Dismissed

Sreejith K.B. v. State of Kerala

Kerala HC2 Nov 2016WP(C)/37992/2003

Case brief

AI extract

What is this about?

Writ petition challenging eviction orders issued by KSIDC against the petitioner for failing to start an industrial unit in his allotted shed within the stipulated time, despite holding a sale deed. The court upheld the eviction proceedings.

What did the court decide?

Writ petition dismissed; eviction proceedings upheld.

What the court decided

Sreejith K.B. Vs State of Kerala — Contract and Commercial Disputes | Kerala HC (2016)

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IN THE HIGH COURT OF KERALA AT ERNAKULAM

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PRESENT:

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THE HONOURABLE SMT. JUSTICE P.V.ASHA

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WEDNESDAY, THE 2ND DAY OF NOVEMBER 2016/11TH KARTHIKA, 1938

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WP(C).No. 37992 of 2003 (W)

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PETITIONER(S):

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SREEJITH K.B., S/O. K. BALAKRISHNAN, KALATHIL HOUSE, PUTHIYARA P.O., CALICUT.

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BY ADVS.SRI.G.S.REGHUNATH, SRI.BASANT BALAJI.

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RESPONDENT(S):

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1. STATE OF KERALA, REP. BY THE SECRETARY, INDUSTRIES DEPARTMENT, SECRETARIAT, TRIVANDRUM.

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2. THE DISTRICT COLLECTOR, TRIVANDRUM.

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3. THE ESTATE OFFICER, KERALA SMALL INDUSTRIES DEVELOPMENT CORPORATION LTD., P.B. NO.50, 6TH FLOOR, HOUSING BOARD BUILDING, SANTHI NAGAR, TRIVANDRUM.

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4. THE MANAGING DIRECTOR, KERALA SMALL INDUSTRIES DEVELOPMENT CORPORATION LTD., P.B. NO.50, 6TH FLOOR, HOUSING BOARD BUILDING, SANTHI NAGAR, TRIVANDRUM.

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R1 & R2 BY GOVT. PLEADER SMT.PRINCY XAVIER. R3 & R4 BY ADVS. SRI.R.T.PRADEEP SRI.M.RAJAGOPALAN NAIR, SC.

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THIS WRIT PETITION (CIVIL) HAVING BEEN FINALLY HEARD ON 02-11-2016, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:

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rs.

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WP(C).No. 37992 of 2003 (W)

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APPENDIX

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PETITIONER'S EXHIBITS:-

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EXT.P1	COPY OF THE SALE DEED DATED 17/06/1993.
EXT.P2	COPY OF THE LETTER DATED 16/04/1998 ISSUED BY THE 4TH RESPONDENT.
EXT.P3	COPY OF THE REPLY DATED 02/05/1998.
EXT.P4	COPY OF THE ORDER DATED 22/06/1998.
EXT.P5	COPY OF THE APPEAL MEMO FILED BEFORE THE 2ND RESPONDENT.
EXT.P6	COPY OF THE STAY PETITION FILED BY SRI.BALAKRISHNAN BEFORE THE 2ND RESPONDENT.
EXT.P7	COPY OF THE STAY ORDER DATED 16/07/1998 BY THE 2ND RESPONDENT.
EXT.P8	COPY OF THE ORDER OF THE 2ND RESPONDENT DATED 27/08/2003 RECEIVED ON 18/10/2003.
EXT.P9	COPY OF THE NOTICE DATED 12/11/2003 ISSUED BY THE 3RD RESPONDENT.

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RESPONDENT'S EXHIBITS:- NIL.

//TRUE COPY//

P.S. TO JUDGE

rs.

P.V.ASHA, J.

W.P(C) No.37992 of 2003-W

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Dated this the 2^nd day of November, 2016

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JUDGMENT

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The petitioner challenges Exts.P3, P4, P8 and P9 orders by which, proceedings were initiated for evicting him from shed No.2 of the Mini Industrial Estate at Vellanad, which was allotted to him.

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The petitioner's father late Sri Balakrishnan submitted applications for allotment of an estate in the industrial estate and had executed an agreement dated 23.5.1993 on allotment of the shed No.2 with the District Industries Officer. By Ext.P1 sale deed dated 7.06.1993, he purchased shed No.2 from the Kerala Small Scale Industries Development Corporation (KSIDC) subject to the conditions specified therein. While so, Ext.P2 order was issued on 16.4.1998 terminating the occupancy in shed no.2 on the ground that shed no. 2 which was allotted for running an industry named “M/s.Varun Batteries” was kept idle after he entered occupation of the shed executing formal

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agreement on 26.5.1993, thereby violating the conditions in the agreement. It was also stated that the promoter had admitted in his letter dated 9.2.2008 that the unit was not working. It was directed that unless the possession of the shed was surrendered to the estate manager within a period of one month, proceedings would be initiated for recovery of possession of the shed and for recovery of resumption interest at 6% per annum, under paragraph 6 of the Rules of for hiring of space in the industrial estate and as per agreement executed on behalf of the firm.

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On receipt of the same, the petitioner caused a lawyer notice to be sent to the KSIDC informing that the shed was assigned to the petitioner's father as per Ext.P1 assignment deed, registered as document No.1589 of 1993 of Vellanad Sub Registry, on remitting the sale consideration of Rs.40,800/-, and that the possession was not on the basis of the agreement. Therefore, it was requested to withdraw the proceedings proposed in Ext.P2.

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Thereafter by Ext.P4 proceedings dated 22.6.1998 the KSIDC ordered the petitioner and all persons in occupation of shed no.2 to vacate the said building within a period of 30 days,

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failing which it was informed that they would be evicted by use of force. Proceedings for eviction were ordered under sub section 1 of Section 5 of the Kerala Public Buildings (Eviction of Unauthorised Occupants) Act, 1968 (herinafter referred to as 'the Act'). The reasons stated were as follows:

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“(a) The shed is being kept under idle occupation.

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(b) Failure to utilise the shed for the purpose for which he was allotted and making default in the matter of payment of rent dues are breaches of conditions of the occupancy.

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(c) Eventhough the occupancy was terminated as per termination order No.MIE/VELANAD/24-980/92 dated 16.4.98 the occupant failed to surrender possession of the shed to the Estate Manager of Industrial Estate, Pappanamcode.”

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On receipt of Ext.P4 order, the petitioner's father approached the District Collector who is the appellate authority under Section 10 of the Act, 1968 filing Ext.P5 appeal stating that proceedings under the said Act cannot be invoked against him. However, as per Ext.P8 order the said appeal was rejected, reiterating that the appellant was residing at Kozhikode and the shed has never been put to use. The respondents thereupon issued Ext.P7 notice again directing the legal heirs of late Balakrishnan including the petitioner to vacate the unauthorised occupancy in the shed and to hand over the vacant possession. This writ petition was filed at this stage challenging the orders Exts.P2, P4, P8 and P9.

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Respondents 2 to 4 have filed counter affidavit stating that the petitioner's father had entered into a hire purchase agreement to run a unit in the industrial estate in the name and style “Varun Batteries”. Thereafter, Ext.P1 sale deed was executed remitting the full hire purchase value. It is stated that even though Ext.P1 sale deed was executed the said sale is subject to the provisions contained in the sale deed and the right obtained by the purchaser was subject to those conditions. Further it is stated that the petitioner's father did not take any steps to start the unit in the shed, which was allotted in the year 1993, till the year 1998 and the order of termination was issued on 16.4.1998. As per clause 9 of the sale deed, any purchaser is bound by the rules made by the Corporation for regulating and controlling the activities, as provided in clause 1 of the sale deed itself. It was stated that the purchase itself was on the agreement to comply with the conditions stipulated in Ext.P1 sale deed. It is also made clear in Ext.P1 sale deed that sale is subject to the allotment rules and under the provisions contained in the rules; action is liable to be taken under those rules which empower the respondents to terminate the sale and initiate proceedings for eviction as provided under the Act, 1968.

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Heard the learned counsel Sri G.S.Raghunath appearing for the petitioner and the learned Standing Counsel. The learned counsel submitted that a perusal of Ext.P2 order itself would show that it was issued without taking note of the sale deed executed and the respondents were under the impression that the petitioner had occupied the shed on the basis of hire purchase agreement. The recitals in Ext.P1 sale deed would show that the petitioner's father purchased the said shed after remitting the sum of Rs.40,800/- and the respondents have transferred the right, title and interest over the shed and the purchaser could enjoy the same as owner after effecting mutation. However, subject to the condition provided in the schedule. As per the conditions specified in Ext.P1 itself condition No.1 was to the effect that purchaser shall use the shed only for the purpose of running an industry which is approved by the vendor. Condition No.3 was to the effect that the purchaser or his heirs, successors and assigners shall not do anything repugnant to the regulations made by competent authorities of the Industrial Estate with a view to maintain safety of the property and general discipline of the estate. Condition No.9 provided that purchaser or anyone deriving title from the

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Vendor by act of parties or by operation of law shall be bound by the rules framed by the corporation for regulating and controlling the activities and affairs of the Industrial Estate.

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The learned counsel for the petitioner pointed out that under Sections 10 and 11 of the Transfer of Property Act, 1882, when the property is transferred subject to certain conditions, the said conditions would be void. Section 10 of the Transfer of Property Act, 1882 provides that when a property is transferred subject to any condition absolutely restraining the transferee or any person claiming under him from parting or disposing of his interest in the property, the condition or limitation is void except in the case of a lease where the condition is for the benefit of the lessor. Section 11 provides that when a property is transferred, an interest is created absolutely in favour of any person, but the terms of the transfer direct that such interest shall be applied or enjoyed by him in a particular manner, he shall be entitled to receive and dispose of such interest as if there were no such direction. Proviso to Section 11 provides that when any such direction is made in respect of one piece of immovable property for the purpose of securing the beneficial enjoyment of another piece of such property, the right of the transferor to enforce such

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directions would not be affected in the case of a breach. According to the learned counsel for the petitioner, the conditions stipulated in Ext.P1 sale deed are void.

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Similarly it is contended that the provisions contained in the Kerala Public Buildings (Eviction of Unauthorised Occupants) Act, 1968 would not apply, since it is not a public building as defined under the Act. Clause (c) of Section 2 defines “public building” as any building or part of a building belonging to, or taken on lease or requisitioned by, or on behalf of, the Government or a local authority or a company or corporation. It is stated that by virtue of Ext.P1 sale deed the petitioner's father became the owner of shed no.2 and therefore shed no.2 cannot be treated as a public building which attracts the application of the provisions contained in the Act, 1968.

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At the same time, the learned counsel for the respondents referring to the conditions contained in Ext.P1 argued that as per condition No.1, every sale is subject to the provisions contained in allotment rules of the Corporation’s Rules for Allotment of Sheds/land in Industrial Estates in Kerala on Outright Purchase Basis, 1996. It is seen that the sale deed Ext.P1 in this case was executed in the year 1993. The learned

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counsel for the respondents submitted that pre-revised rules also contained similar provision. At any rate, the Rules relied on by the respondents were issued in the year 1996 called “Corporation’s Rules for Allotment of Sheds/land in Industrial Estates in Kerala on Outright Purchase Basis, 1996”. Condition No.9 also in Ext.P1 sale deed provides that the purchaser shall be bound by the allotment rules of the respondents. Under Rule 7(a) of these rules, Corporation is empowered to terminate the agreement and resume and take over the shed/land if the allottee contravenes any of the provisions contained in the rule or of the agreement executed by him or if positive action has not been taken to start the industry within 3 months of allotment of the shed/land or in the event of the unit run by the allottee being wound up or the industry is not in a position to pay the amount due under the agreement. Further clause 17 of these rules provides that corporation shall have power to evict the allottee under the provisions of the Act 1968 on his failure to clear off the dues if any or on violation of the Rules of allotment of shed/land. It is stated that the petitioner did not start any operation in the shed alloted to him in the year 1993 till 1998 and therefore, the provisions contained in the rules were

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violated. Under Rule 7(a), in case no proceedings are taken to start the industry within 3 months of allotment of shed, the Corporation can take over the shed.

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The learned counsel for the respondents relied on the judgment of the Apex Court in Indu Kakkar v. Haryana State Industrial Development Corpn. Ltd. [(1999) 2 SCC 37] where the scope of Section 11 of the Transfer of Property Act, 1882 was considered in a similar case. There a plot of land was allotted by the Haryana Industrial Development Corporation Ltd. and the allottee was put in possession and the registered deed of conveyance was executed on 10.12.1982 on remittance of the entire amount. It was stated that the land was transferred by the Haryana Development Industrial Corporation in favour of the corporation for facilitating the objects and purposes of the Haryana Urban Development (Disposal of Land and Buildings) Regulation, 1978 and the allottee did not establish the industrial unit till the end of 1983. Hence the Corporation issued notice on 6.1.1984 for resumption of the unit and the plot was resumed on 16.3.1984. The allottee had approached the civil court. There the trial court decreed the suit declaring the resumption illegal. The allottee had also contended that the conditions contained in

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the sale deed especially clause 7 cannot be invoked in the light of Section 11 of the Transfer of Property Act. But the Apex Court found in paragraph 16 that the deed of conveyance had not created any absolute interest to the allottee in respect of the plot conveyed.

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Further the Apex Court found that under Section 31 of the Transfer of Property Act, on a transfer of property an interest may be created with the condition superadded that it shall cease to exist in case a specified uncertain event shall happen or in case a specified uncertain event shall not happen. The condition that the industrial unit shall be established within a specified period failing which the industry shall be ceased is a valid condition under clause 7 of the agreement between the parties. Further it was found that since the agreement was entered into between the Corporation and the allottee based on the request by the allottee as a sequel to the request made by the allottee to give him an industrial plot for the purpose of setting up an industry and that request was satisfied by the corporation, the allottee shall carry out the obligations in order to accomplish the purpose of allotment. In paragraph 20 the Apex Court it was held as follows:

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“Here the agreement was entered into between the Corporation and the allottee as a sequel to the request made by the allottee to give him an industrial plot for the purpose of setting up an industry. The Corporation reciprocated to the request on being satisfied that the allottee was able to carry out the obligations so as to accomplish the purpose of allotment. The assurance given by the allottee that he shall start construction of the building for setting up the industry within a period of six months and complete the construction thereof within two years from the date of issue of the allotment letter was verified and found acceptable to the Corporation and then only the Corporation has chosen to enter into the agreement with the allottee. It is a matter of confidence which the Corporation acquired in the promise made by the allottee that the latter would perform such obligations. If the allottee evacuates from the scene after inducting someone else into the plot without the consent of the Corporation, it is not legally permissible for the inductee to compel the Corporation to recognize him as the allottee.”

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It was therefore found that the allottee did not have a locus standi to question the validity of the order of resumption.

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Regarding the applicability of the Kerala Public Buildings (Eviction of Unauthorised Occupants) Act, 1968, this Court had in the decision reported in George Joseph v. K.F.C. [2001(2) KLT 579], considered a similar issue and proceedings were initiated by the KSIDC and in paragraph 12 of the judgment it was found that the act of the corporation which was exercising as a statutory right for evicting the unauthorised occupants in accordance with the provisions cannot be interfered with. The learned counsel for the petitioner points out that the judgment of the Apex Court is not applicable since in that case there was no absolute transfer as in the present case. Since the

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case considered by the Apex Court in the judgment in Indu

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Kakkar v. Haryana State Industrial Development Corpn.

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Ltd. (supra) as well as by this Court in George Joseph v. K.F.C. (supra) are similar, the proceedings initiated by the respondents cannot be interfered with and it was only an agreement entered into in that case. It was also argued that Rule 7(a) and 17 of the Allotment Rules can be made applicable only in a case where the occupation was on the basis of main agreement and not on the basis of the sale deed like Ext.P1, whereby the petitioner was given the full ownership over the shed. Here it is clear that Ext.P1 order makes the conditions provided in the said sale deed to be fulfilled. According to which, the respondents are competent to initiate proceedings under the Allotment Rules as well as the as Kerala Public Buildings (Eviction of Unauthorised Occupants) Act, 1968 by virtue of the application of those provisions contained in those rules.

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In the above circumstances, the petitioner's father who was in occupation of the plot no.2 on the basis of Ext.P1 agreement subject to the conditions contained therein was liable to vacate the said shed when one of the conditions was violated and that condition provided for cancellation of the

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allotment/recovery of possession in a case where the industrial unit was not started even after 5 years of the allotment. In the event of not surrendering the posession the respondents were entitled to proceed for evicting him or his successors in interest resorting to the provisions in the Act also, as provided in the coonditions contained in the schedule.

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Hence, I do not find any reason to interfere with the impugned orders. This Writ Petition is accordingly dismissed.

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Sd/(P.V.ASHA, JUDGE)

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rtr/

Sreejith K.B. v. State of Kerala

Case brief

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Sreejith K.B. v. State of Kerala

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