Chattisgarh High Court
N. Jivan Lal Chemical Industries Pvt. ... vs State Of Chhattisgarh on 8 January, 2025
-1-
Digitally signed
by REKHA
SINGH
2025:CGHC:1210
NAFR
HIGH COURT OF CHHATTISGARH AT BILASPUR
WPC No. 2233 of 2015
1 - N. Jivan Lal Chemical Industries Pvt. Ltd. Through Its Manager Rajan Pillai, S/o
Raman Pillai, Aged About 56 Years, Industrial Estate, Jagdalpur Chhattisgarh.,
Chhattisgarh
... Petitioner(s)
versus
1 - State Of Chhattisgarh Through The Secretary, Department Of Commerce And
Industries, Mahanadi Mantralaya, Naya Raipur, Post Office And Police Station Naya
Raipur, District Raipur Chhattisgarh, Chhattisgarh
2 - Commissioner/ Director, Directorate Of Industries, Mantralaya, Naya Raipur, Post
Office And Police Station Naya Raipur, District Raipur Chhattisgarh
3 - District Trade And Industries Centre, Through Its General Manager, Jagdalpur
Chhattisgarh ... Respondents
For Petitioner : Mr. Jitendra Pali, Advocate with Mr. S.S. Baghel, Advocate
For State : Mr. Lav Sharma, Panel Lawyer
Hon'ble Shri Justice Rakesh Mohan Pandey
Order on Board
08.01.2025
1) Heard.
2) The petitioner has filed this petition seeking the following relief(s):-
"(i). That, this Hon'ble Court may kindly be pleased to quash the
impugned order dated 9/11/2015 (Annexure P/1) passed by the
respondent No.1; order dated 2/6/2009 (Annexure P/2) passed by the
respondent No.2; and the memo dated 19/11/2015 (Annexure - P/3)
passed by the respondent No.3.
(ii). Cost of the petition may also be granted to the petitioner.
(iii). Any other relief, which this Hon'ble Court deems fit and proper,
may also kindly be granted to the petitioner, in the interest of justice."
3) The facts of the present case are that the State Government executed an
agreement for the supply of Arjuna Bark and Saja Bark from Bodhghar
Submerged Area and Bastar Forest for the purposes of the operation of the
business and to promote the Small Scale Industry on 28.11.1979. A lease deed
of 19800 sq.mtr. land was executed between respondent No.3 and the petitioner
for a period of 99 years commencing from 25.04.1980 for the purposes of the
construction and establishment of a factory to manufacture Oxalic Acid. A show
cause notice was issued to the petitioner exercising power under Clause 18 of
the lease agreement on 10.04.2008 on the ground that for the last 6 months, the
production has been stopped and the machinery of the factory is still stand
which is in violation of Clause 12 of the lease agreement. The petitioner filed a
reply to the show cause notice on 05.05.2008 and took a plea that the State
failed to supply raw material for the production of Oxalic Acid. It is also stated
that the claims of the petitioner were adjudicated by the Secretary of the Forest
Department, who was the sole Arbitrator. Vide award dated 17.12.1999, all the
claims of the petitioner stood rejected by the Arbitrator. The petitioner challenged
that award by filing an appeal under Section 30 of the Arbitration Act, 1940
before the District Judge, Raipur (C.G.). The concerned Court set aside the
award passed by the Arbitrator and vide order dated 25.11.2000, appointed a
retired High Court Judge Shri S. Awasthi as an Arbitrator only on the ground that
the proper opportunity of hearing was not afforded to the petitioner. The
subsequent Arbitrator passed an award on 24.05.2001, which was challenged
before the District Judge by the State Government and the same was dismissed
vide order dated 12.01.2004. Thereafter, the State Government challenged the
order passed by the District Judge by filing an appeal before the Coordinate
Bench of this Court and the same was allowed vide order dated 31.03.2017 and
the award dated 24.05.2001 passed by the Arbitrator was set aside. Thereafter,
the petitioner preferred a Special Leave Petition bearing SLP(C) No.23110 of
2017 before the Hon'ble Supreme Court and that was allowed vide order dated
12.12.2017.
4) Mr. Pali, learned counsel appearing for the petitioner would argue that on
account of non-supply of raw material, the petitioner could not continue with the
production of Oxalic Acid. He would further submit that the petitioner made
various representations before the respondent authorities/Forest Authorities for
the supply of Arjuna Bark and Saja Bark but no heed was paid. He would
contend that when there is an award passed in favour of the petitioner and the
same has been upheld by the Hon'ble Supreme Court, the respondent
authorities had no right to cancel the lease granted in favour of the petitioner. He
would also submit that the order of cancellation of the lease dated 02.06.2009
and the order passed by the State Government in the appeal dated 09.11.2015
are liable to be quashed.
5) On the other hand, Mr. Sharma, the learned Panel Lawyer appearing for the
State would oppose the submissions made by Mr. Pali. He would submit that the
physical inspection was conducted and it was found that the electricity
connection was not available with the factory premises, the machinery was also
not available, the production of Oxalic Acid was stopped and therefore, a
decision was taken to cancel the lease agreement pursuant to Clause 18 of the
lease agreement. He would further submit that according to Clause 18 of the
lease agreement, the closure of the factory for a continuous period exceeding
six months without proper reasons to the satisfaction of the allotting authority
would be considered a breach of this condition. He would contend that sufficient
opportunity of hearing was afforded to the petitioner before the cancellation of
the lease agreement. It is also contended that the production was stopped in the
year 2001 by the petitioner. With regard to the judgment passed by the Hon'ble
Supreme Court in the Special Leave Petition preferred by the petitioner, he
would submit that the award passed by the Arbitrator was upheld.
6) I have heard the learned counsel appearing for the parties and perused the
documents placed on the record.
7) From a perusal of the award passed by the Arbitrator on 24.05.2001, it is quite
vivid that the State was held liable for the non-supply of raw material to the
petitioner factory. The liability was also fastened with the State Government and
the State was directed to pay compensation to the tune of Rs.3,49,60,560/-. The
award passed by the Arbitrator has attained finality. The subsequent Arbitrator
passed an award on 24.05.2001 in favour of the petitioner, which was
challenged before the District Judge by the State Government and the same
was dismissed vide order dated 12.01.2004. Thereafter, the State Government
challenged the order passed by the District Judge by filing an appeal before the
Coordinate Bench of this Court and it was pending when the lease agreement
was cancelled by respondent No.2.
8) From a perusal of the order dated 02.06.2009 passed by respondent No.2, it
appears that the award passed by the Arbitrator dated 24.05.2001 was not taken
care of while passing the order impugned.
9) Respondent No.1 vide order dated 09.11.2015 affirmed the order passed by
respondent No. 2 on the ground that the production was stopped in the year
2001; trees and plants are grown in the factory premises; the electricity
connection was disconnected but order passed by the Hon'ble Supreme Court
and the award passed by the Arbitrator were not taken into consideration.
10) Taking into consideration the above-discussed facts, in the opinion of this Court,
the order dated 02.06.2009 passed by respondent No.2 and the order dated
09.11.2015 passed by respondent No.1 are not sustainable in the eyes of law.
Therefore, both orders are hereby quashed.
11)The State would be at liberty to take an appropriate decision as 24 years have
elapsed from the year 2001 when the award was passed in favour of the
petitioner. The State Government would be at liberty to revisit the agreement
and take an appropriate decision. The petitioner shall be provided appropriate
opportunity before taking any decision.
12) With the aforesaid observation(s)/direction(s), the present petition is disposed
of. Sd/-
(Rakesh Mohan Pandey)
Judge
Rekha
