M/S R.S. Kalyani Hotels Pvt. Ltd. v. the State of Karnataka

Karnataka HC25 Oct 2025WP/25036/2015

Case brief

AI extract

What is this about?

KIADB allotment cancellation for non-payment of balance premium; automatic cancellation clause upheld — no show cause notice required; Section 34B KIADB Act 1966 confined to post-possession resumption; policy change from lease-cum-sale (10 years) to 99-year lease; writ petition dismissed (M. Nagaprasanna J., High Court of Karnataka, 25.10.2025); follows Kamalalayaa Real Estates LLP; relies on Imperial Constrafin (Division Bench affirmed).

What did the court decide?

None; the petition was rejected and interim orders of any kind subsisting were dissolved. ¶267-268

M/S R.S. Kalyani Hotels Pvt. Ltd. Vs the State of… — Company and Corporate | Karnataka HC (2025)

What the court decided

AI extract

Outcome

None; the petition was rejected and interim orders of any kind subsisting were dissolved.

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Issue for consideration

Whether the cancellation of the petitioner's allotment for non-payment of the balance amount, without a show cause notice or adherence to any prescribed procedure, was valid. +2 more

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Court's answer

Following the order in M/s. Kamalalayaa Real Estates LLP (undisturbed in appeal), and noting the petitioner's similar conduct, the petitioner has lost its right to claim that indulgence should be shown and the plot allotted at this juncture; it does not deserve indulgence from this Court as it continues to withhold payment.

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Ratio / Principle

No show cause notice or hearing is required before cancellation of an allotment for non-payment of the balance premium; the submission that a show cause notice ought to have been issued tumbles down, in line with M/s. Imperial Constrafin (learned single judge, affirmed by the Division Bench).

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Key takeaways

Section 34B of the Act operates only where physical possession has been handed over to the allottee on execution of a lease-cum-sale agreement; since possession was never handed over (the entire amount not having been paid), Section 34B was not attracted and the plea that it ought to have been followed holds no water.ratio¶255
The judgments relied on by the petitioner are distinguishable on their facts: in those cases lease-cum-sale agreements had already been executed and the coordinate Benches held show cause notice prior to resumption of possession imperative, unlike the present pre-possession cancellation for non-payment.ratio¶256

Detailed headnote1 paragraphs

High Court of Karnataka (M. Nagaprasanna J.), W.P. No.25036 of 2015 (GM-KIADB), decided 25.10.2025 — Cancellation by KIADB of allotment of 3 acres in Plot No.51 (Corner), Bengaluru IT Park, made by allotment letter dated 15.02.2013 on lease-cum-sale basis for 10 years at tentative Rs.1.80 crores per acre plus 10%; petitioner paid the 20% instalment, obtained a 90-day extension (communication dated 05.08.2014) to pay the balance Rs.5,04,00,000, and was finally called upon on 07.02.2015 to pay the balance with interest at 12.75% p.a. from 05.11.2014; meanwhile the State changed policy from lease-cum-sale to 99-year lease (GO No.CI 511 SPQ 2013 dated 07.08.2014). Allotment cancelled by communication dated 22/23.05.2015 (Annexure-G). Held: (i) failure to pay the balance premium triggers automatic cancellation under the allotment letter without a show cause notice — following M/s. Kamalalayaa Real Estates LLP (W.P. No.279 of 2024, decided 12.01.2024, undisturbed in appeal) and relying on M/s. Imperial Constrafin (learned single judge, affirmed by the Division Bench); (ii) Section 34B, Karnataka Industrial Areas Development Act 1966 governs resumption of possession after handover pursuant to an executed lease-cum-sale agreement and has no application to pre-possession cancellation for non-payment; (iii) precedents relied on by the petitioner, where lease-cum-sale agreements had already been executed, are distinguishable; a defaulting allottee who has not paid even to date deserves no indulgence. Petition rejected; interim orders dissolved.

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Reserved on : 24.09.2025 Pronounced on : 25.10.2025

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IN THE HIGH COURT OF KARNATAKA AT BENGALURU

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DATED THIS THE 25^TH DAY OF OCTOBER, 2025

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BEFORE

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THE HON'BLE MR. JUSTICE M. NAGAPRASANNA WRIT PETITION No.25036 OF 2015 (GM - KIADB)

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BETWEEN:

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M/S. R.S. KALYANI HOTELS PVT. LTD., A COMPANY INCORPORATED UNDER THE COMPANIES ACT, REPRESENTED BY ITS DIRECTOR R.RAVICHANDRA AND HAVING ITS REGISTERED OFFICE AT NO.7,100 FEET ROAD, 4^TH B BLOCK, KORAMANGALA, BENGALURU – 560 034.

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... PETITIONER

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(BY SRI ASHOK HARANAHALLI, SR.ADVOCATE A/W SRI ABHINAY Y.T., ADVOCATE)

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AND:

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1 . THE STATE OF KARNATAKA BY ITS PRINCIPAL SECRETARY, AND ADDITIONAL CHIEF SECRETARY COMMERCE AND INDUSTRIES DEPARTMENT, VIKAS SOUDHA,

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BENGALURU – 560 001.

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2 . THE KARNATAKA INDUSTRIAL AREAS DEVELOPMENT BOARD 4^TH AND 5^TH FLOOR, EAST WING, KHANIJA BHAVAN, RACE COURSE ROAD, BENGALURU – 560 001 REPRESENTED BY ITS CHIEF EXECUTIVE OFFICER.

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3 . THE JOINT DIRECTOR THE KARNATAKA INDUSTRIAL AREAS DEVELOPMENT BOARD, 4^TH AND 5^TH FLOOR, EAST WING, KHANIJA BHAVAN, RACE COURSE ROAD, BENGALURU – 560 001.

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... RESPONDENTS

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(BY SRI SPOORTHY HEGDE N., HCGP FOR R-1; SRI K.SHASHIKIRAN SHETTY, ADVOCATE GENERAL A/W SRI B.B.PATIL, ADVOCATE FOR R-2 AND R-3)

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THIS WRIT PETITION IS FILED UNDER ARTICLES 226 AND 227 OF THE CONSTITUTION OF INDIA PRAYING TO DECLARE THAT THE RESPONDENTS HAVE NO RIGHT TO CHANGE THE MODE OF ALLOTMENT FROM LEASE-CUM - SALE FOR A PERIOD OF 10 YEARS TO A LEASE FOR A PERIOD OF 99 YEARS AFTER THE ALLOTMENT WAS MADE; QUASH THE GOVERNMENT ORDER BEARING NO.CI 511 SPQ 2013, DATED 7.8.2014 VIDE ANN-D; QUASH THE COMMUNICATION BEARING NO.IADB/HO/ALLOT/JD/BIT19172/2444/2015-16 DATED 22.5.2015 / 23.5.2015 ISSUED BY THE R-3 VIDE ANN-G, BY WHICH THE ALLOTMENT HAS BEEN CANCELLED; DIRECT THE RESPONDENTS TO ABIDE BY THE TERMS OF THE ALLOTMENT LETTER DATED 15.2.2013 IN SO FAR AS IT RELATES TO THE ALLOTMENT BY LEASE CUM SALE BASIS FOR A PERIOD OF 10 YEARS; RESTRAIN THE RESPONDENTS FROM DEMANDING OR COLLECTING THE BALANCE SUMS FROM THE

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PETITIONER UNTIL ALL THE AMENITIES THAT IS REQUIRED TO ESTABLISH AN AREA AS AN INDUSTRIAL AREA ARE PROVIDED.

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THIS WRIT PETITION HAVING BEEN HEARD AND RESERVED FOR ORDERS ON 24.09.2025, COMING ON FOR PRONOUNCEMENT THIS DAY, THE COURT MADE THE FOLLOWING:-

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CORAM: THE HON'BLE MR JUSTICE M.NAGAPRASANNA

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CAV ORDER

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The petitioner is before this Court seeking the following

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reliefs:

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(a) “Declare that the respondents have no right to change the mode of allotment from lease-cum-sale for a period of 10 years to a lease for a period of 99 years after the allotment was made and

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(b) Consequently, quash the Government order bearing No.CI 511 SPQ 2013 dated 7-08-2014 (annexure-D) and

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(c) Quash the communication bearing No. IADB/HO/Allot/ JD/BIT-19172/2444/2015-16 dated 22-05-2015/ 23.5.2015 issued by the 3^rd respondent (Annexure-G) by which the allotment has been cancelled.

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(d) Direct the respondents to abide by the terms of the allotment letter dated 15-02-2013 insofar as it relates to the allotment by lease cum-sale basis for a period of 10 years.

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(e) Restrain the respondents from demanding or collecting the balance sums from the petitioner until all the

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amenities that is required to establish an area as an Industrial Area are provided.

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(f) Pass such other orders as this Hon’ble Court deems fit.”

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Heard Sri Ashok Haranahalli, learned senior counsel appearing for the petitioner, Sri Spoorthy Hegde N, learned High Court Government Pleader for respondent No.1 and Sri K Shashikiran Shetty, learned Advocate General appearing for respondents 2 and 3.

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Facts in brief, germane, are as follows: -

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3.1. The petitioner who is in the business of food industry in

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the name and style of R.S.Kalyani Hotels Private Limited and desirous of setting up of an establishment in Bangalore International Tech Park for establishing a hotel and convention centre, applies for allotment of land to the 2^nd respondent/Karnataka Industrial Areas Development Board through the Single Window Clearance Committee. Pursuant to the clearance by the Single Window Clearance Committee, the petitioner deposits

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a sum of ₹1.08 crores for allotment of 3 acres of land in the

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Bangalore IT Park. This is said to have happened between July 2010 and May 2011. On 15-02-2013, land measuring 3 acres was allotted on lease-cum-sale basis for a period of 10 years on a tentative cost of ₹1.80 crores per acre with addition of 10% extra for 3 acres. The petitioner then requests time till 13-08-2015 to pay balance amount of 80% as 20% had already been paid. The Board then extends the time by 90 days for payment of balance amount in terms of its communication dated 05-08-2014. Pending completion of payment, it appears that Government of Karnataka changes the policy decision of approving allotment of land by the Board on lease cum-sale basis existing then, only on lease basis, for a period of 99 years. The Government order was also indicative of the fact that the lease would apply to such projects cleared by the Committee constituted under the Industrial Facilitation Act.

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3.2. The Board then calls upon the petitioner to pay balance amount along with interest from 05-11-2014. The petitioner is said to have paid another ₹30/- lakhs and informed that it is approaching the Bank for loan and would pay the balance amount on or before 31-08-2015. The petitioner did not pay the balance

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amount and as per communication to the petitioner, the allotment of plot was cancelled, as full payment was not made in time and at the same time, the Board is said to have encashed ₹30/- lakhs that was paid by the petitioner. At this juncture, the petitioner approaches this Court in the subject petition. This Court had protected the interest of the petitioner, by grant of an interim order on 23-06-2015. The said order continued till the matter comes to be disposed of, on a memo filed by the petitioner that the petition had become infructuous. The learned counsel for the petitioner, thereafter files an application, seeking recall of the order, on the score that the petition had become infructuous only for the reason that the Board had assured that it would resolve the dispute. When the resolution did not come about, the petitioner preferred two applications seeking recall of the order. This Court, on 29-02-2024, had passed the following order:

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“ORDER ON I.A.NOS.1/2024 AND 1/2023

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Learned counsel for the petitioner submits that office objections have been complied with.

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Learned counsel appearing for the petitioner has filed applications-I.A.Nos.1/2024 and 1/2023 seeking to condone the delay of 419 days in seeking recalling of the order dated 05.07.2023.

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Learned counsel for the petitioner submits that the Board has practiced discrimination inasmuch as in favour of every allottee, who is identically placed. The Board has executed lease-cum-sale deeds. It is only in case of the petitioner, it was not done and therefore, he is seeking to recall the order dated 05.07.2023. The order dated 05.07.2023, in the subject petition, was passed disposing the petition, in terms of the memo. A perusal at the memo would indicate that the liberty was sought by the petitioner.

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The Board has no objection to condone the delay of 419 days.

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For the reasons indicated in the affidavits accompanying the applications and being satisfied with the same, the delay of 419 days caused in filing the recalling application is condoned, the order dated 05.07.2023 is recalled and the petition is restored to file.

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Accordingly, the applications-I.A.Nos.1/2024 and 1/2023 are allowed.

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List the matter on 14.03.2024.”

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It is then the matter is heard.

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The learned senior counsel Sri Ashok Haranahalli appearing

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for the petitioner would submit that payment of ₹30/- lakhs that was paid even on the last day has been encashed by the 2^nd respondent. Having encashed the same, it was not open to the Board to have simultaneously cancelled the allotment. 20% payment was made immediately on allotment. Time was sought

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and, therefore, time ought to have been granted. He would project procedural violation in the cancellation of allotment that is made in favour of the petitioner.

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Per contra, learned Advocate General Sri K Shashikiran Shetty, appearing for respondents 2 and 3 submits that allotment was constrained to be cancelled on account of the petitioner violating the terms of allotment. Therefore, left with no choice, the Board had to cancel the allotment. There is no procedure under Section 34 of the Karnataka Industrial Areas Development Act, 1966 (‘the Act’ for short) to be violated for cancellation of allotment. He would seek to place reliance upon judgment of this Court in the case of M/s. KAMALALAYAA REAL ESTATES LLP v. THE KARNATAKA INDUSTRIAL AREAS DEVELOPMENT BOARD¹ .

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

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1 Writ Petition No.279 of 2024 decided on 12th January 2024.

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The afore-narrated facts are not in dispute. The application of the petitioner, seeking allotment of land, is processed by issuance of an allotment letter, which reads as follows:

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“No.IADB/HO/JD/BHP/19172/15453/2012-13 15-02-2013

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M/s. R.S.Kalyani Hotels Private Limited, No.7, 100ft Road, 4^th ‘B’ Block, Koramangala, Bangalore – 560 034.

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Sir,

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ALLOTMENT LETTER

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Sub: Allotment of land in Bengaluru IT Park, Bangalore Rural District.

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Ref: 1.72^nd SLSWCC Meeting dated 18-05-2012. 2.Your application dated 06-07-2010.

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-o0o-

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I am happy to inform you that you have been allotted 3.00 acres of land in Plot No.51 (Corner) of Bengaluru IT Part , to establish “ Hotel & Convention Centre ”, subject to the standard terms and conditions indicated in the Annexure appended hereto and also those mentioned hereafter. I take this opportunity to wish you the very best in the venture you have embarked upon.

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The allotment of land is on lease-cum-sale basis for a period of 10 years. At the end of 10 years, the lease will be converted into a sale subject to fulfillment of all the terms and conditions of allotment. Lease Cum-Sale Agreement and payment of price of land in full, as finally fixed, subject to adjustment of amounts paid by you towards premium. The conversion of lease into sale will also be subject to the utilization of a minimum 50% of as per para-12 here below whichever is higher. The utilization of land as determined by the Board on the merits of each case is final and binding.

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The price of the land will be determined by the Board and intimated to you in due course. However, for the purpose of this allotment, the tentative price of the land per acre has been fixed at ₹1.80 crores + 10% extra for the entire extent of 5.00 acres.

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Slum development cess at ₹2.50 per smtr. amounting to ₹30,354 /- is payable on or before 14.03.2013 .

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The tentative price of the land and lese rents shall be paid as follows:

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a. A sum of ₹18,00,000 /- being the balance 20% tentative cost of land within 30 days from the date of issue of this letter, i.e., on or before 14-03-2013 .

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b. A sum of ₹5,04,00,000/- being the balance 80% tentative cost of land shall be paid within 180 days from the date of issue of this letter i.e., on or before 13.08.2013.

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c. In the event of your furnishing Bank guarantee or letter of commitment from KSFC/KSIIDC/Financial Institutions agreeing to pay the cost of land indicated at 4(b) directly to the Board, the allotment will be confirmed and documentation will be permitted subject to payment of interest of 12.75% per annum on amount due from the date of handing over possession of land to the date of payment which should be made within 180 days from the date of execution of agreement.

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d. You should pay a lese rent at the rate of ₹1000/per acre/per annum or part thereof or at such other rates as may be fixed by the Board from time to time.

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e. Interest at 12.75% p.a. shall be levied in case the lease rents are not paid within one month from the date on which the lease rents fall due every year.

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This allotment letter will be valid only for a period of 30 days from the date of its issue and in the event of failure to pay

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the amount indicated at para 4(a) allotment stands automatically cancelled and E.M.D. paid stands forfeited.

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6(a) In case of your failure to pay the amount mentioned at para 4(b) before expiry of the time stipulated therein, this offer of allotment stands automatically expired and the Earnest Money Deposit and 25% of the amount paid by you towards cost of land stands automatically forfeited.

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(b) If the balance land cost if not paid within 180 days from the date of execution of lease agreement in respect of cases mentioned at para-4(c) the plot would be resumed on expiry of the time stipulated within issuing any fresh notice.

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Soon after receipt of the payment of 100% tentative cost of land and on your acceptance of all the terms and conditions indicated herein before and also those mentioned hereinafter, the possession of land will be handed over within 30 days from the date of payment and at the time of taking over possession you should produce the original receipt, issued for the payment made to the Engineer in-charge of the area.

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8(a) On taking possession of land, you shall adhere to the time schedule indicated in the standard conditions appended hereto.

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8(b) It shall be mandatory for the lessee to obtain clearance for the project from Karnataka State Pollution Control Board before commencement of approved project.

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Your failure to fulfill any of the standard terms and conditions and also to take over possession of land within 30 days from the date of payment of the land cost shall result in cancellation of allotment and forfeiture of 25% of the amount paid towards the tentative cost of land and E.M.D. deposited shall stand forfeited.

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The cancelled allotments or the resumed plots shall be restored, only at the rates prevailing at the time of considering such requests provided the request in writing for such restoration is received within one month from the date of cancellation of allotment or resumption. Any requests received

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after expiry of 30 days from the date of cancellation/resumption of land will be rejected.

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Extension of time will be granted only on the directions from High Court/Injunction order/orders from competent judicial forum relating to acquisition proceedings and taking over possession of plot.”

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The condition of allotment clearly indicated the timeline, in which the petitioner had to make payment. 20% of tentative cost of the land within 30 days, which the petitioner paid and remaining 80% within 6 months thereafter, which would expire on 13-08-2013. The petitioner does not make payment, but places a request for grant of three months’ time. The request reads as follows:

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“August 12, 2023

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Chief Executive Officer/Executive Member, KIADB, Bangalore.

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Dear Sir,

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Ref: Allotment of 3 acres land for our company R.S. Kalyaani Hotels P Ltd. in Software Park, Devanahalli KIADB Project.

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Ref: KUM/SLS/WCC-58/DD/283/2010-11 dated 07.06.10.

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This has reference to your above cited allotment letter. We have paid 20% of the land cost within the stipulated time and as per the allotment order condition we have to pay the remaining 80% of the amount on or before 13-08-2013.

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We have visited the place and to our dismay no road is developed, power connections were not there, there is no ETP. There is no water supply and no industry has started their project so far. We are planning to construct 5 star hotel and convention centre with huge capital outlay and with the present status of the project it is not viable for us to start the work. Hotel rooms and restaurants are mainly depending on the surrounding industries and no industry has started their start up work. In the circumstances we request your good office to kindly allow us time till 13-08-2015 to pay the remaining balance without any interest or costs. We hope you will kindly understand our genuine request based on the status of project and consider our request as special case.

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Thanking you in anticipation of your positive response.”

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The petitioner did not come forward to pay. Therefore, a

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communication is sent to the petitioner on 05-08-2014 to clear the balance amount. The communication reads as follows:

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“No.IADB/HO/JD/Allot/19172/6327/14-15

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Date:05-08-2014

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M/s. R.K.Kalyani Hotels Private Limited, No.7, 100ft Road, 4^th ‘B’ Block, Koramangala, Bangalore-560034.

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Sir,

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Sub: Allotment of three acres of land in Plot No.51 (Corner) of Bengaluru IT Park, near BIAL, Devanahalli.

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Ref: 1.This office allotment letter No. KIADB/HO/JD/ BIT/19172/15453/2012-13 dated 15-02-2013.

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2.Your letter dated 13-03-2013.

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As per the terms and recommendations of the subcommittee in its meeting held on 26-06-2014, 30-06-2014 and 05-07-2014 you are hereby granted 90 days extension of time from the date of this letter for payment of balance land cost amounting to ₹5,04,00,000 /-.

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Please note that your failure to pay the balance land cost within the extended period shall result in levy of interest for delay in payment as per rules in force.

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On receipt of the payment, further action will be taken to hand over the possession of land in your favour.”

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In the interregnum, there is a change in policy by the Government.

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Lease-cum-sale is taken off and a lease for 99 years springs up. But, the petitioner did not change. He did not make payment, but placed a request again to extend time. The Board then issues a communication which reads as follows:

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“No.KIADB/HO/JD/Allot/19172/14680/2014-15

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Date:07-02-2015

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M/s. R.K.Kalyani Hotels Private Limited, No.7, 100ft Road, 4^th ‘B’ Block, Koramangala, Bangalore-560034.

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Sir,

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Sub: Payment of balance cost of land -regarding.

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Ref: 1.This office allotment letter No. KIADB/HO/JD/ BIT/19172/15453/2012-13 dated 15-02-2013.

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2.This office letter No. KIADB/HO/JD (Allot)/ 19172/6327/2014-15 dated 05-08-2014.

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With reference to the above subject, this is to inform you that you have been allotted an extent of three acres of land has been allotted in your favour in Plot No.51 (Corner) of Bengaluru IT Park near Devanahalli, Bengaluru Rural District.

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In accordance with the decision of the Sub-Committee in its meetings dated 27-06-2014, 30-06-2014 and 05-07-2014, you were intimated in the letter dated 05.08.2014 to pay the balance land cost within 90 days from the date of communication and also intimated that in case your failure to pay the same within the extended period it will result in levy of interest for delayed payment as per rules in force.

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You have not paid the balance cost of the land within the stipulated period and your have failed to comply with the notice. Under the circumstances, you are once again requested to remit ₹5,04,00,000 /- towards balance cost of land along with interest at 12.75% p.a. from 05-11-2014 till date of payment.

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In case of your failure to remit the above said amount within 30 days from the date of receipt of this letter the allotment made in your favour stands automatically cancelled and no further correspondence will be made in this regard.

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Yours faithfully, Sd/- Joint Director.”

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Even then, the petitioner did not make any payment. Now the Board would pass an order cancelling the allotment. It is this that has driven the petitioner to this Court in the subject petition.

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From the submissions of the petitioner one factor which is clear is, that the petitioner has not made complete payment even to this day. His submission is that he is ready and willing to make

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payment, but has not made so far. The issue, in such circumstances, need not detain this Court for long or delve deep into the matter. This Court, considering the entire spectrum of the

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Act and conditions of allotment, had held in the case of

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M/S KAMALALAYAA REAL ESTATES LLP supra as follows:

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The afore-narrated facts are not in dispute. The petitioner being desirous of setting up of an industry in the subject property makes an application to the Committee. The Committee in terms of its proceedings dated 24-03-2020 clears the application/project and recommends for grant of land to the Board. The Government then issues a Government order on 01-06-2020 recommending allotment of land in favour of the petitioner. The Government Order insofar as it is relevant reads as follows:

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“GOVERNMENT ORDER NO. CI 128 SPI 2020(E), BENGALURU DATED 01.06.2020

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Government is pleased to accord in-principle approval to the investment proposal of M/s. Kamalalayaa Real Estates LLP to establish “IT/ITES/IT Park”, with an investment of Rs.401 crore, generating employment to about 111 persons at plot No.25-P1 in IT Park area of Hitech, Defence and Aerospace Park, Bengaluru with the following infrastructure assistances, incentives and concessions:

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Land	KIADB to Allot 10 Acres of land at Plot No.25-P1 in IT Park Area of Hi- tech, Defence and Aerospace Park, Bengaluru.
Water	1200 KLPD from KIADB
Power	10,000 KVA from BESCOM
Incentives and	As per IT Policy of the State”.

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Concessions

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The life of the Government Order as approved was valid for a period of 2 years from the date of its issue. It is found in the Government Order itself and reads as follows:

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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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Therefore, the Government Order which recommended allotment of 10 acres of land had its life up to 31-05-2022.

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Pursuant to the Government order, the Board issues a communication to the petitioner demanding remittance of 30% of the amount as initial deposit and EMD at ₹1 lakh. The communication dated 22-05-2020 reads as follows:

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“We are very happy to inform you that, your project for establishing a unit for “IT/ITES/IT Park” has been approved by the 119th SLSWCC Meeting held on 24.03.2020 and recommended KIADB to allot 10-00 acres of land in Plot no: 25-P1 of Hi-tech, Defence and Aerospace Park, Bengaluru District in your favour. The tentative allotment rate is Rs.2,80,00,000/- per acre.

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It is requested to apply online at www.kiadb.in and fill the complete details in the KIADB online application form.

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Further, you are requested to remit a sum of Rs.8,40,00,000/- towards 30% initial deposit and EMD Rs. 1,00,000/- within 30 days, so as to enable this office to allot land. If you fail to apply to KIADB and remit the initial cost within the deadline indicated, you will not have any claim on the plot indicated above. ”

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(Emphasis added)

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The petitioner makes the payment. After receipt of payment the Board issues an allotment letter on 05-06-2020. The allotment letter reads as follows:

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“No.KIADB/HO/Secy-1/Allot/22906/1262/20-21

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Date:05-06-2020

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M/s. Kamalalaya Real Estates LLP Plot No: 166, New MLA and MP Colony Road No. 10C, Jubilee Hills, Hyderabad – 500033.

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ALLOTMENT LETTER

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Sir,

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Sub: Allotment of 10-00 acres of land in Plot No. 25-P1 of Hi-tech, Defence and Aerospace Park, (IT Sector) Bengaluru urban District.

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Ref:1.119th SLSWCC meeting dtd. 24.03.2020. 2. Your letter dtd: 27.05.2020.

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******

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In pursuance of the approval given by the 119th SLSWCC meeting held on 24.03.2020, you have been allotted 10-00 acres of land in Plot. No.25-P1 of HiTech, Defence and Aerospace Park, (IT Sector) Bengaluru urban District for setting up an industry for “IT/ITES/IT Park/IT City” subject to the terms and conditions indicated in the Annexe-A appended hereto and also the terms and conditions mentioned hereafter.

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The allotment of land is on lease cum sale basis for a period of 99 years . The lease is liable to be cancelled automatically in case the land is not utilized within a period of three years in case MSME, large projects or five years in cases of mega, ultra mega, super mega projects as defined in the industrial policy or the land is not utilized within a specified period approved by DLSWCC/SLSWCC/ SHLCC/Allotment Committee without obtaining valid extensions from the concerned investment approving committees detailed in (c)(iii) of Annexe ‘A’.

¶170

The tentative premium payable for allotment shall be determined by the Board and intimated to you due course. However, for the purpose of this allotment, the

¶171

¶172

tentative premium had fixed at Rs. 2,80,00,000 /- per acre.

¶173

(a) The tentative premium of the land payable /paid adjusted is as follows:

¶174

i) A sum of Rs. 8,41,00,000 /- paid vide Rt.No.48285 dtd.29.05.2020, and has been adjusted towards 30% the tentative premium of land and EMD.

¶175

ii) A sum of RS.19,59,50,000 /- being the 70% balance tentative premium of land shall be paid within 90 days from the date of issue of this letter i.e., on or before 04.06.2020.

¶176

(b) In the event of your furnishing letter of commitment from KSFC/KSIIDC/Reserve Bank of India approved Financial Institutions/Corporations/Companies agreeing to pay the premium indicated at 3(a)(ii) directly to the Board (applicable only to Medium, Small and Micro Enterprises) the allotment will be confirmed and documentation will be permitted subject to payment of interest @ 10.00% per annum on amount due from the date of handing over possession of land to the date of payment which should be made within 90 days from the date of execution of lease agreement.

¶177

¶178

(d) You should pay maintenance charges as may be fixed by the Board from time to time.

¶179

(e) Interest at 10.00% per annum shall be levied in case the lease rents are not paid within one month from the date on which the lease rents fall due every year.

¶180

4(a) In case of your, failure to pay the amount mentioned at Para 3(a)(ii) before the expiry of the time stipulated therein, this offer of allotment stands automatically cancelled and the Earnest

¶181

¶182

Money Deposit and 20% of the amount paid by you towards premium stands automatically forfeited.

¶183

4(b) If the balance premium is not paid within 90 days from the date of execution of lease agreement in respect of cases mentioned at Para 3(b), the plot would be resumed on expiry of the stipulated without issuing any fresh notice.

¶184

Soon after receipt of 100% premium and on your acceptance of all the terms accused conditions indicated herein before and also those mentioned hereinafter, the possession of land will be handed over within 30 days from the date of payment. At the time of taking over possession, you should produce the original receipts, issued for the payments made, to the Engineer in charge of the area.

¶185

On taking possession of land, you shall adhere to the time schedule indicated in the Annexe-A.

¶186

Your failure to take possession of land within 30 days from the date of payment of the premium shall result in cancellation of allotment and 10% of the amount paid towards premium and E.M.D shall stand forfeited.

¶187

The Board may accept voluntary surrender of plot subject to levy of penalty at 15% of the allotment cost paid by you. … … …”

¶188

(Emphasis added)

¶189

Clause 4(a) in the said allotment letter makes it clear that in case the allottee/petitioner fails to remit the entire amount in terms of para 3(a)(ii) which was the remittance of ₹19,59,50,000/- within 90 days from the date of issuance of allotment letter, the allotment would stand automatically cancelled and the earnest money deposit would get automatically forfeited. The petitioner accepts the allotment letter and the conditions imposed therein but, fails to make the payment within 90 days.

¶190

The petitioner then would submit another application before the Committee seeking additional allotment of 5 acres of

¶191

¶192

land 14 in the same subject property. The Committee accepts the request and recommends allotment of additional 3 acres. Accordingly, a Government Order comes to be issued on 19-092020. It reads as follows:

¶193

“Hence the following order:

¶194

GOVERNMENT ORDER NO. CI 128 SPI 2020(E), BENGALURU, DATED 19.09.2020

¶195

Government is pleased to approve for allotment of additional 3 acres of land at Plot No.25-P1 in IT Park area of Hi-tech, Defence and Aerospace Park to M/s. Kamalalayaa Real Estates LLP.” Though the Government had recommended for 3 acres of land, the respondent/KIADB allotted only 2 acres of land which was said to be available in the said plot. The petitioner in terms of the said additional allotment, pays a sum of 1.68 crores being 30% of the allotment and 10,000/- as EMD. Three years passed by. The petitioner did not comply the terms of allotment of either 10 acres or 2 acres. This led to issuance of the impugned communication on 28-11-2023. The said communication reads as follows:

¶196

“No.KIADB/HO/Allot/22906/15187/2023-24

¶197

Date:28.11.2023.

¶198

M/s. Kamalalaya Real Estates LLP, Plot No. 166, New MLA and MP Colony, Road No. 10-C, Jubilee Hills, Hyderabad-500 033. Sir,

¶199

Sub: Cancellation of allotment of 10.00 acres land in Plot No. 25-P1 of Hi-Tech, Defence& Aerospace Park (IT Sector), Bengaluru.

¶200

Ref: This office Allotment letter No. KIADB/ HO/Secy1/Allot/22906/1262/2020-21, dated 05.06.2020

¶201

-o0o-

¶202

This has reference to the above,

¶203

¶204

As you are aware, an extent of 10.00 acres land in Plot No. 25-P1 of Hi- Tech, Defence& Aerospace Park (IT Sector), Bengaluru has been allotted in your favour vide this office allotment letter dated 05.06.2020 cited at ref. above, for establishment of "IT/ITES/IT Park / IT City ".

¶205

As per the time schedule prescribed in the allotment letter, you were required to remit a sum of Rs. 19,59,50,000/- being the balance 70% tentative cost of land on or before 04.06.2020. Further, you have remitted a sum of Rs. 1,68,10,000/- vide receipt No. 0049985 dated 30.01.2021 and No 0050347 dated 16.03.2021,

¶206

Para 4(a) of the allotment letter, it is indicated that, the allotment stands automatically cancelled if you fail to remit the balance tentative cost of land within the stipulated time.

¶207

As on date, a sum of Rs. 17,91,40,000/- is due towards the balance tentative cost of land. In spite of sufficient time given, you have failed to remit the tentative cost of land to the Board so far. This act on your part shows your lack of earnestness and interest in taking up of the project and also violation of the terms and conditions of allotment.

¶208

In view of the above, and due to non-payment of balance tentative cost of land of Rs. 17,91,40,000/- the allotment of 10.00 acres land in Plot No. 25-P1 of HiTech, Defence& Aerospace Park (IT Sector), Bengaluru is hereby cancelled.

¶209

You are hereby requested to surrender original allotment letter and original receipts of payments made towards allotment of land, to enable this office to refund the amount deposited by you after effecting necessary forfeiture.”

¶210

(Emphasis added)

¶211

It is an admitted fact that in terms of the communication the petitioner is in due close to 17/- to 19/- crores to be paid to the Board as on date. The petitioner, after accepting the letter

¶212

¶213

of allotment and conditions of allotment, now seeks to turn around and challenge Clause 4(a) supra, which gives a right to the Board to cancel the allotment unilaterally in the event of default in payment of the entire amount. The petitioner, undoubtedly, is in default of payment to the tune of ₹17/- to ₹19/- crores even as on today.

¶214

The learned counsel for the petitioner has strenuously contended that an allottee has a right to be heard by issuance of a show cause notice in the least. The submission does not merit 17 acceptance, particularly in the light of the order passed by the learned single Judge in the case of M/S IMPERIAL CONSTRAFIN PRIVATE LIMITED v. CHIEF EXECUTIVE OFFICER AND EXECUTIVE MEMBER, KIADB, wherein the coordinate Bench of this Court rejects the petition on the following grounds:

¶215

“…. …. ….

¶216

7. Shri. Vijaykumar is right in his submission that failure to make payment as required in clause 3(a)(ii) before the time stipulated therein entails automatic cancellation. This happens by default on the part of the petitioner, which occurred on December 5, 2017. However, cancellation of allotment has been communicated in July 2019. Thus, it is clear that petitioner has defaulted in making the payment.

¶217

8. Since allotment has stood automatically cancelled, the contention with regard to the signature by the CEO and the issuance of notice under Section 34B of the Act are irrelevant. Approval of projects by High Level Clearance Committee is accorded to entrepreneurs to provide facilities under one roof. By petitioner's default, some other prospective entrepreneur has lost his chance to set-up an Industry. Such defaults will have cascading effect not only on the entrepreneurs but also on the Industrial development in the State.”

¶218

(Emphasis supplied)

¶219

¶220

The order of the learned single Judge is tossed by the petitioner therein before the Division Bench. The Division Bench while affirming the order of the learned single Judge in the said case of M/S IMPERIAL CONSTRAFIN PRIVATE LIMITED , which was a challenge to the clause in allotment that if entire payment is not made within 90 days, without even issuance of notice the allotment can be cancelled, the Division Bench has held as follows:

¶221

“2. The appellant submitted an online application for approval of his project. The 1st respondent vide communication dated 28.4.2017 allotted industrial plot No.12P-IC measuring 4.09 acres in Hitech Defence Aero Space Park, Bengaluru, at a tentative allotment rate of Rs.250 lakhs per acre. The appellant deposited 30% of the allotment amount within 30 days from the date of allotment. The appellant failed to deposit balance premium amount of Rs.8,57,50,000/- within a period of 90 days from the date of allotment. The 1st respondent sent a communication letter dated 12.7.2019 intimating the appellant in regard to cancellation of allotment.

¶222

The appellant questioned the said communication letter dated 12.7.2019 issued by the 1st respondent before the learned Single Judge. The learned Single Judge having examined clause 3(a)(ii) of the allotment letter held that as per the said clause, failure to make payment of balance premium amount within 90 days from the date of allotment would entail automatic cancellation. The learned Single Judge negatived the contention raised by the appellant herein in regard to authority of the Chief Executive Officer of the 2nd respondent. The learned Single Judge was of the view that since clause 3(a)(ii) contemplates automatic cancellation and therefore, the appellant cannot raise objection that the cancellation was done by the Chief Executive Officer and not by the Board. On this set of reasoning, the learned Single Judge has dismissed the writ petition.

¶223

The learned counsel appearing for the appellant would vehemently argue and contend before this Court that no notice was issued by 1st respondent intimating

¶224

¶225

the cancellation of allotment and therefore, the cancellation of allotment is arbitrary and warrants interference at the hands of this Court. Further, placing reliance on the judgment rendered by this Court in the case of Abhaya Technologies Private Limited, Bengaluruvs. State of Karnataka and others, the learned counsel appearing for the appellant would contend that it is only the Board which is vested with the power and that this Court in an identical case has set aside the impugned communication sent by the CEO and the matter was remitted back to the Board for fresh consideration. The learned counsel would further submit to this Court that the appellant is made to suffer on account of laxness on the part of respondent No.4-Bank as well as the 2nd respondent-Board.

¶226

Per contra, learned counsel appearing for respondents 1 and 2 would however submit that 2nd respondent has allotted the site to a third party and therefore, since there is a breach on the part of the appellant in not depositing the balance premium amount within the stipulated time, no relief can be granted to the appellant herein.

¶227

Perused the order under challenge. It would be useful for this Court to refer to the clauses in the allotment letter which reads as under:

¶228

"3(a) The premium of the land shall be paid as follows:

¶229

i) A Sum of Rs. NIL being the balance 30% of the tentative premium of land shall be paid within 30 days from the date of issue of this letter i.e., on or before NIL.

¶230

ii) A sum of Rs.8,57,50,000-00 being the balance tentative premium of land shall be paid within 90 days from the date of issue of this letter ie on or before 05.12.2017.

¶231

b) In the event of your furnishing letter of commitment from KSFC/KSIIDC/Reserve Bank of India approved Financial

¶232

¶233

Institutions/Corporations/Companies agreeing to pay the premium indicated at 3(a)(2) directly to the Board(applicable only to Medium, Small and Micro Enterprises) the allotment will be confirmed and documentation will be permitted subject to payment of Interest @ 10% per annum on amount due from the date of handing over possession of land to the date of payment which should be made within 180 days from the date of execution of lease agreement.

¶234

c) You should pay lease rent of Rs.1000/- per acre/per annum.

¶235

d) You should pay maintenance charges as may be fixed by the Board from time to time.

¶236

e) Interest at 10% per annum shall be levied in case the lease rents are not paid within one month from the date on which the lease rents fall due every year.

¶237

4(a) In case of your failure to pay the amount mentioned at Para 3(a)(2) before the expiry of the time stipulated therein, this offer of allotment stands automatically cancelled and the Earnest Money Deposit and 20% of the amount paid by you towards premium stands automatically forfeited.

¶238

4(b) If the balance premium is not paid within 90 days from the date of execution of lease agreement in respect of cases mentioned at Para3(b), the plot would be resumed on expiry of the time stipulated without issuing any fresh notice."

¶239

On perusal of 4(a) of the allotment letter, it is quite evident that on failure to pay the balance premium amount, the offer of allotment stands automatically cancelled and under clause 4(b), the plot would automatically stand restored with the 2nd respondent- Board. The above said two clauses would clearly indicate that in the event of breach, the allotment stands automatically cancelled. Therefore, the contention of the appellant that he was not notified before communicating the cancellation cannot be acceded to.

¶240

¶241

We have also examined the statement of objections filed by respondents 1 and 2. The appellant was required to pay the balance tentative premium on 5.12.2017. The 2nd respondent even after expiry of period kept on communicating to the 4th respondentBank to deposit the balance premium of Rs.8,84,51,712/along with interest at the rate of 12%. The first communication was sent on 28.4.2017. The 2nd communication was sent on 2.3.2018. If 4th respondentBank was insisting for NOC from the 2nd respondentBoard for release of the amount, then it was incumbent on the part of the appellant to negotiate and convince his banker to release the amount. The appellant cannot expect an authority to issue NOC before receiving the balance premium. Therefore, we are of the view that no fault can be found with respondents 1 and 2. The learned Single Judge has dealt with the matter and has rightly dismissed the writ petition. This Court has taken note of the fact that the authorities were quite lenient and had extended time even after expiry of the statutory period prescribed under clause 3(a)(ii) of the allotment letter. The appellant was not able to deposit the balance premium amount even in 2018 which is evident from the two communications dated 28.4.2017 and 2.3.2018. Further, this Court has also taken note of the fact that respondents 1 and 2 have allotted the site to a 3rd party after cancellation of allotment in favour of the appellant.”

¶242

(Emphasis supplied)

¶243

The Division Bench considered the very submission that it would give an arbitrary power to the Board to cancel the allotment in the event there is non-compliance of payment within 90 days. The Division Bench affirms the order of the learned single Judge which had rejected such a contention of hearing before cancellation of allotment in the event of breach of allotment. Therefore, the submission of the learned counsel for the petitioner that a show cause notice ought to have been issued tumbles down.

¶244

The other submission of the learned counsel for the petitioner is that Section 34B of Act has been violated, as prior to resumption of possession a notice ought to have been issued

¶245

¶246

to the allottee and, therefore, submits that its breach would lead to obliteration of the order. This again is sans acceptance. Section 34B reads as follows:

¶247

“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.

¶248

(2) If the allottee fails to remedy the breaches within the time so stipulated, the Board shall serve a notice upon the allotteeunder 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.

¶249

(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.

¶250

(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.

¶251

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

¶252

¶253

premises or part thereof or residential tenement free from all encumbrances and for that purpose may use force as may be necessary.”

¶254

(Emphasis supplied)

¶255

Section 34B mandates resumption of possession from the hands of an allottee. Possession would be handed over to the allottee only after execution of a lease-cum-sale agreement and issuance of possession certificate by the Board. Those events are yet to come about, as the petitioner is yet to make good the entire amount in terms of allotment letter itself. The entire Section 34B unequivocally depicts that if the allottee fails to adhere to the conditions of lease hold rights, possession can be resumed by the Board. Sub-sections (4) and (5) make it clear that the allottee shall deliver possession thereafter to the Board within the date specified in the notice issued under Section 34B. Therefore, Section 34B operates in a different circumstance. It would kick only in cases of physical possession being handed over by the Board to the allottee on certain terms and conditions and the breach of those terms and conditions in the lease-cum-sale agreement is violated, which would lead to revocation of proceedings under Section 34B. Therefore, the submission that Section 34B ought to have been followed is a figment of imagination of the learned counsel for the petitioner and holds no water.

¶256

Insofar as the judgments relied on by the learned counsel for the petitioner, they are all distinguishable on the facts obtaining in the cases therein without much ado. They were all cases where lease-cum-sale agreements had already been executed in favour of those allottees and, therefore, the co-ordinate Benches held that show cause notice prior to resumption of possession was imperative. Even in the case of M/S NANJUNDESHWARA TECH PARK v. THE KARNATAKA INDUSTRIAL AREAS DEVELOPMENT BOARD , the respondent Board was directed to consider the representation of the petitioner in terms of Section 34B of the Act. Therefore, the judgments so relied on by the learned counsel for the petitioner would not render any assistance in the light of two factors – one being, the facts obtaining in those cases and the other being, the judgment of the Division Bench which upholds the clause in the allotment letter whereby permitting cancellation of allotment without even issuance of a notice. Therefore, the contentions so

¶257

¶258

advanced by the petitioner are unacceptable. The unacceptability would lead to rejection of the petition.

¶259

The petition is preferred qua allotment of 10 acres. Therefore, the petition is considered qua allotment of 10 acres only. The reminder of 2 acres that is allotted is not the subject matter of the petition and no finding is rendered qua the additional allotment made by the Board.

¶260

For the aforesaid reasons, I pass the following order: O R D E R

¶261

(i) Writ Petition is dismissed.

¶262

(ii) It is made clear that this Court has not pronounced upon additional allotment of 2 acres by the Board and the order is restricted to the allotment of 10 acres only.

¶263

(iii) The Board shall within 4 weeks from the date of receipt of a copy of this order refund the amount deposited by the petitioner qua first allotment concerning 10 acres.”

¶264

Though the judgment in M/S KAMALALAYAA REAL ESTATES

¶265

LLP ’s case has been tossed in appeal, the Division Bench has not disturbed it. In the case at hand, the acts of the petitioner being similar, I deem it appropriate to follow the afore-quoted order and hold that the petitioner has lost its right to claim that it should be shown indulgence and the plot should be allotted at this juncture. As on today, the petitioner is only dragging the issue without making payment as demanded. In that light, the petitioner does not deserve any indulgence from the hands of this Court.

¶266

¶267

Finding no merit, the petition stands rejected . Interim

¶268

order of any kind subsisting stands dissolved.

¶269

Sd/(M.NAGAPRASANNA)

¶270

JUDGE

¶271

bkp CT:MJ

Procedural history

How this case reached the court

AI extract

Order under challenge
Communication bearing No.IADB/HO/Allot/JD/BIT-19172/2444/2015-16 dated 22.05.2015/23.05.2015 issued by respondent No.3 cancelling the petitioner's allotment of land (Annexure-G).¶29
Respondent No.3 - Joint Director, Karnataka Industrial Areas Development Board · 22.05.2015/23.05.2015
Prior proceeding
Petitioner applied through the Single Window Clearance Committee for allotment of land in Bangalore IT Park for a hotel and convention centre and deposited Rs.1.08 crores for 3 acres (between July 2010 and May 2011).¶38
Prior proceeding
Allotment letter dated 15-02-2013: 3 acres in Plot No.51 (Corner), Bengaluru IT Park, allotted on lease-cum-sale basis for 10 years at tentative cost of Rs.1.80 crores per acre plus 10% extra.¶41
Prior proceeding
Petitioner requested extension of time till 13-08-2015 to pay the remaining 80% without interest or costs, citing undeveloped amenities (no road, power, ETP or water supply).¶105
Prior proceeding
Board granted 90 days' extension of time for payment of balance land cost of Rs.5,04,00,000 by communication dated 05-08-2014.¶118
Prior proceeding
Government of Karnataka changed policy from lease-cum-sale allotment to allotment only on lease basis for 99 years (Government Order No.CI 511 SPQ 2013 dated 7.8.2014, Annexure-D).¶41
Prior proceeding
Petitioner paid a further Rs.30 lakhs and informed the Board it was approaching a bank for a loan and would pay the balance on or before 31-08-2015; the balance remained unpaid.¶42
Prior proceeding
Board's communication dated 07-02-2015 demanded Rs.5,04,00,000 towards balance cost of land with interest at 12.75% p.a. from 05-11-2014, failing which the allotment would stand automatically cancelled.¶134
Prior proceeding
This Court granted an interim order on 23-06-2015 protecting the petitioner's interest, which continued until disposal of the petition on a memo.¶44
Prior proceeding
Petition had been disposed on 05.07.2023 in terms of a memo; applications I.A.Nos.1/2023 and 1/2024 seeking recall condoning a delay of 419 days were allowed on 29-02-2024, the order was recalled and the petition restored to file.¶51

M/S R.S. Kalyani Hotels Pvt. Ltd. v. the State of Karnataka

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M/S R.S. Kalyani Hotels Pvt. Ltd. v. the State of Karnataka

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