Writ petition challenging cancellation of industrial land allotment due to a valid mortgage created in favor of Respondent No. 5 and subsequent default, which the Court found justified.
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IN THE HIGH COURT OF KERALA AT ERNAKULAM
PRESENT:
THE HONOURABLE MR.JUSTICE K.SURENDRA MOHAN
WEDNESDAY, THE 1ST DAY OF APRIL 2015/11TH CHAITHRA, 1937
WP(C).No. 6543 of 2006 (D)
PETITIONER(S):
M.J. JOB, AGED 40 YEARS, S/O. JOHN, MANNAPARAMBIL, JUHN'S HOUSE PUNNAPRA, ALAPPUZHA-1.
BY ADVS.SRI.S.SANAL KUMAR SMT.BHAVANA VELAYUDHAN
RESPONDENT(S):
1. THE GENERAL MANAGER, DISTRICT INDUSTRIES CENTRE, ALAPPUZHA.
2. THE DIRECTOR, INDUSTRIES AND COMMERCE, THIRUVANANTHAPURAM.
3. STATE OF KERALA, REPRESENTED BY THE SECRETARY, INDUSTRIES DEPARTMENT, THIRUVANANTHAPURAM.
4. THE MANAGING DIRECTOR, KERALA STATE INDUSTRIAL DEVELOPMENT CORPORATION, KESTON ROAD KOWDIAR P.O., THIRUVANANTHAPURAM.
SREEKARYAM, TRIVANDRUM REPRESENTED BY THE MANAGING DIRECTOR, N.KANNARAJ, SAROJ CHEKKALAMUKKU
*ADDITIONAL 5TH RESPONDENT IS IMPLEADED AS PER THE ORDER DATED 01.04.2015 IN I.A.NO.1935 OF 2013.
#6.PRAKASAN AGED 60 YEARS, S/O LATE K.SHANKARA MENON, PROPRIETOR, SUN PAPERS, RESIDING AT KADEKUZHY HOUSE, MARADU, KOCHI- 682 034 #ADDITIONAL 6TH RESPONDENT IS IMPLEADED AS PER THE ORDER DATED 24.06.2015 IN I.A.NO.8370 OF 2015.
R,R4 BY ADV. SRI.M.PATHROSE MATTHAI (SR.) R,R4 BY ADV. SRI.RONY J.PALLATH R1 TO R3 BY ADV. GOVERNMENT PLEADER E M ABDUL KHADER ADDL.R5 BY ADV. SRI.M.M.HUSAIN R4 BY ADV. SRI.K.JAJU BABU, SC, KERALA STATE INDUSTRIAL DEVELOPMENT CORPORATION ADDL R6 BY ADV. SRI.A.BALAGOPALAN R BY ADV. SRI.A.RAJAGOPALAN R BY ADV. SRI.M.S.IMTHIYAZ AHAMMED R BY SRI.RONY J..PALLATH, SC FOR KSIDC
THIS WRIT PETITION (CIVIL) HAVING BEEN FINALLY HEARD ON 01-04-2015, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: kkj
WP(C).No. 6543 of 2006 (D)
APPENDIX
PETITIONER' EXHIBITS
| EXT.P1: | COPY OF THE ORDER OF THE FIRST RESPONDENT DATED 22.2.2005 |
|---|---|
| EXT.P2: | COPY OF THE GO(MS) NO,97/70/ID DATED 24.08.1970 |
RESPONDENTS'S EXHIBITS
| EXT.R4(A): | TRUE COPY OF SALE EXECUTED BY KERALA FINANCIAL CORPORATION DATED 27.03.1996 IN FAVOUR OF M/S KANOIL FOODS LTD |
|---|---|
| EXT.R4(B): | TRUE COPY OF ORDER DATED 20.09.1996 ISSUED BY THE 1ST RESPONDENT IN FAVOUR OF N.KANNARAJN |
| EXT.R4(C): | TRUE COPY OF CERTIFICATE DATED 03.10.1996 ISSUED BY THE 1ST RESPONDENT |
// TRUE COPY //
PA TO JUDGE
K.SURENDRA MOHAN, J.
W.P.(C) No.6543 of 2006
---------------------------------------------Dated this the 1st day of April, 2015
J U D G M E N T
The petitioner has filed this writ petition challenging Exhibit P3 proceedings by which, an allotment of land made in his favour by the first respondent has been cancelled. As per Exhibit P1 proceedings of the first respondent dated 02.02.2005, the petitioner was allotted an extent of 50cents of land comprised in Survey No.408/8 and 411/1A of Aroor Village for the purpose of setting up an industrial unit manufacturing fibre glass products under the name and style M/s Eldon Products. It is the said allotment that has been cancelled by Exhibit P3. It is stated in Exhibit P3 that, the land had been allotted earlier to one Sri.Kannaraj of Thiruvananthapuram. The land was later resumed and reallotted to the petitioner. The cancellation has been made pursuant to a communication issued by the 4th respondent informing the first respondent that the land had been taken
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over by them under Section 29 of the State Financial Corporations Act, 1951 (hereinafter referred to as 'the Act' for short). The petitioner challenges the above order.
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W.P.(C) No.6543 of 2006
up an industry. The land was mortgaged to the Kerala Financial Corporation ('KFC' for short) for the purpose of availing a loan for conduct of the industry. However, repayment of the loan was defaulted. Therefore, the Kerala Financial Corporation initiated action under Section 29 of the Act, took over possession of the land and sold the land in public auction. The property was purchased by one Sri. Kannaraj of Thiruvananthapuram for the purpose of establishing an industry producing coconut oil and cakes. Exhibit R4(a) is the agreement executed by the KFC favour of M/s Kanoil and Foods Ltd.
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respondent under Section 29 of the Act on 25.05.2005. The property remains in the possession of the 4th respondent. The 4th respondent is also stated to have conducted an auction of the property on 22.02.2006. The additional 5th respondent was the highest bidder. However, the proceedings have not been finalised till date.
is contended that, Exhibit P3 does not call for any interference at the hands of this Court.
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institution. Sub Rule (b) deals with a situation where the allottee has mortgaged or in any other way encumbered the improvements on the land, superstructure etc. The procedure to be adopted in such a case has been stipulated in sub rule (b). Sub rule (b) of Rule 15 is extracted hereunder.
b) If the allottee has morgaged or in any way encumbered the improvements on the land, superstructure etc. to a bank or financial institution for the purpose of raising funds for the construction of buildings, purchase of machinery, working capital etc. thereby creating a first charge in favour of such bank or financial institution, the Director of Industries & Commerce will, if he finds an alternate person or persons or company to whom the land and building could be alloted, pay to the mortgagee the value of these improvements on the basis of valuation made by an officer not below the status of an Executive Engineer of the Public Works Department provided that the amount payable shall not exceed the amount for which the improvements have been valued by the above competent authority less valuation charges. After settlement of the dues of the above said bank or financial institution and the claims of the Government, the ownership of the improvement shall vest in the Government. The Director
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of Industries & Commerce shall, then dispose of the land and improvements thereon to any other person or group of persons or company in accordance with the rules for sale or hire purchase of Industrial Estate.
A perusal of the above provision shows that, the same applies only to a situation where the allottee has created a mortgage in respect of the improvements alone, by mortgaging the same to a financial institution or bank. In such cases, provision has been made for payment of the value of such improvements to the financial institutions so as to enable the first respondent to re-allot the land and buildings to a prospective industrialist. The said provision cannot be construed as limiting the power of the first respondent or the financial institution that has advanced money to an industrialist on the security of the land that was allotted. The contention of the counsel for the petitioner is that, the power of the respondents would have to be limited to recovery of value of improvements alone since the land actually belongs to the Government and not to the allottee. It is contended that, no title has been
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conveyed to the allottee in respect of the land. Though it is true that no title has been conveyed to the allottee of the land, the fact remains that the land has been allotted to the particular person for the purpose of setting up an industry. Rule 7 empowers the first respondent to permit a land to be mortgaged. Rule 7 is extracted herein under for convenience of reference.
The land allotted under these rules and/or the improvements thereon including super-structures, buildings etc. shall not be alienated or encumbered in any manner without prior sanction in writing of the Director of Industries & Commerce. Every alienation or encumbrance duly made by the hirer shall be notified by the hirer and the Director of Industries and Commerce to the already aliene/holder of encumbrance right in the interest if any.
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infirmity. It was certainly within the powers of the 4th respondent to repossess the land, in the event of default in repayment of the loan. In the present case, they have actually repossessed the land and are in possession thereof. According to the counter affidavit of respondents 1 to 3, apart from receiving the allotment Exhibit P1, the petitioner has not done anything pursuant thereto, to take possession of the land or to comply with the directions of the first respondent. Therefore, when it was brought to the notice of the first respondent that the allotment was made without noticing the charge on the property in favour of the 4th respondent, the allotment has been cancelled. I do not find any infirmity in Exhibit P3. The action is perfectly justified in the facts and circumstances of the case.
For the above reasons, this writ petition fails and is accordingly dismissed.
Sd/- K.SURENDRA MOHAN, JUDGE
kkj
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The words “The additional 5th respondent “ occurring in the 11th & 12th lines of 4th paragraph of the judgment at page 4 are corrected as “The additional 6th respondent”, vide order dated 24.06.2015 in I.A.No.8370/2015 in W.P.(C) No.6543/2006.
Sd/Registrar (Judicial)
3 issues framed by the court
Whether the cancellation of allotment of industrial land despite a mortgage encumberance granted by the authorities is sustainable.
Whether Rule 15 of the Rules for allotment of land limits the power of the authority to claim only the value of improvements.
Whether the mortgage of the land by Respondent No. 5 was valid and entitled them to take possession and seek cancellation of Plaintiff's allotment.
1 provisions across 1 enactments
M.J. Job
The General Manager, District Industries Centre, Alappuzha
The Director, Industries and Commerce, Thiruvananthapuram
State of Kerala
Kerala State Industrial Development Corporation
Kanoil and Foods Ltd
K. Surendra Mohan
As recorded by the court registry
Judgements on the same questions, provisions and authorities, from every court
