M/S Kamalalayaa Real Estates Llp vs The Karnataka Industrial Areas ...
2024 Latest Caselaw 1117 Kant

Karnataka High Court

M/S Kamalalayaa Real Estates Llp vs The Karnataka Industrial Areas ... on 12 January, 2024

Author: M. Nagaprasanna

Bench: M. Nagaprasanna

                            1



Reserved on   : 09-01-2024
Pronounced on : 12-01-2024
                                                      R
       IN THE HIGH COURT OF KARNATAKA AT BENGALURU

          DATED THIS THE 12TH DAY OF JANUARY, 2024

                           BEFORE

         THE HON'BLE MR. JUSTICE M. NAGAPRASANNA

          WRIT PETITION No.279 OF 2024 (GM-KIADB)

BETWEEN:

M/S. KAMALALAYAA REAL ESTATES LLP
A LIMITED LIABILITY PARTNERSHIP FIRM
REGISTERED UNDER THE
LIMITED LIABILITY PARTNERSHIP ACT, 2008
HAVING ITS REGISTERED OFFICE AT PLOT NO. 166,
NEW MLA AND MP COLONY, ROAD NO. 10C
JUBILEE HILLS, HYDERABAD - 500 033.
REPRESENTED BY ITS CEO AND AUTHORIZED SIGNATORY
MR. VENKAT RANJIT PATIBANDLA
                                              ... PETITIONER
(BY SRI. SAMMITH S., ADVOCATE)

AND:

1.   THE KARNATAKA INDUSTRIAL AREAS
     DEVELOPMENT BOARD
     REPRESENTED BY ITS
     CHIEF EXECUTIVE OFFICER AND
     EXECUTIVE MEMBER
     NO. 49, 4TH AND 5TH FLOORS, EAST WING
     KHANIJA BHAVAN, RACE COURSE ROAD
     BENGALURU - 560 001.
                                 2



2.   KARNATAKA UDYOG MITRA
     REPRESENTED BY ITS MANAGING DIRECTOR
     3RD FLOOR, KHANIJA BHAVAN
     RACE COURSE ROAD
     BENGALURU - 560 001.
                                                   ... RESPONDENTS

(BY SRI. K.SHASHIKIRAN SHETTY, AG A/W.,
    SRI. ASHOK N.NAYAK, ADVOCATE FOR C/R1)

     THIS WRIT PETITION IS FILED UNDER ARTICLES 226 AND
227 OF THE CONSTITUTION OF INDIA PRAYING TO GRANT AN
ORDER DECLARING THAT CONDITION NO. 4 IN THE ALLOTMENT
LETTER BEARING NO. KIADB/HO/ALLOT/SECY-1/22906/1262/
2020-21 DATED 05/06/2020 ISSUED BY R1 AS CONTAINED IN
ANNEXURE-D IS ULTRA VIRES THE KIAB ACT, 1966 AND
CONSEQUENTLY QUASH THE CONDITION NO. 4.

     THIS WRIT PETITION HAVING BEEN HEARD AND RESERVED
FOR ORDERS ON 09.01.2024, COMING ON FOR PRONOUNCEMENT
THIS DAY, THE COURT MADE THE FOLLOWING:-


                              ORDER

The petitioner is before this Court seeking a writ in the nature

of declaration to declare Condition No.4 in the allotment letter

issued by the 1st respondent/Karnataka Industrial Areas

Development Board ('the Board' for short) as ultra vires the

Karnataka Industrial Areas Development Act, 1966 ('the Act' for

short) and has sought quashment of impugned notice issued to the

petitioner seeking to cancel the allotment.

2. The facts adumbrated are as follows:-

The petitioner claims to be a limited liability partnership firm

incorporated under the Limited Liability Partnership Act, 2008 and is

in the business of constructing buildings and establishing software

parks. The petitioner desirous of establishment of a software park

in the lands coming under the precincts of the Board, applies for

allotment of 10 acres of land in Plot No.25-P1 of IT Sector, Hi Tech

Defence and Aerospace Park, Bengaluru (hereinafter referred to as

the subject property). The State Level Single Window Clearance

Committee ('the Committee' for short) in terms of its proceedings

dated 24-03-2020 recommends allotment of subject property in

favour of the petitioner. In terms of the recommendation for

allotment, a communication is made by the Board to the petitioner

informing it about the said allotment and directing payment of

requisite initial deposit towards the allotment. The petitioner then

makes payment of 30% of the amount and earnest money deposit

in a total sum of `8.40 crores to the Board. On 01-06-2020 a

Government order is issued confirming the said allotment and the

allotment is confirmed on 05-06-2020 by the Board as well.

3. When things stood thus, the petitioner submits a

representation on 09-06-2020 seeking 5 acres of additional land to

the Committee. The Committee in terms of its proceedings dated

19-09-2020 accepts the representation of the petitioner and

recommends allotment of 3 acres. Further payment is made by the

petitioner towards the said allotment at `1,68,10,000/-. Close to

three years thereafter, the petitioner receives a cancellation notice

on 28-11-2023 from the 1st respondent/Board. The petitioner then

represents against the said cancellation on 07-12-2023. That

having not been acceded to, it has driven the petitioner to this

Court in the subject petition.

4. The matter was heard and reserved on 09-01-2024. The

learned counsel for the petitioner moved a memo for 'being spoken

to' on the score that he was not afforded an opportunity to

distinguish the judgment of the Division Bench, as it was handed

over to his hands at the time of arguments. Therefore, the matter

was listed for 'being spoken to' on 11-01-2024 and the parties were

heard qua the judgment of the Division Bench as well.

5. Heard Sri S. Sammith, learned counsel appearing for the

petitioner and Sri K.Shashikiran Shetty, learned Advocate General

appearing for the 1st respondent.

6. The learned counsel for the petitioner submits that Clause

4 of the allotment letter issued to him on 05-06-2020 is arbitrary as

it permits allotment to be cancelled in the event of breach of the

terms of allotment. He would further contend that a notice in the

least ought to have been issued to the petitioner prior to directing

cancellation of allotment, as the petitioner had paid close to `10

crores for the aforesaid allotments and had a right to be heard at

least, in the matter. He would contend Section 34B of the Act is

unequivocal and without issuing a notice, the allotment cannot be

cancelled. He would submit that there is total breach of the

mandate of law and, therefore, seeks quashment of the impugned

order, while seeking to declare the offending clause to be ultra vires

the Act. The learned counsel for the petitioner would contend that

the judgment of the Division Bench is distinguishable, as two

notices were issued to the appellant before the Division Bench. In

the case at hand, there is no notice issued prior to cancellation. He

would further contend that the Division Bench does not consider the

applicability of Section 34B of the Act to a pre-lease cum agreement

stage. It is, therefore, not a binding precedent is his submission.

He would contend that the judgment of the Division Bench is sub-

silentio qua the said aspect. He would submit that a judgment

rendered by the Division Bench would not become applicable to the

facts of the case.

7. On the other hand, the learned Advocate General

representing the Board while taking this Court through the Act and

documents appended to the petition would seek to demonstrate

that, in the case of cancellation of allotment on the breach of terms

of allotment, no notice need be issued to the allottee. The result of

the breach of allotment is automatic that the allotment would be

cancelled. He would contend that this very clause was called in

question by the other allottees and the Division Bench has upheld

such a clause in the allotment letter. He would contend that Section

34B of the Act would come into operation only after execution of

lease-cum-sale agreement in favour of the allottee for the purpose

of resumption of possession. In the case at hand, it is his emphatic

submission that, there is no possession handed over to the allottee.

Insofar as the right under the allotment is concerned, he would

submit that the allotment letter has a life of two years which has

also expired as on date. Since there is blatant breach by the

petitioner of approximately `17/- to `19/- crores to be paid to the

Board, which is yet to be paid, the learned Advocate General

submits that the petition be dismissed. The learned Advocate

General would further contend, the Division Bench may not have

considered Section 34B of the Act, but the order of the learned

Single Judge is only on the applicability of Section 34B of the Act to

a pre-lease cum sale agreement stage. The Division Bench affirms

the order of the learned Single Judge. Therefore, the petitioner

cannot now contend that the judgment of the Division Bench is not

binding upon this Court, which interprets verbatim similar contract

of allotment in favour of an allottee.

8. The learned counsel for the petitioner would take this Court

through the rejoinder and submit that the petitioner is ready and

willing to pay the entire amount, if six months time is granted in a

staggered manner. He would submit that when the petitioner is

ready and willing to pay, the act of the Board is arbitrary. Both the

learned counsel for the petitioner and the learned Advocate General

have placed reliance upon several judgments which would bear

consideration qua their relevance in the course of the order.

9. I have given my anxious consideration to the submissions

made by the respective learned counsel and have perused the

material on record.

10. The afore-narrated facts are not in dispute. The

petitioner being desirous of setting up of an industry in the subject

property makes an application to the Committee. The Committee in

terms of its proceedings dated 24-03-2020 clears the

application/project and recommends for grant of land to the Board.

The Government then issues a Government order on 01-06-2020

recommending allotment of land in favour of the petitioner. The

Government Order insofar as it is relevant reads as follows:

"GOVERNMENT ORDER NO. CI 128 SPI 2020(E), BENGALURU DATED 01.06.2020

Government is pleased to accord in-principle approval to the investment proposal of M/s. Kamalalayaa Real Estates LLP to establish "IT/ITES/IT Park", with an investment of Rs.401 crore, generating employment to about 111 persons at plot No.25-P1 in IT Park area of Hi-tech, Defence and Aerospace Park, Bengaluru with the following infrastructure assistances, incentives and concessions:

       Land                   KIADB To Allot 10 Acres Of Land
                              At Plot No.25-P1 In IT Park area
                              of    Hi-tech,   Defence     and
                              Aerospace Park, Bengaluru.
       Water                  1200 KLPD from KIADB
       Power                  10,000 KVA from BESCOM
       Incentives and         As Per IT Policy of the
       Concessions            State"

The life of the Government Order as approved was valid for a period

of 2 years from the date of its issue. It is found in the Government

Order itself and reads as follows:

"This approval is valid for a period of two years from the date of issue of this Government Order."

(Emphasis supplied)

Therefore, the Government Order which recommended allotment of

10 acres of land had its life up to 31-05-2022.

11. Pursuant to the Government order, the Board issues a

communication to the petitioner demanding remittance of 30% of

the amount as initial deposit and EMD at `1 lakh. The

communication dated 22-05-2020 reads as follows:

"We are very happy to inform you that, your project for establishing a unit for "IT/ITES/IT Park" has been approved by the 119th SLSWCC Meeting held on 24.03.2020 and recommended KIADB to allot 10-00 acres of land in Plot no: 25-P1 of Hi-tech, Defence and Aerospace Park, Bengaluru District in your favour. The tentative allotment rate is Rs.2,80,00,000/- per acre.

It is requested to apply online at www.kiadb.in and fill the complete details in the KIADB online application form.

Further, you are requested to remit a sum of Rs.8,40,00,000/- towards 30% initial deposit and EMD Rs. 1,00,000/- within 30 days, so as to enable this office to allot land. If you fail to apply to KIADB and remit the initial cost within the deadline indicated, you will not have any claim on the plot indicated above."

(Emphasis added)

The petitioner makes the payment. After receipt of payment the

Board issues an allotment letter on 05-06-2020. The allotment letter

reads as follows:

"No.KIADB/HO/Secy-1/Allot/22906/1262/20-21 Date:05-06-2020 M/s. Kamalalaya Real Estates LLP Plot No: 166, New MLA and MP Colony Road No. 10C, Jubilee Hills, Hyderabad - 500033.

ALLOTMENT LETTER Sir,

Sub: Allotment of 10-00 acres of land in Plot No. 25-P1 of Hi-tech, Defence and Aerospace Park, (IT Sector) Bengaluru urban District.

Ref: 1. 119th SLSWCC meeting dtd. 24.03.2020.

2. Your letter dtd: 27.05.2020.

****** In pursuance of the approval given by the 119th SLSWCC meeting held on 24.03.2020, you have been allotted 10-00 acres of land in Plot. No.25-P1 of Hi-Tech, Defence and Aerospace Park, (IT Sector) Bengaluru urban District for setting up an industry for "IT/ITES/IT Park/IT City" subject to the terms and conditions indicated in the Annexe-A appended hereto and also the terms and conditions mentioned hereafter.

1. The allotment of land is on lease cum sale basis for a period of 99 years. The lease is liable to be cancelled automatically in case the land is not utilized within a period of three years in case MSME, large projects or five years in cases of mega, ultra mega, super mega projects as defined in the industrial policy or the land is not utilized within a specified period approved by DLSWCC/SLSWCC/ SHLCC/Allotment Committee without obtaining valid extensions from the concerned investment approving committees detailed in (c)(iii) of Annexe 'A'.

2. The tentative premium payable for allotment shall be determined by the Board and intimated to you due course. However, for the purpose of this allotment, the tentative premium had fixed at Rs. 2,80,00,000/- per acre.

3. (a) The tentative premium of the land payable /paid adjusted is as follows:

i) A sum of Rs. 8,41,00,000/- paid vide Rt.No.48285 dtd.29.05.2020, and has been adjusted towards 30% the tentative premium of land and EMD.

ii) A sum of RS.19,59,50,000/- being the 70% balance tentative premium of land shall be paid within 90 days from the date of issue of this letter i.e., on or before 04.06.2020.

(b) In the event of your furnishing letter of commitment from KSFC/KSIIDC/Reserve Bank of India approved Financial Institutions/Corporations/Companies agreeing to pay the premium indicated at 3(a)(ii) directly to the Board (applicable only to Medium, Small and Micro Enterprises) the allotment will be confirmed and documentation will be permitted subject to payment of interest @ 10.00% per annum on amount due from the date of handing over possession of land to the date of payment which should be made within 90 days from the date of execution of lease agreement.

(c) You should pay lease rent of Rs.1000/- per acre/per annum.

(d) You should pay maintenance charges as may be fixed by the Board from time to time.

(e) Interest at 10.00% per annum shall be levied in case the lease rents are not paid within one month from the date on which the lease rents fall due every year.

4(a) In case of your, failure to pay the amount mentioned at Para 3(a)(ii) before the expiry of the time stipulated therein, this offer of allotment stands automatically cancelled and the Earnest Money Deposit and 20% of the amount paid by you towards premium stands automatically forfeited.

4(b) If the balance premium is not paid within 90 days from the date of execution of lease agreement in respect of cases mentioned at Para 3(b), the plot would be resumed on expiry of the stipulated without issuing any fresh notice.

5. Soon after receipt of 100% premium and on your acceptance of all the terms accused conditions indicated herein before and also those mentioned hereinafter, the possession of land will be handed over within 30 days from the date of payment. At the time of taking over possession,

you should produce the original receipts, issued for the payments made, to the Engineer in charge of the area.

6. On taking possession of land, you shall adhere to the time schedule indicated in the Annexe-A.

7. Your failure to take possession of land within 30 days from the date of payment of the premium shall result in cancellation of allotment and 10% of the amount paid towards premium and E.M.D shall stand forfeited.

8. The Board may accept voluntary surrender of plot subject to levy of penalty at 15% of the allotment cost paid by you.

           ...                   ...                  ..."

                                            (Emphasis added)

Clause 4(a) in the said allotment letter makes it clear that in case

the allottee/petitioner fails to remit the entire amount in terms of

para 3(a)(ii) which was the remittance of `19,59,50,000/- within 90

days from the date of issuance of allotment letter, the allotment

would stand automatically cancelled and the earnest money deposit

would get automatically forfeited. The petitioner accepts the

allotment letter and the conditions imposed therein but, fails to

make the payment within 90 days.

12. The petitioner then would submit another application

before the Committee seeking additional allotment of 5 acres of land

in the same subject property. The Committee accepts the request

and recommends allotment of additional 3 acres. Accordingly, a

Government Order comes to be issued on 19-09-2020. It reads as

follows:

"Hence the following order:

GOVERNMENT ORDER NO. CI 128 SPI 2020(E), BENGALURU, DATED 19.09.2020

Government is pleased to approve for allotment of additional 3 acres of land at Plot No.25-P1 in IT Park area of Hi-tech, Defence and Aerospace Park to M/s. Kamalalayaa Real Estates LLP."

Though the Government had recommended for 3 acres of land, the

respondent/KIADB allotted only 2 acres of land which was said to be

available in the said plot. The petitioner in terms of the said

additional allotment, pays a sum of `1.68 crores being 30% of the

allotment and `10,000/- as EMD. Three years passed by. The

petitioner did not comply the terms of allotment of either 10 acres

or 2 acres. This led to issuance of the impugned communication on

28-11-2023. The said communication reads as follows:

"No.KIADB/HO/Allot/22906/15187/2023-24 Date:28.11.2023.

M/s. Kamalalaya Real Estates LLP,

Plot No. 166, New MLA and MP Colony, Road No. 10-C, Jubilee Hills, Hyderabad-500 033.

Sir,

Sub: Cancellation of allotment of 10.00 acres land in Plot No. 25-P1 of Hi-Tech, Defence & Aerospace Park (IT Sector), Bengaluru.

Ref: This office Allotment letter No. KIADB/ HO/Secy-

1/Allot/22906/1262/2020-21, dated 05.06.2020

-o0o-

This has reference to the above,

As you are aware, an extent of 10.00 acres land in Plot No. 25-P1 of Hi- Tech, Defence & Aerospace Park (IT Sector), Bengaluru has been allotted in your favour vide this office allotment letter dated 05.06.2020 cited at ref. above, for establishment of "IT/ITES/IT Park / IT City".

As per the time schedule prescribed in the allotment letter, you were required to remit a sum of Rs. 19,59,50,000/- being the balance 70% tentative cost of land on or before 04.06.2020. Further, you have remitted a sum of Rs. 1,68,10,000/- vide receipt No. 0049985 dated 30.01.2021 and No 0050347 dated 16.03.2021,

Para 4(a) of the allotment letter, it is indicated that, the allotment stands automatically cancelled if you fail to remit the balance tentative cost of land within the stipulated time.

As on date, a sum of Rs. 17,91,40,000/- is due towards the balance tentative cost of land. In spite of sufficient time given, you have failed to remit the tentative cost of land to the Board so far. This act on your part shows your lack of earnestness and interest in taking up of the project and also violation of the terms and conditions of allotment.

In view of the above, and due to non-payment of balance tentative cost of land of Rs. 17,91,40,000/- the allotment of 10.00 acres land in Plot No. 25-P1 of Hi-Tech, Defence & Aerospace Park (IT Sector), Bengaluru is hereby cancelled.

You are hereby requested to surrender original allotment letter and original receipts of payments made towards allotment of land, to enable this office to refund the amount deposited by you after effecting necessary forfeiture."

(Emphasis added)

It is an admitted fact that in terms of the communication the

petitioner is in due close to `17/- to `19/- crores to be paid to the

Board as on date. The petitioner, after accepting the letter of

allotment and conditions of allotment, now seeks to turn around and

challenge Clause 4(a) supra, which gives a right to the Board to

cancel the allotment unilaterally in the event of default in payment

of the entire amount. The petitioner, undoubtedly, is in default of

payment to the tune of `17/- to `19/- crores even as on today.

13. The learned counsel for the petitioner has strenuously

contended that an allottee has a right to be heard by issuance of a

show cause notice in the least. The submission does not merit

acceptance, particularly in the light of the order passed by the

learned single Judge in the case of M/S IMPERIAL CONSTRAFIN

PRIVATE LIMITED v. CHIEF EXECUTIVE OFFICER AND

EXECUTIVE MEMBER, KIADB1 wherein the co-ordinate Bench of

this Court rejects the petition on the following grounds:

".... .... ....

7. Shri. Vijaykumar is right in his submission that failure to make payment as required in clause 3(a)(ii) before the time stipulated therein entails automatic cancellation. This happens by default on the part of the petitioner, which occurred on December 5, 2017. However, cancellation of allotment has been communicated in July 2019. Thus, it is clear that petitioner has defaulted in making the payment.

8. Since allotment has stood automatically cancelled, the contention with regard to the signature by the CEO and the issuance of notice under Section 34B of the Act are irrelevant. Approval of projects by High Level Clearance Committee is accorded to entrepreneurs to provide facilities under one roof. By petitioner's default, some other prospective entrepreneur has lost his chance to set-up an Industry. Such defaults will have cascading effect not only on the entrepreneurs but also on the Industrial development in the State."

(Emphasis supplied)

The order of the learned single Judge is tossed by the petitioner

therein before the Division Bench. The Division Bench while

affirming the order of the learned single Judge in the said case of

W.P.No.33257 of 2019 disposed on 17-03-2021

M/S IMPERIAL CONSTRAFIN PRIVATE LIMITED2, which was a

challenge to the clause in allotment that if entire payment is not

made within 90 days, without even issuance of notice the allotment

can be cancelled, the Division Bench has held as follows:

"2. The appellant submitted an online application for approval of his project. The 1st respondent vide communication dated 28.4.2017 allotted industrial plot No.12P-IC measuring 4.09 acres in Hitech Defence Aero Space ParK, Bengaluru, at a tentative allotment rate of Rs.250 lakhs per acre. The appellant deposited 30% of the allotment amount within 30 days from the date of allotment. The appellant failed to deposit balance premium amount of Rs.8,57,50,000/- within a period of 90 days from the date of allotment. The 1st respondent sent a communication letter dated 12.7.2019 intimating the appellant in regard to cancellation of allotment.

3. The appellant questioned the said communication letter dated 12.7.2019 issued by the 1st respondent before the learned Single Judge. The learned Single Judge having examined clause 3(a)(ii) of the allotment letter held that as per the said clause, failure to make payment of balance premium amount within 90 days from the date of allotment would entail automatic cancellation. The learned Single Judge negatived the contention raised by the appellant herein in regard to authority of the Chief Executive Officer of the 2nd respondent. The learned Single Judge was of the view that since clause 3(a)(ii) contemplates automatic cancellation and therefore, the appellant cannot raise objection that the cancellation was done by the Chief Executive Officer and not by the Board. On this set of reasoning, the learned Single Judge has dismissed the writ petition.

W.A.No.533 of 2021 decided on 19th August 2021

4. The learned counsel appearing for the appellant would vehemently argue and contend before this Court that no notice was issued by 1st respondent intimating the cancellation of allotment and therefore, the cancellation of allotment is arbitrary and warrants interference at the hands of this Court. Further, placing reliance on the judgment rendered by this Court in the case of Abhaya Technologies Private Limited, Bengaluru .vs. State of Karnataka and others1, the learned counsel appearing for the appellant would contend that it is only the Board which is vested with the power and that this Court in an identical case has set aside the impugned communication sent by the CEO and the matter was remitted back to the Board for fresh consideration. The learned counsel would further submit to this Court that the appellant is made to suffer on account of laxness on the part of respondent No.4-Bank as well as the 2nd respondent-Board.

5. Per contra, learned counsel appearing for respondents 1 and 2 would however submit that 2nd respondent has allotted the site to a third party and therefore, since there is a breach on the part of the appellant in not depositing the balance premium amount within the stipulated time, no relief can be granted to the appellant herein.

6. Perused the order under challenge. It would be useful for this Court to refer to the clauses in the allotment letter which reads as under:

"3(a) The premium of the land shall be paid as follows:

i) A Sum of Rs. NIL being the balance 30% of the tentative premium of land shall be paid within 30 days from the date of issue of this letter ie on or before NIL.

ii) A sum of Rs.8,57,50,000-00 being the balance tentative premium of land shall be paid within 90 days

from the date of issue of this letter ie on or before 05.12.2017.

b) In the event of your furnishing letter of commitment from KSFC/KSIIDC/Reserve Bank of India approved Financial Institutions/Corporations/ Companies agreeing to pay the premium indicated at 3(a)(2) directly to the Board(applicable only to Medium, Small and Micro Enterprises) the allotment will be confirmed and documentation will be permitted subject to payment of Interest @ 10% per annum on amount due from the date of handing over possession of land to the date of payment which should be made within 180 days from the date of execution of lease agreement.

c) You should pay lease rent of Rs.1000/- per acre/per annum.

d) You should pay maintenance charges as may be fixed by the Board from time to time.

e) Interest at 10% per annum shall be levied in case the lease rents are not paid within one month from the date on which the lease rents fall due every year.

4(a) In case of your failure to pay the amount mentioned at Para 3(a)(2) before the expiry of the time stipulated therein, this offer of allotment stands automatically cancelled and the Earnest Money Deposit and 20% of the amount paid by you towards premium stands automatically forfeited.

4(b) If the balance premium is not paid within 90 days from the date of execution of lease agreement in respect of cases mentioned at Para3(b), the plot would be resumed on expiry of the time stipulated without issuing any fresh notice."

7. On perusal of 4(a) of the allotment letter, it is quite evident that on failure to pay the balance premium amount, the offer of allotment stands automatically cancelled and under clause 4(b), the plot would automatically stand restored with the 2nd respondent- Board. The above said two clauses would clearly indicate that in the event of breach, the allotment stands automatically cancelled. Therefore, the contention of the appellant that he was not notified before communicating the cancellation cannot be acceded to.

8. We have also examined the statement of objections filed by respondents 1 and 2. The appellant was required to pay the balance tentative premium on 5.12.2017. The 2nd respondent even after expiry of period kept on communicating to the 4th respondent-Bank to deposit the balance premium of Rs.8,84,51,712/- along with interest at the rate of 12%. The first communication was sent on 28.4.2017. The 2nd communication was sent on 2.3.2018. If 4th respondent-Bank was insisting for NOC from the 2nd respondent-Board for release of the amount, then it was incumbent on the part of the appellant to negotiate and convince his banker to release the amount. The appellant cannot expect an authority to issue NOC before receiving the balance premium. Therefore, we are of the view that no fault can be found with respondents 1 and 2. The learned Single Judge has dealt with the matter and has rightly dismissed the writ petition. This Court has taken note of the fact that the authorities were quite lenient and had extended time even after expiry of the statutory period prescribed under clause 3(a)(ii) of the allotment letter. The appellant was not able to deposit the balance premium amount even in 2018 which is evident from the two communications dated 28.4.2017 and 2.3.2018. Further, this Court has also taken note of the fact that respondents 1 and 2 have allotted the

site to a 3rd party after cancellation of allotment in favour of the appellant."

(Emphasis supplied)

The Division Bench considered the very submission that it would

give an arbitrary power to the Board to cancel the allotment in the

event there is non-compliance of payment within 90 days. The

Division Bench affirms the order of the learned single Judge which

had rejected such a contention of hearing before cancellation of

allotment in the event of breach of allotment. Therefore, the

submission of the learned counsel for the petitioner that a show

cause notice ought to have been issued tumbles down.

14. The other submission of the learned counsel for the

petitioner is that Section 34B of Act has been violated, as prior to

resumption of possession a notice ought to have been issued to the

allottee and, therefore, submits that its breach would lead to

obliteration of the order. This again is sans acceptance. Section 34B

reads as follows:

"34-B. Resumption of the possession of premises including the residential tenements on breach of terms

and conditions of lease or holding without authority.--

(1) Where the Board is of the opinion that an allottee of any premises or part thereof or residential tenement in an industrial area or industrial estate has violated any of the terms or conditions of allotment or holds it without any authority it may, without prejudice to section 25 give notice to such allottee and Banks or Financial Institutions, in whose favour the Board has permitted the mortgage or leasehold rights of the premises, or residential tenement specifying the breaches of the terms and conditions of the allotment calling upon the allottee to remedy such breaches within a time stipulated in the notice.

(2) If the allottee fails to remedy the breaches within the time so stipulated, the Board shall serve a notice upon the allottee under intimation to such Bank or Financial Institutions to show cause within thirty days from the date of service of notice, why the possession of the premises or part thereof or residential tenement should not be resumed.

(3) After considering the cause, if any, shown by the allottee and after giving him an opportunity of being heard, the Board may pass such orders, as it deems fit.

(4) Where the Board passes an order under sub-

section (3), for resuming possession of the premises or part thereof or residential tenement in the industrial area it may, by notice in writing, order any allottee to surrender and deliver possession thereof to the Board or any person duly authorised in this behalf within the date specified in the notice.

(5) If any allottee refuses to surrender or deliver the possession of the premises or part thereof or residential tenement within the time specified in the notice, the Board or any officer authorised by it in this behalf may resume the possession of the premises or part thereof or residential tenement free from all

encumbrances and for that purpose may use force as may be necessary."

(Emphasis supplied)

Section 34B mandates resumption of possession from the hands of

an allottee. Possession would be handed over to the allottee only

after execution of a lease-cum-sale agreement and issuance of

possession certificate by the Board. Those events are yet to come

about, as the petitioner is yet to make good the entire amount in

terms of allotment letter itself. The entire Section 34B unequivocally

depicts that if the allottee fails to adhere to the conditions of lease

hold rights, possession can be resumed by the Board. Sub-sections

(4) and (5) make it clear that the allottee shall deliver possession

thereafter to the Board within the date specified in the notice issued

under Section 34B. Therefore, Section 34B operates in a different

circumstance. It would kick only in cases of physical possession

being handed over by the Board to the allottee on certain terms

and conditions and the breach of those terms and conditions in the

lease-cum-sale agreement is violated, which would lead to

revocation of proceedings under Section 34B. Therefore, the

submission that Section 34B ought to have been followed is a

figment of imagination of the learned counsel for the petitioner and

holds no water.

15. Insofar as the judgments relied on by the learned counsel

for the petitioner, they are all distinguishable on the facts obtaining

in the cases therein without much ado. They were all cases where

lease-cum-sale agreements had already been executed in favour of

those allottees and, therefore, the co-ordinate Benches held that

show cause notice prior to resumption of possession was imperative.

Even in the case of M/S NANJUNDESHWARA TECH PARK v. THE

KARNATAKA INDUSTRIAL AREAS DEVELOPMENT BOARD3, the

respondent Board was directed to consider the representation of the

petitioner in terms of Section 34B of the Act. Therefore, the

judgments so relied on by the learned counsel for the petitioner

would not render any assistance in the light of two factors - one

being, the facts obtaining in those cases and the other being, the

judgment of the Division Bench which upholds the clause in the

allotment letter whereby permitting cancellation of allotment

without even issuance of a notice. Therefore, the contentions so

W.P.No.13304 of 2020 decided on 3-11-2023

advanced by the petitioner are unacceptable. The unacceptability

would lead to rejection of the petition.

16. The petition is preferred qua allotment of 10 acres.

Therefore, the petition is considered qua allotment of 10 acres only.

The reminder of 2 acres that is allotted is not the subject matter of

the petition and no finding is rendered qua the additional allotment

made by the Board.

17. For the aforesaid reasons, I pass the following order:

ORDER

(i) Writ Petition is dismissed.

(ii) It is made clear that this Court has not pronounced upon additional allotment of 2 acres by the Board and the order is restricted to the allotment of 10 acres only.

(iii) The Board shall within 4 weeks from the date of receipt of a copy of this order refund the amount deposited by the petitioner qua first allotment concerning 10 acres.

Sd/-

JUDGE bkp/CT:SS