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Chattisgarh High Court
M/S Atgc Biotech vs State Of Chhattisgarh on 17 April, 2026
1
Digitally
signed
by
SHAYNA 2026:CGHC:17645
KADRI
NAFR
HIGH COURT OF CHHATTISGARH AT BILASPUR
WPC No. 1271 of 2020
1 - M/s Atgc Biotech Through Its Proprietor Ashish Purena, S/o Amar
Das Age 37, R/o Street No. 07, Sector 2, Near Kadam Chowk Professor
Colony, Raipur Chhattisgarh Unit Address Plot No. 112 To 115, Industrial
Area Tehsil And District Mahasamund Chhattisgarh, District :
Mahasamund, Chhattisgarh
... Petitioner(s)
versus
1 - State Of Chhattisgarh Through Its Secretary, Department Of
Commerce And Industy, Mahanadi Bhawan, Mantralaya, Atal Nagar
Nawa Raipur District Raipur Chhattisgarh, District : Raipur, Chhattisgarh
2 - Chhattisgarh State Industrial Development Corporation Limited
Through Its Chiecf Manager (Land Allotment) Raipur First Floor Udyog
Bhawan Telibandha Ring Road No. 01 Opposite Khanij Bhawan Raipur
Chhattisgarh, District : Raipur, Chhattisgarh
3 - Office Of District Commerce And Industry Centre Mahasamund
District Mahasamund Chhattisgarh, District : Mahasamund,
Chhattisgarh
... Respondent(s)
(Cause Title is taken from CIS System)
For Petitioner : Mr. Pallav Mishra, Advocate
For State : Mr. Sangharsh Pandey, Govt. Advocate
For Resp. No. 2 : Mr. Ayaz Naved, Advocate
Hon'ble Mr. Justice Amitendra Kishore Prasad
Order on Board
17/04/2026
1. The petitioner has filed this writ petition seeking following reliefs:
"a) Allow the petition by issuing the writ
of the Certiorari quashing the impugned
order Annexure P-1 alongwith Notice
Annexure P-4 as above;
(b) Grant cost of the expenses caused
by the petitioner."
2. Facts of the case, as emerging from the writ petition, are that the
petitioner is a firm engaged in the field of biotechnology,
particularly specializing in the development and production of
tissue culture relating to various flora and fauna. The firm is duly
represented through its proprietor, who is competent and
authorized to institute the present proceedings. With the objective
of establishing its industrial unit, the petitioner, in the year 2008,
applied to respondent No. 2 for allotment of land on lease basis.
Pursuant thereto, an agreement dated 20.03.2008 was executed
between the petitioner and respondent No. 2 for lease of land
admeasuring 1.77 acres situated at Birkoni Industrial Area, Tahsil
and District Mahasamund. The said agreement contained detailed
terms and conditions governing the lease, including provisions
relating to payment of premium, annual ground rent, development
charges, street light charges, and the timeline for commencement
of production. After execution of the lease deed, the petitioner
took steps to establish its industrial unit on the allotted land and
commenced operations. The petitioner has placed on record its
Udyog Aadhaar registration to substantiate that the industrial unit
was functional. However, on 31.01.2018, respondent No. 2 issued
a show cause notice alleging violation of certain clauses of the
lease agreement, particularly Clauses 2, 3, and 6. The allegations
primarily pertained to non-payment of annual dues such as
ground rent and development charges, as well as failure to
commence production within the stipulated period of one year
from the date of possession. It is the case of the petitioner that
without granting adequate opportunity to respond to the said
notice, respondent No. 2 proceeded to pass a final order
cancelling the lease deed. Aggrieved thereby, the petitioner
preferred an appeal before the Appellate Authority (Managing
Director), which was registered as Appeal No. 2018/461. The
Appellate Authority, by order dated 05.01.2019, allowed the
appeal and granted the petitioner an additional period of six
months to restart production, taking into consideration the
petitioner's explanation regarding temporary closure due to repair
and capacity expansion. However, respondent No. 2, being
dissatisfied with the said order, preferred a second appeal before
the State Government. The State Government, by the impugned
order, allowed the appeal and restored the cancellation of the
lease deed. Consequent thereto, a notice dated 30.05.2020 was
issued directing the petitioner to vacate the leased premises
within three months. Being aggrieved by the aforesaid actions, the
petitioner has approached this Court by way of the present writ
petition.
3. Learned counsel for the petitioner submits that the impugned
orders passed by respondent authorities are illegal, arbitrary, and
contrary to the facts on record as well as settled principles of law.
It is contended that the order of cancellation of lease deed suffers
from serious procedural and substantive infirmities and is liable to
be quashed. It is argued that the show cause notice dated
31.01.2018 was issued on two specific allegations, namely, non-
payment of annual dues under Clauses 2 and 3 of the lease deed,
and failure to commence production within the stipulated time
under Clause 6. However, both these allegations are factually
incorrect and baseless. Learned counsel submits that the
petitioner had regularly made payments towards ground rent and
other charges, and documentary evidence in the form of receipts
has been placed on record to demonstrate that all dues stood
cleared up to the date of issuance of the notice. Therefore, the
allegation of non-payment is stated to be an afterthought and
motivated. Learned counsel for the petitioner further submits that
the lease rent was paid up to 04.02.2019 and as such the
impugned order is not in accordance with law. However, upon a
specific query put by this Court, learned counsel fairly submits
that at present the unit is not being run and the same is lying
closed. He further submits that since 04.02.2019 till date, the
factory has remained closed though the petitioner continues to be
in possession of the property in question. It is also fairly submitted
that no rent amount has been paid after 04.02.2019. Learned
counsel candidly states that since the factory has been closed,
the petitioner has not paid the rent amount. He has clearly
admitted that the factory has been closed since the year 2019. It
is also not disputed that the impugned order was passed on
05.02.2020 and the factory had, in fact, been closed for a period
exceeding six months prior to the said date. With regard to the
second allegation, it is submitted that the petitioner had in fact
commenced production on 02.12.2010, after taking possession of
the land in March 2008. It is further contended that the unit was
duly recognized by the authorities and had even been conferred
with the "Rajya Audyogik Puruskar" for the year 2012-2013, which
clearly establishes that the unit was operational. The temporary
halt in production was only on account of repair and capacity
expansion, which was undertaken with due permission from the
competent authorities. Learned counsel further submits that the
respondent authorities themselves had acknowledged the
functioning of the petitioner's unit at various stages. In the year
2016, the petitioner was issued a No Objection Certificate by
respondent No. 2 for availing credit facilities from a financial
institution, which clearly indicates that the unit was operational
and compliant with the terms of allotment. Similarly, permission for
expansion of business was also granted by the District Trade and
Industry Centre, Mahasamund. In light of these facts, the action of
the respondents in alleging non-compliance is stated to be
contradictory and unsustainable. It is also contended that the
order passed by respondent No. 2 stood merged with the order of
the First Appellate Authority dated 05.01.2019, which had granted
relief to the petitioner. Therefore, the second appellate authority
could not have ignored the findings recorded by the First
Appellate Authority without proper justification. It is further
submitted that the second appellate authority has upheld the
cancellation on grounds which were not part of the original show
cause notice, thereby violating the principles of natural justice.
Learned counsel emphasizes that the impugned order of the State
Government travels beyond the scope of the original notice and
introduces new grounds, without affording any opportunity to the
petitioner to respond to the same. Such deviation from the original
charges is impermissible in law and renders the impugned action
arbitrary and violative of principles of natural justice. It is further
argued that the entire action of the respondents is governed by
the provisions of the Chhattisgarh Industries (Allotment of Plots,
Sheds and Land) Rules, 1974, and any action taken in
contravention thereof is liable to be set aside. The petitioner
submits that the respondents have acted in a manner which is not
only inconsistent with the statutory framework but also prejudicial
to the rights of the petitioner. On these grounds, learned counsel
prays that the impugned orders cancelling the lease deed and
directing eviction of the petitioner be quashed, and appropriate
relief be granted in favour of the petitioner.
4. Learned State counsel as well as learned counsel appearing for
respondent No. 2 (CSIDC), in a consolidated manner, submit that
the petitioner was duly allotted land bearing Survey Nos. 112, 113,
114 and 115 admeasuring approximately 1.77 acres situated at
Village Birkoni, District Mahasamund, vide allotment order dated
12.03.2008 for the specific purpose of establishing a
biotechnology and tissue culture unit. Pursuant thereto, a lease
agreement was executed on 20.03.2008, clearly incorporating the
terms and conditions governing the allotment, including the
obligation to pay annual lease rent, maintenance charges and to
commence commercial production within the stipulated time. It is
jointly contended that the petitioner committed clear and admitted
violations of the essential conditions of the lease deed, particularly
Clauses 2, 3 and 6. Clause 2 pertains to payment of annual lease
rent and other charges, whereas Clause 6 mandates timely
commencement and continuation of production. Due to persistent
non-compliance, a detailed show cause notice dated 31.01.2018
was issued to the petitioner granting 21 days' time to remedy the
breaches in terms of Clause 26 of the lease deed. However,
despite due service, the petitioner neither submitted any reply nor
rectified the breaches within the stipulated period, leaving the
authorities with no option but to cancel the lease deed vide order
dated 16.10.2018. Learned counsel further submit that the record
itself demonstrates that the petitioner had not been making timely
payments and, in fact, payments for several years, including
2017, 2018 and 2019, were made belatedly on 04.02.2019,
though the same were due on or before 10th January of the
respective years. Thus, there was a clear breach of Clause 2,
which was not remedied even within the grace period provided
under the show cause notice. It is further submitted that after
cancellation, the petitioner preferred a first appeal before the
Managing Director (Appellate Authority), wherein the petitioner
itself admitted that the unit was not functioning and sought time on
the ground of repair and capacity expansion. Taking a lenient
view, the Appellate Authority, by order dated 05.01.2019, granted
a conditional opportunity of six months to restart commercial
production and clear all outstanding dues, with a specific
stipulation that failure to comply would result in revival of the
cancellation order. Learned counsel submit that the petitioner
failed to comply with the said conditions within the stipulated time
and, instead of curing the breaches, preferred a second appeal
seeking further extension of time. The State Government, after
due consideration, rightly rejected the second appeal vide order
dated 05.02.2020, holding that there was continued violation of
Clauses 2, 3 and 6 of the lease deed. It was also found, on the
basis of inspection dated 04.12.2019, that the industrial unit was
non-functional and lying locked. It is further contended that the
argument of the petitioner that the second appellate authority has
travelled beyond the scope of the show cause notice is
misconceived. The cancellation was primarily based on non-
payment of dues, and the subsequent finding regarding non-
functioning of the unit only strengthens and substantiates the
earlier grounds of breach. Moreover, closure of the industrial unit
itself constitutes a serious violation of the lease conditions,
particularly under Clause 23, justifying termination of the lease.
Learned counsel emphasize that ample opportunities were
granted to the petitioner at every stage, including issuance of
show cause notice and grant of additional time by the Appellate
Authority. Despite such opportunities, the petitioner failed to
comply with the conditions. Having accepted the conditional order
dated 05.01.2019 and failed to adhere to its terms, the petitioner
is now estopped from challenging the consequential order passed
in second appeal. In sum, it is submitted that the impugned
orders have been passed strictly in accordance with the terms of
the lease agreement and applicable rules, without any procedural
irregularity or violation of principles of natural justice. The writ
petition, being devoid of merit, deserves to be dismissed.
5. Having heard learned counsel for the parties at length and on
perusal of the material available on record, this Court proceeds to
examine the controversy involved in the present writ petition.
6. The undisputed facts reveal that the petitioner was allotted
leasehold land for establishment of an industrial unit subject to
specific terms and conditions contained in the lease deed dated
20.03.2008. The said lease deed, inter alia, obligated the
petitioner to (i) regularly pay annual lease rent and other charges,
and (ii) establish and continuously run the industrial unit within the
stipulated time. It is also not in dispute that a show cause notice
dated 31.01.2018 was issued to the petitioner pointing out
violations of the aforesaid conditions and granting opportunity to
remedy the breaches. From perusal of the records, it clearly
emerges that the lease came to be cancelled on account of
violation of essential conditions of the lease deed, which was
subsequently upheld by the appellate authorities. The principal
issue for consideration is whether the impugned orders suffer
from any illegality warranting interference under Article 226 of the
Constitution of India.
7. From perusal of the records, it appears that on two counts the
impugned order has been passed. Firstly, the factory of the
petitioner is not being run and has not been in continuous
operation for a period exceeding six months without any sufficient
or justified reason. Such prolonged closure of the unit is clearly in
breach of the conditions of grant of lease, which required the
petitioner not only to establish but also to continuously operate the
industrial unit. Secondly, it is evident that the lessee has not paid
the rent amount since 04.02.2019. The obligation to regularly pay
lease rent and other charges is a fundamental condition of the
lease agreement, and failure to comply with the same constitutes
a material breach justifying cancellation of the lease.
8. During the course of hearing, learned counsel for the petitioner
fairly submitted that the factory has remained closed since
February, 2019 and till date no production work has taken place in
the unit, though the petitioner continues to remain in possession
of the property. It has also been fairly admitted that the rent
amount has not been paid. These admissions go to the root of the
matter and substantiate the findings recorded by the authorities
below.
9. In light of the aforesaid admitted factual position, this Court finds
that the petitioner has failed to comply with the essential
conditions of the lease deed. The contention of the petitioner
regarding arbitrariness or violation of principles of natural justice
does not merit acceptance inasmuch as sufficient opportunity was
granted by issuance of show cause notice and even thereafter by
the First Appellate Authority, which granted additional time to the
petitioner to revive the unit. Despite such opportunity, the
petitioner failed to fulfill the stipulated conditions. This Court is of
the considered view that the authorities have acted strictly in
accordance with the terms of the lease deed and after affording
due opportunity to the petitioner. The impugned orders do not
suffer from any jurisdictional error, illegality, or perversity so as to
warrant interference in exercise of writ jurisdiction.
10. Considering the aforesaid facts and circumstances of the case,
this Court does not find the present to be a fit case to interfere
with the impugned order. The order has rightly been passed by
the competent authorities.
11. Accordingly, the writ petition, being devoid of merits, is hereby
dismissed.
Sd/-
(Amitendra Kishore Prasad)
Shayna Judge
