Excel Wirecut Inc. Vs Karnataka Industrial Areas

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NC: 2025:KHC:30882 WP No. 21243 of 2017

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HC-KAR

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IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 11^TH DAY OF AUGUST, 2025

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BEFORE

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THE HON'BLE MR. JUSTICE R. NATARAJ WRIT PETITION NO. 21243 OF 2017 (GM-KIADB)

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BETWEEN:

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EXCEL WIRECUT INC, A PARTNERSHIP FIRM, REPRESENTED BY ITS MANAGING PARTNER SRI. SUDHINDRA KULKARNI, NO.5/6, SAJJEPALYA, PETE CHANNAPPA INDUSTRIAL ESTATE, MAGADI ROAD, KAMAKSHIPALYA, BANGALORE.

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…PETITIONER

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(BY SRI. NITISH, ADVOCATE FOR SRI. K V NARASIMHAN, ADVOCATE)

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AND:

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Digitally signed by SUMA Location: HIGH COURT OF KARNATAKA

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KARNATAKA INDUSTRIAL AREAS DEVELOPMENT BOARD, NO.49, 4^TH AND 5^TH FLOOR, EAST WING, KHANIJA BHAVAN, RACE COURSE ROAD, BANGALORE-560 001. BY ITS CHAIRMAN.

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CHIEF EXECUTIVE OFFICER AND EXECUTIVE MEMBER, KARNATAKA INDUSTRIAL AREAS DEVELOPMENT BOARD, NO.49, 4^TH AND 5^TH FLOOR, EAST WING, KHANIJA BHAVAN, RACE COURSE ROAD, BANGALORE-560 001.

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THE SECRETARY-2 KARNATAKA INDUSTRIAL AREAS

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DEVELOPMENT BOARD, NO.49, 4^TH AND 5^TH FLOOR, EAST WING, KHANIJA BHAVAN, RACE COURSE ROAD, BANGALORE-560 001.

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…RESPONDENTS

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(BY SRI. B B PATIL, ADVOCATE FOR C/R)

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THIS WP IS FILED UNDER ARTICLES 226 AND 227 OF THE CONSTITUTION OF INDIA PRAYING TO QUASH THE IMPUGNED ORDERS DATED 17.3.2017 AT ANNEX-S PASSED BY THE R-2 AND THE ORDER DATED 4.4.2017 PASSED BY R-3 DATED 4.4.2017 AT ANNEX-T; DIRECT RESPONDENTS TO EXTEND THE TIME FOR IMPLEMENTATION OF THE PROJECT WITHOUT INSISTING THE PAYMENT OF ANY EXTRA COST.

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THIS PETITION, COMING ON FOR PRELIMINARY HEARING, THIS DAY, ORDER WAS MADE THEREIN AS UNDER:

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CORAM: HON'BLE MR. JUSTICE R. NATARAJ

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ORAL ORDER

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The petitioner has called in question an order bearing No. KIADB/HO/ALLOT/18532/19301/16-17 dated 17.03.2017 issued by the respondent No.2 and the order bearing No.KIADB/HO/ALLOT/18532/365/17-18 dated 04.04.2017 issued by the respondent No.3 and to direct the respondents to extend the time for implementation of the project.

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The petitioner was allotted an industrial plot bearing No.228 at Sompura 1^st stage Industrial area, Nelamangala, on 01.12.2009 for establishing a unit for manufacturing valves and precision engineering components. A lease cum sale agreement

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was executed on 23.05.2011 and possession of the allotted plot was handed over. The petitioner had set the ground for implementation of the project. However, the respondents informed the petitioner that a NOC to mortgage the land to a bank cannot be granted as the allotted land lay within Zone-3 of KIADB, where no industrial activity is permitted. Therefore, the project of the petitioner could not take off. Later, an alternative plot bearing No.1B and 1C of Sompura 1^st stage industrial area was allotted but possession was not handedover in view of the resistance of villagers that there was an ancient temple in the plot. After a survey and other ground work, the respondents felt it not possible to hand over possession. Thereafter, another alternative plot Nos.2-D and 3-A of Sompura 1^st stage industrial area was allotted to him on 31.01.2013. The possession of the plots so allotted was handed-over to the petitioner on 19.08.2013 and a supplementary agreement was executed on 19.08.2013. In view of this continuous confusion regarding allotment of the plot, the financing agencies did not extend the assistance to the petitioner and due to market conditions, it was not then feasible to start the unit. After the market conditions improved,

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the petitioner sought extension of time by six months for implementation of the project vide representation dated 05.07.2016. Thereafter, the respondent No.2 issued a notice under Section 34-B of the Karnataka Industrial Areas Development Act, 1966 (henceforth referred to as 'KIAD Act' for short), to show cause as to why the allotment should not be cancelled. The petitioner submitted his reply setting out the reasons for the delay. Later, the respondent No.2 considered the reply and passed the impugned order dated 17.03.2017 extending the time for implementation of the project by twelve months, subject to payment of Rs.75,76,831/- being the difference in the allotment price and the final allotment price. This was followed by an order dated 04.04.2017 passed by the respondent No.3 stating that on receipt of Rs.75,76,831/-, further action would be taken in the matter. The petitioner being aggrieved by the aforesaid order, is before this Court.

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Learned counsel for the petitioner contended that the respondents before demanding the difference in the final cost of the plots and the tentative price collected were bound to follow the procedure prescribed under Section 34-B(1) and 34B(2) of the KIAD Act. He contends that though the petitioner

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was served with the notice under Section 34-B(1) of the KIAD Act, no order under Section 34-B(2) was passed. He contends that the impugned order demanding a sum of Rs.75,76,831/from the petitioner is therefore improper and warrants interference. In support of this contention, he relied upon a judgments of Co-ordinate Bench of this Court in WP.No.46678/2017 and WP.No.940/2023.

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The petition is opposed by the respondents who admitted the allotment of an industrial plot to the petitioner. They contend that due to a communication issued by the Karnataka State Pollution Control Board to stop further development of Sompura 1^st stage industrial area, which was classified under the Thippagondanahalli catchment area, the petitioner was granted alternate plots. The petitioner was requested to contact the Development Officer-III to collect a revised possession certificate. It was also indicated therein that all other terms and conditions stipulated in the letter of allotment dated 01.12.2009 would remain unaltered. It is claimed that the revised possession certificate relating to plot No.2-D and 3-A was issued to the petitioner on 06.02.2013, a

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supplementary lease-cum-sale agreement for 4025.00 square meters were executed on 19.08.2013. The respondents had called upon the petitioner to pay a sum of Rs.8,35,930/- being the balance of the enhanced tentative cost of land in two quarterly installments. He was also informed vide letter dated 20.08.2013, to pay a sum of Rs.8,35,930/- in two quarterly installments at an enhanced cost of Rs.73.82 lakhs per acre. The petitioner failed to deposit the aforesaid amount. It is claimed that the petitioner committed breach of covenants and obligations regarding implementation of the project. Consequently, a notice under Section 34-B(1) of the KIAD Act was issued on 04.10.2016 by the respondent No.2, calling upon the petitioner to take measures to remedy the specific breaches, failing which, further steps would be taken to terminate the lease and to resume possession for violation of terms and conditions of the agreement. The petitioner submitted his reply on 10.11.2016, mentioning the reasons for the delay in implementing the project and sought for grant of six more months time to implement the project. It is claimed that the respondent/KIAD had issued notice under Section 34B(3) requesting the petitioner to appear personally before the

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respondent No.2 for hearing on 16.12.2016 at 11.00 a.m. with relevant documents. Accordingly, the petitioner appeared before the respondent No.2 on 16.12.2016 and furnished reasons for non-implementation of the project. The respondent No.2 after considering the submissions held that the petitioner had shown some interest in implementing the project, but it noticed that the plot allotted to the petitioner was still vacant. The respondent No.2 therefore exercised discretion under Section 10(1)(e) of the lease cum sale agreement executed on 23.05.2011 and the supplementary agreement executed on 19.08.2013 and passed an order dated 17.03.2017 granting twelve months time to the petitioner to implement the project subject to payment of Rs.75,76,831/-, being the difference in the tentative allotment price and the final allotment price. Therefore, it is contended that the non-payment of the aforesaid price should result in canceling the allotment of the industrial plots allotted to the petitioner.

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Learned counsel for the petitioner contended that the procedure for resumption of possession of premises allotted is as contemplated under Section 34B of the KIAD Act. He contends that the respondents are bound to issue a notice

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under Section 34-B(1) setting out the breaches of the terms and conditions of the allotment and call upon the allottee to remedy such breaches within a stipulated period. It is after considering the cause shown by the allottee that the board is entitled to pass an order. He therefore contends that the respondents have not complied the procedure prescribed and hence, the impugned order is liable to be quashed.

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Learned counsel for the respondents submitted that the petitioner was bound to implement the project within the time stipulated and the respondents had issued a notice under Section 34-B(1) on 04.10.2016, to which the petitioner responded and sought for six months time to implement the project. He contends the respondent No.2 taking into account the interest shown by the petitioner to implement the project, had used discretion to extend the time for implementation of the project for another one year subject to payment of a sum of Rs.75,76,831/-. However, he does not dispute that no action thereafter was initiated as provided under Section 34-B(2) or no order under Section 34-B(3) or no notice under Section 34B(4) was issued.

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It is clear from the contentions urged in the writ petition, which is not disputed by the respondents that certain plots were allotted to the petitioner, which were later found to be in violation of certain guidelines issued by the pollution control board as they lay within the catchment area of Thippagondanahalli. The said allotment was thereafter replaced by another alternate plots, which again was cancelled and a fresh plot was allotted to the petitioner. It is probable that due to this uncertainty that the financing agencies may have backed out from funding the industrial activity. Be that as it may, an alternate plot was allotted to the petitioner on 31.01.2013. The petitioner was required to implement the project within two years from the date of taking over possession. The possession of the plot was delivered to the petitioner thereby indicating that there was no difficulty for the petitioner to undertake the implementation of the project. Though the respondents had issued a notice under Section 34B(1) on 04.10.2016, the time for implementation of the project was extended by another one year in terms of an order dated 17.03.2017 subject to the petitioner paying a sum of Rs.75,76,831/- being the difference in the tentative price and

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the final cost of the plot. This Court had granted an interim order on 14.06.2017, staying the demand of Rs.75,76,831/-. However, it permitted the petitioner to obtain necessary permission and proceed further to implement the project. It is now stated by the learned counsel for the petitioner that the petitioner has implemented the project and has placed on record certain photographs of the project so implemented. It contends that the petitioner cannot therefore be put at peril due to the acts committed by the respondents, which resulted in delay in implementation of the project.

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Since the time for implementation of the project is extended by the respondents vide order dated 17.03.2017, subject to payment of Rs.75,76,831/- being the difference in the tentative price and the final price, and now that the petitioner has implemented the project, the only question that arises for consideration is whether the petitioner is bound to pay the difference in the tentative price and the final cost of the plot. The respondents are bound to clarify as to how the difference in the cost of the plot was arrived at a sum of Rs.75,76,831/-.

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In view of the above, this writ petition is disposed

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off with the following directions:

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(i) The respondents shall issue appropriate communication to the petitioner indicating the manner of arriving at the final cost of the plot and justify the demand of Rs.75,76,831/-.

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(ii) This shall be done within a period of one month from the date of receipt of a copy of this order. The petitioner is entitled to submit his reply to the said notice and thereafter respondents shall pass appropriate orders regarding the difference in the tentative cost and the final price of the plot allotted to the petitioner.

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(iii) Since the petitioner has already implemented

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the project, the question of the respondents taking any action under Section 34-B of the KIAD Act does not arise.

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(iv) It is open for the respondents to inspect the unit established by the petitioner to verify whether it complies with the activity/purpose for which it was allotted. If not, the

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