Karnataka High Court

Karnataka Industrial Areas ... vs M/S.Renuka Fertilizers By Its. ... on 9 February, 2024

Author: S G Pandit

Bench: S G Pandit

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                                                        NC: 2024:KHC-D:3015-DB
                                                            WA No. 100059 of 2020




                       IN THE HIGH COURT OF KARNATAKA, DHARWAD BENCH

                             DATED THIS THE 9TH DAY OF FEBRUARY, 2024

                                                PRESENT
                                THE HON'BLE MR JUSTICE S G PANDIT
                                                   AND
                                THE HON'BLE MR JUSTICE K V ARAVIND
                             WRIT APPEAL NO. 100059 OF 2020 (GM-KIADB)

                      BETWEEN:

                      1.   KARNATAKA INDUSTRIAL AREAS DEVELOPMENT,
                           BOARD, #49, 4TH AND 5TH FLOORS,
                           'EAST WING', KHANIJA BHAVAN,
                           RACE COURSE ROAD, BENGALURU-560001.
                           REP. BY ITS CHIEF EXECUTIVE OFFICER,
                           AND EXECUTIVE MEMBER.

                      2.   DEVELOPMENT OFFICER,
                           KARNATAKA INDUSTRIAL AREA
                           DEVELOPMENT BOARD, ZONAL OFFICE,
                           PLOT NO.7/B-3, KANGRALI INDUSTRIAL AREA,
                           P. B. ROAD, BELAGAVI.
                                                                      ...APPELLANTS
                      (BY SRI. P. N. HATTI, ADVOCATE)

CHANDRASHEKAR         AND:
LAXMAN
KATTIMANI

Digitally signed by
CHANDRASHEKAR
                      M/S. RENUKA FERTILIZERS
LAXMAN KATTIMANI
Date: 2024.02.16
                      BY ITS PROPRIETOR, TAKAPPA P. RATHOD,
12:06:14 +0530
                      AGED ABOUT 35 YEARS, OCC: BUSINESS,
                      C/O. K. T. PATIL, GURAV BUILDING,
                      CHAVAT GALLI, BELAGAVI.
                                                                      ...RESPONDENT

                           THIS WRIT APPEAL IS FILED U/S.4 OF KARNATAKA HIGH
                      COURT ACT, 1961, PRAYING TO, THE ORDER DATED 05.09.2019,
                      PASSED BY THE LEARNED SINGLE JUDGE IN WRIT PETITION
                      NO.102426/2018, MAY KINDLY BE SET ASIDE BY ALLOWING THIS
                      APPEAL WITH COST THROUGH OUT IN THE ENDS OF JUSTICE AND
                      EQUITY.
                            THIS APPEAL, COMING ON FOR PRELIMINARY HEARING, THIS
                      DAY, K V ARAVIND, J., DELIVERED THE FOLLOWING:
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                                  NC: 2024:KHC-D:3015-DB
                                        WA No. 100059 of 2020




                           JUDGMENT

This intra Court appeal challenging the order passed in

W.P.No.102426/2018 dated 05.09.2019.

2. Appellants were respondents and respondent in

this appeal was petitioner in the writ petition.

3. The respondent was allotted industrial plot on

24.02.2011. Lease-cum-sale agreement was executed on

25.06.2011. The KIADB by order dated 06.10.2017 invoking

Section 34B(iii) and 34B(iv) of the Karnataka Industrial

Areas Development Act, 1966 (for short, 'the KIAD Act')

cancelled the allotment and directed to return the possession

of the plot to the Board. The allottee questioning the order of

cancellation dated 07.10.2017 preferred petition under

Article 226 of the Constitution of India in

W.P.No.102426/2018. The learned Single Judge under the

impugned order set aside the cancellation of allotment and

directed the KIADB to reconsider the request of the

petitioner for extension of time to implement the project.

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4. The KIADB being aggrieved against the order of

the learned Single Judge is before this court in this appeal.

5. Heard the learned counsel Sri. Prakashgouda

N.Hatti, for appellants.

6. Learned counsel for the appellant/Board submits

that the cancellation is justified as per Clause 11(vi) of the

terms and conditions to the allotment letter. It is further

submitted that failure to take effective steps would enable

the Board to resume land. The respondent having failed to

implement the project even after lapse of six years,

cancellation of allotment is justified. It is submitted that the

plot was allotted in the year 2011 and production activity

was to start on or before 2013, till date project for which the

land was allotted has not been implemented. Inspite of

sufficient opportunities, no progress has been shown in

implementing the project. It is further submitted that the

notice issued under Section 34B(i) of the KIAD Act dated

16.08.2013 would comply the requirements of Section 34B

(2) of the KIAD ACT. Learned counsel further submits that

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cancellation of allotment and resumption of possession of

premises is strictly in conformity with Section 34 of KIAD

Act. Further submitting that learned Single Judge committed

an error in directing the KIADB to consider the request of the

petitioner for extension of time to implement the project by

setting aside the cancellation of allotment. Learned counsel

further submits that issuance of notice u/sec.34B(ii) of the

KIAD Act is not mandatory.

7. We have heard learned counsel for the appellant

and perused the appeal papers.

8. The allotment of land on 24.02.2011 and

execution of lease-cum-sale agreement dated 25.06.2011 is

not in dispute. The appellants have cancelled the allotment

of plot invoking Section 34B(iii) and (iv) of the KIAD Act.

Learned counsel for the Board submits that notice dated

16.08.2013 issued u/sec.34B(i) of KIAD Act would comply

the requirement of Section 34B(ii) of KIAD Act. Notice

u/sec.34B(i) of KIAD Act is only to remedy the specific

breach within the period stated in the notice. The said notice

does not meet requirements of Section 34B(ii) of KIAD Act.

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Section 34B(ii) of KIAD Act, enables the Board when allottee

fails to remedy the breaches within the time stated in the

notice u/sec.34B(i) of KIAD Act, to issue show-cause notice

as to why the possession of the premises or part thereof

residential tenements should not be resumed. Section

34B(iii) of KIAD Act enables the Board to pass orders after

considering the reply to the show-cause notice by the

allottee and after an opportunity of being heard.

9. During the course of hearing, sufficient time was

granted to the appellant-Board to place notice issued

u/sec.34B(ii) of KIAD Act, if any. No notice issued

u/sec.34B(ii) of KIAD Act is placed for our consideration. On

the contrary, it is contended by the Board notice dated

16.08.2013 issued u/sec.34B(i) of the KIAD Act would meet

the requirement of Section 34B(ii) of the KIAD Act. In the

circumstances, we have to proceed on the basis that no

notice u/sec.34B(ii) is issued by the Board.

10. Similar issue has come up for consideration

before this Court in W.A.No.100134/2021. This Court by

judgment dated 21.06.2023 has held thus:

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"On a careful reading of sub-Section (1) of Section 34B, it is seen that if the Board is of the opinion that an allottee of an industrial plot has violated any of the terms or conditions of allotment or holds it without any authority, it may, without prejudice to Section 25 of the 1966 Act give notice to the said allottee specifying the breaches of the terms and conditions of allotment, calling upon the allottee to remedy such breaches within the time stipulated in the notice. Sub-section (2) of Section 34B would mandate that if the allottee fails to remedy the breaches pointed out under Section 34B (1) within the time stipulated, the Board shall serve a notice upon the allottee to show cause within 30 days from the date of service of notice as to why the industrial plot or residential tenement should not be resumed.

15. In the case on hand, the notice at Annexure-C is issued under Section 34B(1) of the 1966 Act pointing out defects/breaches, providing ninety days time to the petitioner to remedy the breaches/defects.

The notice also states that if no reply is received within 30 days it would be presumed that there is no genuine reason to show cause and further action in terms of the lease agreement would be taken. Pursuant to the said notice, the petitioner submitted his reply seeking extension of time to complete the Project. In case the petitioner/lessee had failed to submit his reply to the notice under Section 34B(1) or remedy the breaches, the Board is required to issue notice under Section 34B(2) of the 1966 Act calling upon the petitioner as to why the possession of the industrial plot should not be taken or

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resumed for non-compliance of the breaches as indicated in the notice at Annexure-E dated 02.09.2020. As stated above, the petitioner had replied to the notice seeking extension of time. But, without issuing a notice as required under Section 34B(2) of the 1966 Act, the respondent-Board proceeded to pass order under Section 34B(3) of the 1966 Act. For non-compliance of the procedure prescribed under Section 34B(2), the impugned resumption order at Annexure-G dated 25.11.2020 requires to be quashed."

11. The facts and circumstances in the present case

are similar to facts in the judgment referred supra. In view

of the judgment in W.A.No.100134/2021, in the absence of

show-cause notice not being issued u/sec.34B(ii) of the KIAD

Act, order of cancellation is not sustainable. The learned

Single Judge is justified in setting aside the cancellation of

allotment. As observed by the learned Single Judge, it is for

the Board to consider the representation for extension of

time to implement the project. Further as observed in

W.A.No.100134/2021, it is open to the respondent-Board to

proceed further from the stage of issuance of notice

u/sec.34B(ii) of the KIAD Act after granting sufficient