Arihant Industries vs The Principal Secretary To
2024 Latest Caselaw 12946 Kant

Karnataka High Court

Arihant Industries vs The Principal Secretary To on 10 June, 2024

                            -1-




     IN THE HIGH COURT OF KARNATAKA, DHARWAD BENCH

           DATED THIS THE 10TH DAY OF JUNE, 2024

                         BEFORE

     THE HON'BLE MR JUSTICE SACHIN SHANKAR MAGADUM

       WRIT PETITION NO.107341 OF 2014 (GM-KIADB)

BETWEEN:
ARIHANT INDUSTRIES
A PROP CONCERN REP/BY ITS PROPRIETOR,
MR. SUNNY AMARNATH JAIN,
AGE: 39 YEARS, OCC: BUSINESS,
R/O. PLOT NO. 289, SECTOR 25,
PRADHIKARAN NIGADI PUNE-44
                                              ...PETITIONER
(BY SRI. PRAKASH K. JAWALKAR, ADVOCATE)
AND:
1. THE PRINCIPAL SECRETARY TO
     GOVERNMENT OF KARNATAKA
     (COMMERCE & INDUSTRIES DEPARTMENT)
     & EX-OFFICIO CHAIRMAN,
     KARNATAKA INDUSTRIAL AREAS
     DEVELOPMENT BOARD,
     M.S. BUILDING, AMBEDKAR VEEDHI,
     BANGALORE-01.

2.   THE CHIEF EXECUTIVE OFFICER
     AND EXECUTIVE MEMBER,
     KARNATAKA INDUSTRIAL AREAS
     DEVELOPMENT BOARD,
     NO.14/3, 2ND FLOOR,
     RASTOTHANA PARISHAT BUILDING,
     NRUPATHUNGA ROAD,
     BANGALORE-560 002.

3.   THE DEVELOPMENT OFFICER,
     KIADB ZONAL OFFICE,
     LAKKAMMANAHALLI INDUSTRIAL AREA,
     PONA BANGALORE ROAD,
                                  -2-




     DHARWAD-580004.

4.   THE ASSISTANT SECRETARY,
     KARNATAKA INDUSTRIAL AREAS
     DEVELOPMENT BOARD,
     LAKKAMMANAHALLI INDUSTRIAL AREA,
     POONA BANGALORE ROAD,
     DHARWAD-580 004.

5.   MS/ R.R. ENTERPRISES,
     A PARTNERSHIP FIRM
     R/BY ITS PARTNERS
     SMT. ROOPA B.G. AND SMT. RAJESHWARI S.G.,
     D2-504 , SWAPNANAGARI, UDYAMNAGAR,
     PIMPRI, PUNE-411018.
                                              ...RESPONDENTS
(BY SRI. V.S. KALASURMATH, HCGP FOR R1;
    SRI. P.N. HATTI, ADV. FOR R2-R4;
   SRI. S.D. RATHOD & SRI. P.S. KADADEVAR, ADVOCATES FOR R5)

         THIS WRIT PETITION IS FILED UNDER ARTICLES 226 AND 227
OF THE CONSTITUTION OF INDIA PRAYING TO ISSUE A WRIT/
ORDER/ DIRECTION IN THE NATURE OF A WRIT CERTIORARI
QUASHING          THE         IMPUGNED       ORDER        BEARING
NO.KIADB/DWD/AS/991/14-15        DATED    17-07-2014    PASSED   BY
RESPONDENT NO.4 CLAIMING TO BE ON BEHALF OF RESPONDENTS
NO.1 TO 3 AGAINST THE PETITIONER VIDE ANNEXURE-K TO THIS
WRIT PETITION; ISSUE A WRIT/ORDER/DIRECTION IN THE NATURE
OF   A    WRIT   CERTIORARI    QUASHING   THE   LEASE   CUM   SALE
AGREEMENT DATED 19-09-2011 ANNEXURE-G AND SALE DEED
DATED 01-04-2013 ANNEXURE-H EXECUTED BY RESPONDENT NO.4
CLAIMING TO BE ON BEHALF OF RESPONDENTS NO.1 TO 3 IN
FAVOUR OF RESPONDENT NO.5.


         THIS PETITION HAVING BEEN HEARD AND RESERVED FOR
JUDGMENT ON 06.06.2024, COMING ON FOR PRONOUNCEMENT OF
JUDGMENT THIS DAY, THE COURT DELIVERED THE FOLLOWING:
                                   -3-




                              ORDER

1. This writ petition is filed under Articles 226 and 227 of the

Constitution of India, wherein the petitioner seeks

quashing of the cancellation order regarding the allotment

of industrial plot No.553D and requests the setting aside

of the lease-cum-sale agreement and the sale deed

executed in favor of Respondent No. 5. The petitioner

argues that the Karnataka Industrial Areas Development

Board (KIADB) and other respondents acted arbitrarily and

violated procedural norms in the cancellation of the

allotment and subsequent transactions.

FACTS OF THE CASE:

2. The petitioner, with an intention to establish an industry,

applied for an industrial site and made an initial payment

of ₹2,41,000/- to KIADB. Following this payment, KIADB

issued an allotment letter on 15.01.2009 for plot No.

553P. To secure the plot, the petitioner deposited the

balance amount of ₹9,69,800/- on the same day, which

KIADB acknowledged by issuing a receipt on 19.01.2009.

Subsequently, KIADB provided a possession certificate for

Plot No.553D, along with a sketch clearly indicating the

description of Plot No.553D. A lease agreement for Plot

No.553D in Survey No.70 was then executed on

11.11.2010.

3. However, complications arose when Respondents 2 to 3

allotted Plot No.553D to Respondent No.5 and executed a

lease-cum-sale agreement on 19.09.2011. This

agreement, strangely, pertained to Plot No.553D but in

Survey No.349, introducing significant discrepancies.

Despite the lease-cum-sale agreement with Respondent

No.5, KIADB issued a notice on 17.07.2014 to the

petitioner, alleging violation of Clause 14 of the lease-

cum-sale agreement. Further complicating matters, on

17.02.2020, the respondents introduced a new contention,

claiming that the petitioner was originally allotted Plot

No.553E, not 553D.

4. Heard the counsels on record.

5. Before I proceed further, it becomes necessary to examine

the contents of the impugned resumption notice as per

Annexure-K. Respondent No.5 has issued impugned notice

alleging violation of terms and conditions of lease

agreement executed in favour of petitioner on 11.11.2010

in respect of plot No.553D, measuring 4047 sq. meters. In

the said resumption notice, respondent No.4 has alleged

that the petitioner has not submitted building drawings for

approval and has also not completed civil construction of

the factory building. This Court deems it fit to refer to the

relevant portion of the resumption notice, which reads as

under:

"In spite of the time frame prescribed by the lease agreement and the extension/s of time granted you have committed the breaches of the agreement as detailed below:-

a) You have not submitted the building drawings for approval.

b) You have not completed the civil construction of the factory building.

c) You have not commenced the industrial production for the purpose for which the land was leased.

d) The utilization of the land for the construction of buildings and other purposes connected to industrial project works out vacant % of the extent of the land handed over to you. The Percentage of the utilization is very much on the lower side when compared to the details furnished by you in the project report and application for allotment of land.

e) The buildings and structures put up by you are not in accordance with the building drawings

approved by the KIADB/building regulations prescribed by the KIADB.

Apart from the aforementioned specific breaches, you have not evinced any interest in implementing industrial project. As a result of your inaction, the said plot has been lying idle/the land has not been put to use properly since 09/04/2010 the day on which its possession was handed over to you.

As required under Clause-14 of the said lease agreement, you were given 120 days time to remedy the breach of Governments. But you have failed to remedy the breach within the said time which expired on 08.04.2012."

6. To substantiate breach, respondent No.4 has to

demonstrate that the petitioner was delivered Plot

No.553D, while the allotment letter vide Annexure-B

reveals that petitioner is allotted with Plot No.553P. The

petitioner in compliance of allotment letter, has deposited

the entire amount of ₹12,00,000/- on 19.01.2001, which

is evident from Annexure-D. The respondents, however,

claim that they have delivered Plot No.553D, which is

evident from Annexure-E. The possession certificate is

accompanied with a sketch.

7. During pendency of the petition, the respondents have

clearly introduced a new case. A map is furnished before

this Court along with an affidavit sworn to by the

Development Officer indicating that petitioner is allotted

Plot No.553E and not 553D. The subsequent introduction

of a new contention about plot number reflects lack of

consistency and clarity in KIADB's communication and

decisions. This further complicates petitioner's possession

and demonstrates administrative inefficiency. The

respondents introduction of a new claim that petitioner

was allotted Plot No.553E reflects a significant troubling

inconsistency and introduction of a new case by the

respondents leads to serious dent to the claim made by

the respondent-authorities that the petitioner has failed to

show keen interest in implementing industrial project and

therefore, the respondents are justified in canceling the

allotment and ordering for restitution of the plot.

8. Respondents' claim that petitioner was allotted Plot

No.553E is found to be opposite and contradicts their own

documents commencing from allotment of letter till

executing lease-cum-sale agreement.

9. The possession certificate dated 09.04.2010 as per

Annexure-E, which is accompanied by a sketch, clearly

substantiates that the petitioner was allotted Plot

No.553D. The petitioner's claim that he was allotted Plot

No.553D further stands strengthened in view of lease-

cum-sale agreement executed in fovour of petitioner on

11.11.2010 pertaining to plot No.553D as per Annexure-F.

10. The resumption notice preceded by a show-cause notice as

per Annexure-J is clearly tainted with malafides and few

significant details have to be looked into to elaborate the

highhandedness of respondent-authority and strong

reasons to cancel the allotment made in favour of

petitioner on 24.01.2008. The documents executed in

favour of respondent No.5 would be relevant and the dates

relating to issuance of show-cause notice and resumption

notice, in the context of lease-cum-sale agreement, and

the sale deed executed in favour of respondent No.5 would

throw lot of light reflecting strong bias against petitioner

and the reason for bias.

11. The respondent-Board has executed lease-cum-sale

agreement dated 11.11.2010 and this pertains to Plot

No.553D, situated in Survey No.70. Respondent/Board

lease-cum-sale on 19.09.2011 pertaining to Plot No.553D

situated in Survey No.349 in favour of respondent No.5.

This clearly demonstrates that lease-cum-sale executed in

favour of respondent No.5 is clearly during subsistence of

the agreement in favour of petitioner. Interestingly, this

Plot No.553D indicated in lease-cum-sale executed in

favour of respondent No.5 pertains to Survey No.349.

Clause 23 of the lease-cum-sale agreement executed by

the authorities in favour of respondent No.5 clearly

contemplates that the sale deed has to be executed at the

end of ten years, as referred to in clause 1(C) or the

extended period, if any. Clause 23 would be relevant and

same is extracted as under:

"23) The Lessor shall sell the schedule property to the lessee at the end of TEN years referred to in Clause (C) or the extended period, if any, if the Lessee has preformed all the conditions herein contained and committed no breach thereof. All attendant expenses in connection with such sale as stamps duty, registration charges etc., shall be borne by the Lessee."

12. In gross violation of Clause 23, respondent No.4 has

executed sale deed in favour of respondent No.5 on

01.04.2013, which is within two years and in gross

violation of the condition incorporated in the lease-cum-

sale agreement vide Annexure-G.

- 10 -

13. Interestingly, in the sale deed, survey number is changed

to 70. Though in lease-cum-sale, Plot No.553D is shown to

be situated in Survey No.349, however in sale deed, the

survey number is rectified as 70. This is one more relevant

aspect which goes to the root of the case which also

cannot be ignored. The lease-cum-sale executed by

respondent No.4 and consequent sale deed in favour of

respondent No.5 is without canceling the allotment in

favour of the petitioner. The show-cause notice issued by

respondent No.4 as per Annexure-J is dated 29.05.2013.

The cancellation of allotment of Plot No.553D is sought

after executing sale deed in favour of respondent No.5.

The KIADB has executed sale deed in favour of respondent

No.5 within two years of execution of lease-cum-sale

agreement, which is contrary to the terms of a ten year

period before conversion of lease into sale.

14. As on 19.09.201, when the lease-cum-sale agreement was

executed in favour of respondent No.5, the allotment of

plot No.553D to the petitioner had not been formally

cancelled. This indicates the blatant disregard for

procedural fairness and failure to follow due process in

managing allotment and cancellation.

- 11 -

15. The stand of respondents 2 to 4 that the petitioner was

never allotted Plot No.553D clearly falsifies their case of

breach of conditions enumerated in lease-cum-sale

agreement. If respondents had not delivered Plot

No.553D, the notice dated 29.05.2013 issued by

respondent No.4 indicating that the petitioner has not

implemented the project by setting up an industry in Plot

No.553D clearly contradicts their new claim set up during

the pendency of the petition.

16. The actions of the respondents, particularly the

contradictory statements and the arbitrary cancellation of

the allotment of Plot No.553D to the petitioner, while

simultaneously executing a lease-cum-sale agreement

with Respondent No.5, reflect bias and arbitrariness. The

respondents have not substantiated the alleged breach of

terms by the petitioner, making their actions legally

indefensible. The respondents' conduct in this matter

violates the rules and regulations related to the allotment

of industrial plots, demonstrating a clear case of

administrative malfeasance.

- 12 -

17. The petitioner's right to the allotted industrial plot has

been unjustly compromised due to the respondents'

contradictory actions. The possession certificate, payment

acknowledgments, and initial allotment letter all point to

the petitioner's rightful claim to Plot No.553D. The

subsequent actions by the respondents to cancel the

allotment and reassign the plot to Respondent No.5,

without proper justification, constitute a grave miscarriage

of justice.

18. Given the findings, this Court deems it fit to set aside the

order of cancellation of the allotment of Plot No.553D to

the petitioner. Additionally, the lease-cum-sale agreement

and the sale deed executed in favor of Respondent No.5

concerning Plot No.553D are also liable to be set aside.

The respondents are bound directed to restore the

allotment of Plot No.553D to the petitioner and ensure

that possession is delivered to the petitioner forthwith. The

petitioner is entitled to the rightful possession and use of

the industrial plot as initially intended.

19. For the foregoing reasons, this Court passes the following:

- 13 -

                              ORDER

      i)     The writ petition is allowed.

      ii)    The impugned order passed by respondent

No.4 as per Annexure-K is hereby quashed.

iii) Consequently, lease-cum-sale agreement dated 19.09.2011 as per annexure-G and sale deed dated 01.04.2013 as per Annexure-H are hereby quashed. Respondents 2 to 4 shall deliver Plot No.553D to the petitioner within a period of three months from the date of receipt of certified copy of this order.

Sd/-

JUDGE

YAN