plot No.553D in Survey No.70 was then executed on 11.11.2010.

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However, complications arose when Respondents 2 to 3 allotted Plot No.553D to Respondent No.5 and executed a lease-cum-sale agreement on 19.09.2011. This agreement, strangely, pertained to Plot No.553D but in Survey No.349, introducing significant discrepancies. Despite the lease-cum-sale agreement with Respondent No.5, KIADB issued a notice on 17.07.2014 to the petitioner, alleging violation of Clause 14 of the leasecum-sale agreement. Further complicating matters, on 17.02.2020, the respondents introduced a new contention, claiming that the petitioner was originally allotted Plot No.553E, not 553D.

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Heard the counsels on record.

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Before I proceed further, it becomes necessary to examine the contents of the impugned resumption notice as per Annexure-K. Respondent No.5 has issued impugned notice alleging violation of terms and conditions of lease agreement executed in favour of petitioner on 11.11.2010

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in respect of plot No.553D, measuring 4047 sq. meters. In the said resumption notice, respondent No.4 has alleged that the petitioner has not submitted building drawings for approval and has also not completed civil construction of the factory building. This Court deems it fit to refer to the relevant portion of the resumption notice, which reads as under:

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“In spite of the time frame prescribed by the lease agreement and the extension/s of time granted you have committed the breaches of the agreement as detailed below:-

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a) You have not submitted the building drawings for approval.

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b) You have not completed the civil construction of the factory building.

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c) You have not commenced the industrial production for the purpose for which the land was leased.

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d) The utilization of the land for the construction of buildings and other purposes connected to industrial project works out vacant % of the extent of the land handed over to you. The Percentage of the utilization is very much on the lower side when compared to the details furnished by you in the project report and application for allotment of land.

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e) The buildings and structures put up by you are not in accordance with the building drawings

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approved by the KIADB/building regulations prescribed by the KIADB.

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Apart from the aforementioned specific breaches, you have not evinced any interest in implementing industrial project. As a result of your inaction, the said plot has been lying idle/the land has not been put to use properly since 09/04/2010 the day on which its possession was handed over to you.

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As required under Clause-14 of the said lease agreement, you were given 120 days time to remedy the breach of Governments. But you have failed to remedy the breach within the said time which expired on 08.04.2012.”

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To substantiate breach, respondent No.4 has to demonstrate that the petitioner was delivered Plot No.553D, while the allotment letter vide Annexure-B reveals that petitioner is allotted with Plot No.553P. The petitioner in compliance of allotment letter, has deposited the entire amount of ₹12,00,000/- on 19.01.2001, which is evident from Annexure-D. The respondents, however, claim that they have delivered Plot No.553D, which is evident from Annexure-E. The possession certificate is accompanied with a sketch.

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During pendency of the petition, the respondents have clearly introduced a new case. A map is furnished before this Court along with an affidavit sworn to by the

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Development Officer indicating that petitioner is allotted Plot No.553E and not 553D. The subsequent introduction of a new contention about plot number reflects lack of consistency and clarity in KIADB’s communication and decisions. This further complicates petitioner’s possession and demonstrates administrative inefficiency. The respondents introduction of a new claim that petitioner was allotted Plot No.553E reflects a significant troubling inconsistency and introduction of a new case by the respondents leads to serious dent to the claim made by the respondent-authorities that the petitioner has failed to show keen interest in implementing industrial project and therefore, the respondents are justified in canceling the allotment and ordering for restitution of the plot.

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Respondents’ claim that petitioner was allotted Plot No.553E is found to be opposite and contradicts their own documents commencing from allotment of letter till executing lease-cum-sale agreement.

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The possession certificate dated 09.04.2010 as per Annexure-E, which is accompanied by a sketch, clearly substantiates that the petitioner was allotted Plot

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No.553D. The petitioner’s claim that he was allotted Plot No.553D further stands strengthened in view of leasecum-sale agreement executed in fovour of petitioner on 11.11.2010 pertaining to plot No.553D as per Annexure-F.

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The resumption notice preceded by a show-cause notice as per Annexure-J is clearly tainted with malafides and few significant details have to be looked into to elaborate the highhandedness of respondent-authority and strong reasons to cancel the allotment made in favour of petitioner on 24.01.2008. The documents executed in favour of respondent No.5 would be relevant and the dates relating to issuance of show-cause notice and resumption notice, in the context of lease-cum-sale agreement, and the sale deed executed in favour of respondent No.5 would throw lot of light reflecting strong bias against petitioner and the reason for bias.

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The respondent-Board has executed lease-cum-sale agreement dated 11.11.2010 and this pertains to Plot No.553D, situated in Survey No.70. Respondent/Board lease-cum-sale on 19.09.2011 pertaining to Plot No.553D situated in Survey No.349 in favour of respondent No.5.

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This clearly demonstrates that lease-cum-sale executed in favour of respondent No.5 is clearly during subsistence of the agreement in favour of petitioner. Interestingly, this Plot No.553D indicated in lease-cum-sale executed in favour of respondent No.5 pertains to Survey No.349. Clause 23 of the lease-cum-sale agreement executed by the authorities in favour of respondent No.5 clearly contemplates that the sale deed has to be executed at the end of ten years, as referred to in clause 1(C) or the extended period, if any. Clause 23 would be relevant and same is extracted as under:

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“23) The Lessor shall sell the schedule property to the lessee at the end of TEN years referred to in Clause (C) or the extended period, if any, if the Lessee has preformed all the conditions herein contained and committed no breach thereof. All attendant expenses in connection with such sale as stamps duty, registration charges etc., shall be borne by the Lessee.”

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In gross violation of Clause 23, respondent No.4 has executed sale deed in favour of respondent No.5 on 01.04.2013, which is within two years and in gross violation of the condition incorporated in the lease-cumsale agreement vide Annexure-G.

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Interestingly, in the sale deed, survey number is changed to 70. Though in lease-cum-sale, Plot No.553D is shown to be situated in Survey No.349, however in sale deed, the survey number is rectified as 70. This is one more relevant aspect which goes to the root of the case which also cannot be ignored. The lease-cum-sale executed by respondent No.4 and consequent sale deed in favour of respondent No.5 is without canceling the allotment in favour of the petitioner. The show-cause notice issued by respondent No.4 as per Annexure-J is dated 29.05.2013. The cancellation of allotment of Plot No.553D is sought after executing sale deed in favour of respondent No.5. The KIADB has executed sale deed in favour of respondent No.5 within two years of execution of lease-cum-sale agreement, which is contrary to the terms of a ten year period before conversion of lease into sale.

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As on 19.09.201, when the lease-cum-sale agreement was executed in favour of respondent No.5, the allotment of plot No.553D to the petitioner had not been formally cancelled. This indicates the blatant disregard for procedural fairness and failure to follow due process in managing allotment and cancellation.

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The stand of respondents 2 to 4 that the petitioner was never allotted Plot No.553D clearly falsifies their case of breach of conditions enumerated in lease-cum-sale agreement. If respondents had not delivered Plot No.553D, the notice dated 29.05.2013 issued by respondent No.4 indicating that the petitioner has not implemented the project by setting up an industry in Plot No.553D clearly contradicts their new claim set up during the pendency of the petition.

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The actions of the respondents, particularly the contradictory statements and the arbitrary cancellation of the allotment of Plot No.553D to the petitioner, while simultaneously executing a lease-cum-sale agreement with Respondent No.5, reflect bias and arbitrariness. The respondents have not substantiated the alleged breach of terms by the petitioner, making their actions legally indefensible. The respondents’ conduct in this matter violates the rules and regulations related to the allotment of industrial plots, demonstrating a clear case of administrative malfeasance.

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The petitioner’s right to the allotted industrial plot has been unjustly compromised due to the respondents’ contradictory actions. The possession certificate, payment acknowledgments, and initial allotment letter all point to the petitioner’s rightful claim to Plot No.553D. The subsequent actions by the respondents to cancel the allotment and reassign the plot to Respondent No.5, without proper justification, constitute a grave miscarriage of justice.

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Given the findings, this Court deems it fit to set aside the order of cancellation of the allotment of Plot No.553D to the petitioner. Additionally, the lease-cum-sale agreement and the sale deed executed in favor of Respondent No.5 concerning Plot No.553D are also liable to be set aside. The respondents are bound directed to restore the allotment of Plot No.553D to the petitioner and ensure that possession is delivered to the petitioner forthwith. The petitioner is entitled to the rightful possession and use of the industrial plot as initially intended.

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For the foregoing reasons, this Court passes the following:

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ORDER

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i) The writ petition is allowed.

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ii) The impugned order passed by respondent No.4 as per Annexure-K is hereby quashed.

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iii) Consequently, lease-cum-sale agreement dated 19.09.2011 as per annexure-G and sale deed dated 01.04.2013 as per Annexure-H are hereby quashed. Respondents 2 to 4 shall deliver Plot No.553D to the petitioner within a period of three months from the date of receipt of certified copy of this order.

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Sd/JUDGE

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YAN

Arihant Industries v. the Principal Secretary to

Case brief

What is this about?

What did the court decide?

Arihant Industries v. the Principal Secretary to

Case brief

What is this about?

What did the court decide?

What the court decided

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