24 Oranges Lab Llp & Another vs New Okhla Industrial Development ...
2013 Latest Caselaw 6445 ALL

HIGH COURT OF JUDICATURE AT ALLAHABAD
 
 

A.F.R.
 
Judgment Reserved on 12.09.2013
 
Judgment Delivered on 11.10.2013
 

 

 
Civil Misc. Writ Petition No. 52933 of 2010
 

 
24 Oranges Lab LLP and another
 

 
Versus
 

 
New Okhla Industrial Development Authority (NOIDA) and another
 

 

 
					____________
 

 
Hon'ble Vineet Saran, J.

Hon'ble Manoj Kumar Gupta, J.

(Delivered by Manoj Kumar Gupta, J.)

1. By means of this writ petition, the petitioners have prayed for a writ of certiorari quashing the order dated 11th August 2010 passed by the General Manager, New Okhla Industrial Development Authority (for short "NOIDA") whereby, the application of the petitioners for allotment of an industrial plot has been rejected on the ground that the petitioners have not been found to be suitable and for a mandamus commanding the respondents to allot the petitioners an industrial plot in Phase III, NOIDA as per its application dated 23.03.2010.

2. Brief facts of the case are that 24 Oranges Lab LLP - petitioner No. 1 is a partnership firm registered under Limited Liabilities Partnership Act, 2008. It's partners are Shvetank Jain and Raj Kumar Jain (petitioner No. 2). Shvetank Jain is B.Tech. in Computer Science from I.I.T. Kanpur and M.Sc. in Computer Science from the University of Toronto, Canada and has working experience with U.S. companies for last several years in web based internet application industry. He is getting a salary of over Rs. 1.5 crores. Petitioner No.2 is a graduate in mechanical engineering from I.I.T Roorkee and is a Gold Medallist and a prominent business man. They got lured by State Government's I.T. Policy, 2004, which promises several incentives to entrepreneur's desirous of setting I.T. based industry in the state. One of the incentive is preferential allotment of land by NOIDA/Greater NOIDA, UPSIDC and other development authorities , apart from exemption in stamp duty and registration fee, interest free loan, special financing packages, uninterrupted power supply, etc. They came together, and got a firm registered in the name of petitioner No.1.

3. In February, 2010, NOIDA launched an open ended scheme for allotment of industrial plots, larger than 2000 sq.mts. in industrial area phase II and III, NOIDA. The petitioners' firm, applied in prescribed form on 23.03.2010, for allotment of a plot measuring 2200 square metres approximately, in Phase III, NOIDA, along with a Project Report for establishing an I. T. Industry relating to designing of websites, software development, networking management, e-commerce resources, planning, etc. By communication dated 03.03.2010 received from Manager(Industries) NOIDA, the petitioners' firm was required to appear before the Screening Committee. According to the petitioners, the authorised representative of the petitioner firm appeared before the Screening Committee and it was fully convinced of the viability of the Project and required the petitioners to proceed further in the matter by obtaining letters regarding finances from the bank. Consequently, the petitioners vide their letter dated 12.05.2010 furnished certificate from the Union Bank of India, Shaharanpur showing commitment by the said bank to advance a sum of Rs. 241.45 crores as term loan and working limit to the petitioners' firm. Thereafter, nothing was heard and abruptly an order dated 11.08.2010 has been received under signatures of General Manager (Industries), NOIDA, whereby, the application of the petitioner has been rejected stating that the Allotment Committee has found the applicant to be unsuitable. Aggrieved by the said order, the petitioners have approached this Court by way of instant writ petition.

4. The respondents have filed a counter affidavit in which reliance has been placed on Clause 2 (j) of the application which provides that the decision of the NOIDA on an application at any stage shall be final and binding upon the applicant and no correspondence shall be entertained in this regard. It has further been stated that the application of the petitioners was examined by the UPICO, which had submitted its report, wherein it found that the documents submitted by the petitioners relating to financial resources were not sufficient. In view of it , the Screening/allotment Committee did not recommend the case of the petitioner and its application has been rejected.

5. In reply to the counter affidavit, the petitioners have filed rejoinder affidavit in which it was stated that all the requisite documents as required by the application were duly appended; that the petitioners gave satisfactory reply to all the questions posed by the Screening Committee; that the Screening Committee asked the petitioners to approach the bank for financing the project and even the said formality was completed by the petitioners by submitting the letter from the Union Bank of India conveying its commitment for extending financial assistance to the petitioners firm; that the report of the UPICO has never been made available to the petitioners and even the copy of the same has not been filed along with the counter affidavit, thereby, seriously prejudicing the petitioners.

6. We have heard Sri Ravi Kiran Jain, learned Senior Advocate, assisted by Sri R.K. Kannaujiya, Advocate appearing for the petitioners and Sri Ramendra Pratap Singh, learned counsel for the respondents. Since pleadings have been exchanged and with the consent of the learned counsel for the parties, this writ petition was heard finally.

7. Sri Ravi Kiran Jain, learned Senior Advocate, appearing for the petitioners contended that the impugned order rejecting the application of the petitioners' firm is a non-speaking order. Though, it has been alleged that the applicant was found 'unsuitable' but it has not been stated in the order as on what ground the applicant was found to be unsuitable. According to him, merely stating that the applicant is unsuitable, tentamounts to passing a non-speaking order. The petitioners' firm which had submitted the application after completing the requisite formalities had a legitimate expectation to be informed of the reasons on which it is not entitled for allotment of an industrial plot. The impugned decision is wholly arbitrary and violative of Articles 14 and 19 of the Constitution of India. He further submitted that in case the Screening Committee required any other document or clarification, the petitioners should have been intimated about the same or should have been given opportunity to submit such document. It has been further argued that the respondents cannot be permitted to supplement reasons to support the impugned order. Alternatively, it has been submitted that even the reasons given in the counter affidavit are apparently incorrect and arbitrary, inasmuch as, the petitioners' firm had submitted all the documents or otherwise, its candidature would have been rejected at the very threshold. He further submitted that there was no requirement for appending any document from the bank showing its commitment to finance the project as the only requirement is to submit a statement of sources of fund, which is different from firm commitment by the bank to extend the financial assistance. He further submitted that the I.T. Policy of the State Government was binding upon the NOIDA authorities and according to the said policy, the petitioners' firm, which had proposed to set-up an I.T. Industry, was entitled for various relaxation and privileges in obtaining bank loan. Had the same been taken into consideration by the NOIDA Authorities, its application would not have been rejected.

8. Per contra, Sri R.P. Singh, counsel for the respondents contended that since the representative of the petitioners' firm was present before the Screening Committee and, therefore, reasons for not making allotment were explained to him and the same is sufficient compliance of principles of natural justice. He further submitted that in view of Clause 2 (j) of the application, the petitioners cannot question the wisdom of the Screening Committee. He placed reliance on various assertions in the counter affidavit to justify rejection of the application of the petitioners.

9. We have considered the rival submissions of the counsel for the parties and have perused the record.

10. The main attack to the impugned order is on the ground that it is a non-speaking order and it amounts to violation of the principles of natural justice. We have perused the impugned order and find that it only states that the application filed by the petitioners' firm is being rejected as the applicant was found to be unsuitable by the allotment/screening committee. The question for consideration before this Court is whether such an order can be sustained in law; whether stating that applicant was found to be unsuitable is sufficient compliance of the requirement of law to give reasons even while acting in an administrative capacity.

11. The Apex Court in the case of Orxy Fisheries Private Limited Versus Union of India, (2010) 13 SCC 427 held that an order rejecting the explanation to show cause notice by stating that it was found to be unsatisfactory, amounts to passing a non-speaking order. Similarly, the Apex Court in the case of Kranti Associates Private Limited Versus Masood Ahmad Khan, (2010) 9 SCC 496, after taking into consideration various previous judgments laid down that " the judicial trend has always been to record reasons, even in administrative decisions, if such decisions affect anyone prejudicially. Insistence on recording of reasons is meant to serve the wider principle of justice that justice must not only be done, it must also appear to be done as well....Reasons facilitate the process of judicial review by superior Courts.... Reasons in support of decisions must be cogent, clear and succinct..... A pretence of reasons or ''rubber-stamp reasons' is not to be equated with a valid decision making process."

12. It is evident from the aforesaid pronouncements of the Apex Court that even administrative authorities while acting in public domain are required to give reasons. It has been consistently held that reasons are live links between the mind of the decision taker to the controversy in question and the decision or conclusion arrived at. It is on account of the aforesaid principle that it has been held that the reasons in support of the decision must be cogent, clear and succinct. A pretence of reasons or rubber stamp reasons is not be equated with a valid decision making process.

13. If we test the impugned order on the aforesaid principles, we find that by stating that the applicant was found to "unsuitable', the authority had only disclosed the conclusion for rejecting the application without giving reasons for arriving at such conclusion. One has been left groping in the dark to speculate the ground on which the authority has found the applicant 'unsuitable'. The live link between the mind of the decision taker and the ultimate decision is conspicuous by its absence. It can by no stretch be said to be adequate and intelligent. Consequently, the irresistible conclusion is that the impugned order is bereft of any reason and cannot be sustained in law.

14. Counsel for the respondents vehemently urged that though the impugned order does not give detailed reasons but the same has been explained by the NOIDA in its counter affidavit and which should be taken into consideration by the Court. Refuting the said submission, Sri Ravi Kiran Jain, Senior Advocate, contended that the NOIDA can not be permitted to supplement reasons and the validity of the impugned order has to be tested on basis of reasons given therein. In support of his contention, he has placed reliance on the judgment of the Apex Court in the case of Mohinder Singh Gill Versus The Chief Election Commissioner, New Delhi, AIR 1978 SC 851.

15. There is no quarrel with the aforesaid proposition of law. However, it cannot be disputed that administrative orders need not contain detailed reasons like orders or judgement of a court. Administrative orders itself may contain reasons or the same may be discernible from contemporaneous records, as held by apex court in M.J. Sivani Vs. State of Karnataka, AIR1995 SC 1770. In view of it, we consider it proper to examine the reasons given by the respondents in their counter affidavit. It has been stated that the application of the petitioners was scrutinised by UPICO and it found that certain documents relating to financial resources as appended with the application were not sufficient. However, we find that even along with the counter affidavit, the said report has not been filed. We are unable to understand as to what prompted NOIDA to withhold the said report from being brought on record of the writ petition, when its entire case is based on the said report and specially when the impugned order does not contain the reasons and the NOIDA is trying to support the impugned order on the basis of contentions made in the counter affidavit. In the absence of the report of the UPICO having been brought on record, this Court is not in a position to appreciate the reasons which impelled the UPICO to submit an adverse report against the petitioners. In view of it, shelter taken behind the report of UPICO for rejecting the application of the petitioners, cannot be sustained.

16. There is another aspect of the matter. According to the stipulations in the application form, on receipt of the application, the same is scrutinised and, if the information submitted is incomplete, it is summarily rejected. It is only those application forms which are found to be duly complete in all respects along with the project report, registration money, processing fee and other necessary documents that it is processed further, by calling the applicant for interview. In this regard, Clause 2(b) is relevant and is reproduced below: -

"2. (b) Application must be complete in all respects. Application form submitted with incomplete information(s)/enclosure(s) shall be summarily rejected."

17. Thus , applications which are found to be incomplete in any manner are rejected summarily. Such applications are not processed any further nor applicant is called for interview. Admittedly, in the instant case, NOIDA had not taken recourse to Clause 2(b). On the contrary, the application was duly processed and the petitioner was called for interview, meaning thereby that the application form was complete in all respects and the project report, registration money, processing fee and other necessary documents were duly appended to it. Thus, the submission of counsel of NOIDA that documents relating to finance from the bank did not accompany the application form, on account of which the application has been rejected, cannot be sustained.

18. It is further noticeable to mention here that after the aforesaid stand was taken for the first time in the counter affidavit, the petitioners, in order to rebut the same, have duly brought on record the documents which were part of the application. Perusal of these documents filed as Annexure R.A 2 would show that along with the application, the petitioners' firm had filed a certificate from the Chartered Accountant certifying that Shvetank Jain has earned US $ 2,68,500 equivalent to INR 1,25,55,060/- during the financial year 2009-10; another certificate from the Chartered Accountant that Shvetank Jain owns moveable properties worth Rs. 1,41,75,000/- out of which a sum of Rs. 1,30,00,000/- is in deposit in the form of Fixed Deposit Receipts with the Union Bank of India, Shaharanpur; certificate from the Union Bank of India certifying that Rs. 1,30,00,000/- is in Fixed Deposit with its Shaharanpur Branch in the name of Shvetank Jain; complete documents of sources of finance stating that both the partners have good net-worth as Shvetank Jain is having Fixed Deposit Receipts of Rs. 1.30 crores and his present salary is over Rs. 1.50 crores, which would also be sent by him for investment in the project and other partner Raj Kumar Jain is also an established businessman having adequate fund resources; another document on cost of project and means of financing mentioning that the promoters will be contributing Rs. 256.93 lakhs from their own funds and will only be taking Rs. 217.07 lakhs as term loan and Rs. 24.38 lakhs as the working capital loan from the bank.

19. We have also been taken through the application form in which at Item No. 8, the documents to be appended in this regard are statement of source of fund and liquidity certificate from any nationalised bank. In case of self-financing or loan from friends/relatives, affidavits to this effect and documentary evidence thereof, to be signed by the applicant/bank/Chartered Accountant are to be appended. In the instant case, we find that the statement of sources of funds have been duly appended. The liquidity certificate from the bank stating that one of the partners Shvetank Jain is having Fixed Deposit Receipts of Rs. 130 lakhs in deposit with its Shaharanpur Branch and another certificate from the Chartered Accountant mentioning that he owns moveable properties worth Rs. 1,41,75,000/- were duly filed. We have minutely perused the application form and it nowhere requires that along with the application form, the applicant has to submit any document from the bank showing its commitment to extend financial assistance. We, therefore hold that if the Screening Committee had rejected the application of the petitioners on the said ground, the same is not sustainable in law in absence of there being any such requirement in the application form.

20. The last submission of the NOIDA is that in view of Clause 2(h)(iii), it is not required to give detailed reasons nor the impugned order can be set-aside on such ground, as its decision is final under clause 2(j). Clause 2(h)(iii) and (j) reads as under: -

"2(h)(iii) No correspondence shall be made with the applicants, whose application(s) are rejected for any reasons or whose candidature is not recommended by the screening committee. However, their registration money would be refunded, without any interest, through the concerned bank where the applicant had registered his application form."

2(j) The decision of the Noida on any application at any stage shall be final and binding on the applicant and no correspondence shall be entertained in this regard."

21. We have perused the aforesaid clauses. It only says that after the application is rejected, no further communication or correspondence from the candidate shall be entertained in this regard. It only means that after the application is rejected, the decision will not be reviewed nor any communication shall be entertained from the candidate in respect thereto. The aforesaid clause neither gives immunity to NOIDA to reject the application in a whimsical or arbitrary manner nor does it take the decisions beyond the reach of judicial review. The aforesaid clause cannot be an obstacle in the way of this Court in testing the validity of the impugned order.

22. Learned counsel for the respondents has placed reliance on the judgment of the Apex Court in the case of Directorate of Education and others Versus Educomp Datamatics Ltd. And others, (2004) 4 SCC 19 and of this Court in the case of Air Force Naval Housing Board Versus State of U.P., 2009 (9) ADJ 603. In the aforesaid judgments, the terms of the tender/public advertisement were under challenge on the ground that they are arbitrary and unreasonable. It was held that the terms of the invitation to tender are not open to judicial scrutiny, the same being in the realm of contract. The aforesaid judgments are of no help to the respondents inasmuch as, no condition of the scheme is under challenge by the petitioners before this Court.

23. In view of the above discussion, we find that the impugned order can not be sustained and is liable to be quashed.

24. However, before parting, this Court is constrained to make certain observations. Admittedly, the State Government had come up with a vision document for giving impetus to I.T. Industries by promising various benefits to the entrepreneurs intending to establish such industry in the State of Uttar Pradesh. From perusal of the I.T. Policy, 2004 (Annexure 3), it is evident that the Government had promised preferential allotment of land to I.T. Industry by NOIDA Authority apart from giving exemption in stamp duty, registration money, interest free loan, special financial packages, uninterrupted power supply and several other facilities. The NOIDA Authority, which is an instrumentality of the State has been constituted under U.P. Industrial Development Act, 1976 with the object of development of certain areas into industrial township. The State Government exercises control over NOIDA by virtue of section 12 of the U.P. Industrial Development Act, 1976 read with section 41 of the U.P. Urban Planning and Development Act,1973. NOIDA is enjoined with the duty to act in tandem with the state policies, in order to ensure co-ordinated development of the area. However in the instant case, we find that the NOIDA had shown total apathy towards the I.T policy, or else it would not have rejected the application of the Petitioner. From the assertions made in the writ petition, we find that the main partner of the petitioners' firm Shvetank Jain is B. Tech in Computer Science from IIT Kanpur and M.Sc. in Computer Science from the University of Toronto, Canada and has throughout been first class and has been working with U.S. Companies for the last several years in web based internet application industry. As per the certificate of the Chartered Accountant, his salary during the financial year 2009-10 was INR 1,25,55,060/- .The petitioner No. 2 Raj Kumar Jain is a graduate in Mechanical Engineering from IIT Roorkee and a established businessman in India having adequate fund resources. With such exemplary academic qualification of its partners, the applicant firm, if deprived of setting-up I.T. Industry in the State, it would be a total annulment of the policy to provide impetus to such sector. The NOIDA Authority acted in a casual manner and without having any insight into the broad objectives with which it is supposed to work while refusing to provide industrial plot to the applicant firm. It is high time that the NOIDA Authority should deliberate over it and act in a more reasonable and sensitive manner, especially when it comes to attracting entrepreneurs for setting-up industries in the State as otherwise the very object with which the said Authority has been constituted, will stand defeated.

25. In view of the above, the writ petition succeeds and is allowed. The impugned order dated 11.09.2010, filed as Annexure 3 to the writ petition, rejecting the application of the petitioners for allotment of industrial plot is hereby quashed. Since, it is an open-ended scheme and even according to the admission in the counter affidavit, 18 plots are still available and also in view of the interim order whereby this Court required the State Authority to reserve one plot by not making allotment thereof, we are of the considered opinion that the interest of justice will be subserved by directing the NOIDA to reconsider the application of the petitioners for allotment of the industrial plot. In case any clarification is required by it from the petitioners, the same should be asked for and thereafter appropriate orders be passed on the application of the petitioners for allotment of the plot, within three months from the date of production of certified copy of this order before the respondents.

26. No orders as to cost.

(Manoj Kumar Gupta, J.)           (Vineet Saran, J.)
 
Dated: 11th October, 2013
 
AM/-