Karnataka High Court
M/S Karnataka Hotel vs The State Of Karnataka on 27 May, 2024
Author: Ravi V.Hosmani
Bench: Ravi V.Hosmani
-1-
IN THE HIGH COURT OF KARNATAKA, DHARWAD BENCH
DATED THIS THE 27TH DAY OF MAY, 2024
BEFORE
THE HON'BLE MR JUSTICE RAVI V.HOSMANI
WRIT PETITION NO.105627 OF 2023 (GM RES)
BETWEEN:
M/S. KARNATAKA HOTEL,
PLOT NO.129)P5),
KIADB BELUR,
DHARWAD-580011,
REPRESENTED BY ITS SOLE PROPRIETOR,
SRI SHRISHAIL NAGAPPA GOKAVI,
AGED ABOUT YEARS, OCC: BUSINESS,
R.AT PLOT NO.129),P5),
KIADB BELUR, DHARWAD-580011.
...PETITIONER
(BY SRI MRUTYUNJAY TATA BANGI, ADVOCATE)
AND:
1. THE STATE OF KARNATAKA,
REPRESENTED BY ITS COMMISSIONER FOR
INDUSTRIAL DEVELOPMENT AND
DIRECTOR OF INDUSTRIES AND COMMERCE,
MEMBER SECRETARY,
STATE LEVEL SINGLE WINDOW CLEARANCE
COMMITTEE,
NO.49, 2ND FLOOR, KHANIJA BHAWAN,
RACE COURSE ROAD, BENGALURU-560001.
2. THE KARNATAKA INDUSTRIAL AREAS
DEVELOPMENT BOARD,
NO.49, 4TH AND 5TH FLOOR,
KHANIJA BHAWAN, RACE COURSE ROAD,
BENGALURU-560001,
REPRESENTED BY ITS SECRETARY.
...RESPONDENTS
(BY SRI MADANMOHAN M. KHANNUR, AGA FOR R1;
SRI VEERESH R. BUDIHAL, ADV. FOR R2)
-2-
THIS WRIT PETITION IS FILED UNDER ARTICLES 226 AND 227
OF THE CONSTITUTION OF INDIA, PRAYING TO ISSUE WRIT OF
CERTIORARI OR ANY OTHER WRIT OR DIRECTION AND QUASH THE
DECISION OF 1ST RESPONDENT AT THE 137TH SLSWCC MEETING
DATED 24.1.2023, COPY AS PER ANNEXURE C, AND THE
ORDER.LETTER OF ALLOTMENT BEARING NO. I & C.ID.SLSWCC-
137.DDI.2022-23, BENGALURU, DATED 06.02.2023, ISSUED BY THE
2ND RESPONDENT COPY AS PER ANNEXURE-D, INSOFAR AS ITS
REALTIES TO IMPOSING A CONDITION TO PAY THE LAND
ALLOTMENT RATE FIXED FOR MUMMIGATTI INDUSTRIAL AREA FOR
THE PLOT ALLOTTED IN MUMMIGATTI-NARENDRA HOUSING LAYOUT,
NARENDRA, DHARWAD DISTRICT AS ARBITRARY UNREASONABLE
AND OPPOSED TO THE PROVISIONS OF THE KIADB ACT AND ETC.
THIS PETITION HAVING BEEN HEARD AND RESERVED FOR
ORDER ON 08.04.2024, COMING ON FOR PRONOUNCEMENT OF
ORDERS, THIS DAY THROUGH VIDEO CONFERENCE AT PRINCIPAL
BENCH, BENGALURU, MADE FOLLOWING:
ORDER
This writ petition is filed seeking for following reliefs:
aa). Issue writ of certiorari or any other writ or
direction and quash the decision of 1st
respondent at the 137th SLSWCC meeting dated
24.1.2023, copy as per Annexure C, and the
order/letter of allotment bearing no. i &
C.ID.SLSWCC-137.DDI.2022-23, Bengaluru,
dated 06.02.2023, issued by the 2nd respondent
copy as per Annexure-D, insofar as its realties
to imposing a condition to pay the land
allotment rate fixed for Mummigatti Industrial
Area for the plot allotted in Mummigatti-
Narendra Housing Layout, Narendra, Dharwad
district as arbitrary unreasonable and opposed
to the provisions of the KIADB Act.
ab). Declare the price fixed for allotment of plot at
Narendra Mummigatti Residential Layout for the
petitioner at the rate on par with the rates for
Mummigatti Industrial Area and the manner of
fixation of allotment price for the plot allotted to
the petitioner is arbitrary and unreasonable and
ultra-vires the provision of the KIADB Act, and
or are,
ac). Declare that the allotment price Rs.139 lakhs
per acre for undeveloped plot at Narendra
Mummigatti Residential Layout is arbitrary and
ultra-vires of the provisions of the KIADB Act,
[Prayers (aa) to (ac) inserted as per orders on
I.A.no.I of 2024 dated 1.4.2024]
ad). Issue writ of mandamus or any other
appropriate writ or direction and direct the 2nd
respondent to consider the representation dated
22.05.2023, 09.06.2023, 01.07.2023,
21.07.2023, 03.08.2023, 08.02.2023 &
23.08.2023, copies as per ANNEXURE-H, H1,
H2, H3, H4, H5, and H6 and direct to receive
the allotment rate at the rate of Rs.45,55,000/-
per acre being the allotment price fixed for
neighbouring plots allotees without insisting
upon allotment price at Rs.1,49,00,000/- per
acre (all inclusive), and/or,
[Prayers (a) is numbered as (ad) virtue of orders on
I.A.no.I of 2024 dated 1.4.2024]
b) Pass such order as this Hon'ble court deems fit
in the fact and circumstances of the case.
2. Sri Mrutyunjay Tata Bangi, learned counsel for
petitioner submitted, petitioner-proprietor concern was in
hospitality business and intended to establish Hotel at
Mummigatti. But, land on which he intended to construct was
acquired by respondent no.2 - Karnataka Industrial Area
Development Board ('KIADB', for short) under provisions of
Karnataka Industrial Area Development Act, 1966 ('KIAD Act'
for short) for new railway line from Dharwad to Belagavi.
Accordingly, notices were issued to land looser to file objections
before SLAO, KIADB. It was submitted, as part of rehabilitation,
petitioner sought allotment of land in Mummigatti - Narendra
Housing Layout from respondent no.2 for establishing Five Star
Hotel. On 06.02.2023, vide Annexure-D-communication,
informing approval of petitioner's proposal by State Level
Single Window Clearance Committee ('SLSWCC', for short) for
allotting 05 acres of land at Mummigatti - Narendra Housing
Layout at prevailing allotment price, was issued.
3. It was submitted, as prevailing allotment rate was
Rs.45.55 lakhs, petitioner accepted allotment. But, in its letter
dated 28.04.2023, KIADB, informed tentative price of allotment
at Rs.1.39 lakhs per acre apart from Rs.9.7 lakhs towards pro-
rata cost of establishing Electric Sub-station in Narendra and
Mummigatti Housing Area and called upon petitioner to pay
20% towards initial deposit/EMD, within 30 days.
4. It was submitted, since allotment price demanded
was unreasonably higher than prevailing allotment price,
petitioner sought information about allotment rates in year
2021 from respondent no.2. In reply received as per Annexure-
F, allotment in favour of other similarly situated allottees was
Rs.45.55 lakhs per acre, whereas in case of petitioner, it was
Rs.1.5 Crores per acre. Hence, there was extreme
discrimination against petitioner insofar as fixation of allotment
price, which would be highlighted in site location sketch at
Annexure-G. Aggrieved by above discrimination, this petition
was filed.
5. It was submitted, impugned resolution was
arbitrary and contrary to settled principles of law. It was
submitted, allotment price fixed was unreasonable apart from
being discriminatory. To substantiate that allotment price was
unreasonable, it was submitted, respondent no.2 had acquired
land at Rs.85,000/- per acre, therefore claim of
Rs.1,50,00,000/- per acre would establish that KIADB was
demanding market price, proscribed of it. It was submitted,
said demand on face of it was arbitrary and indicated
commercialization and unreasonableness contrary to objective
of promoting growth of industry. It was submitted, there was
no proper calculation and therefore fixation of allotment price
was in violation of Article 14 of Constitution of India ('CoI, for
short), calling for interference by this Court. In support of his
submissions, learned counsel relied on decision in Prakash Dal
Mills and others Vs. the Government of Karnataka,
reported in ILR 2003 KAR 1622.
6. On other hand, learned AGA for respondent no.1
and Sri Veeresh R.Budihal, learned counsel for KIADB opposed
writ petition.
7. Learned counsel for KIADB, at outset submitted,
writ petition challenging demand notice for payment of
tentative price for allotment of industrial land to petitioner was
not maintainable. It was submitted, impugned resolution was in
nature of offer only and transaction was in pre-contract stage.
8. It was further submitted that fixation of allotment
price was by experts in that field by taking into account
complex factors. Therefore, invocation of writ jurisdiction to
question same would not be appropriate. It was also contended
that offer of allotment was on tentative price and not final
price. Therefore, challenge would be premature. It was also
contended, nature of relief claimed i.e. allotment of industrial
land at particular price was in nature of seeking specific
performance of agreement of sale and as such untenable.
9. It was further submitted by paying initial amount-
EMD, petitioner accepted allotment which was after considering
petitioner's proposal for allotment of land and same was
specified to be at prevailing land allotment rate (PLAR).
Therefore, challenge would be precluded.
10. Elaborating submissions, it was pointed out that in
minutes of meeting of KIADB dated 23.11.2022, at Annexure-
R1, details of costing were considered and resolution on subject
no.22, to revise tentative rate of allotment from Rs.98 lakhs to
Rs.1.39 lakhs per acre was passed.
11. It was submitted, due to area of allotment and
nature of properties being different, difference in allotment
price was not discriminatory, but, self-explanatory as per
Annexure-R3. Therefore, no interference was warranted.
12. In support of submissions, learned counsel relied on
decision of Hon'ble Supreme Court in M.P.Power
Management Company Limited Jabalpur vs. SKY Power
Southeast Solar India Private Limited and Others,
reported in (2023) 2 SCC 703 for proposition that scope of
interference by High Court in contractual matters, even
involving State/its authorities/agencies was limited.
13. Insofar as challenge against escalation of allotment
price, he relied on decision of High Court of Delhi in
D.M.Talwar vs. Delhi Development Authority, reported in
2004 SCC OnLine Del 27, wherein, it was held challenge of
escalation price would not be maintainable, as costing, pricing
of flats and its escalation would fall within realm of contract and
thus outside purview of judicial review under Article 226 of
Constitution of India.
14. Heard learned counsel and perused writ petition
record.
15. From above, it is seen that petitioner is questioning
resolution of SLSWCC dated 24.01.2023, insofar as fixation of
allotment price as arbitrary, unreasonable and contrary to
provisions of KIAD Act; as fixation of allotment price on par
with allotment price for Mummigatti Industrial Area as
arbitrary; to declare allotment price of Rs.1.39 lakhs per acre
for undeveloped plot as arbitrary and consequently for direction
to respondent no.2 to consider petitioner's representation for
fixation of allotment price at Rs.45.55 lakhs as fixed in respect
of neighbouring plots/allottees etc.
16. Since KIADB urged preliminary contention regarding
maintainability of writ petition for questioning fixation of
tentative allotment price at pre-contract stage by invoking writ
jurisdiction under Article 226 of Constitution of India, same
requires to be considered upfront.
17. Perusal of decision in M.P.Power Management
Co.Ltd.'s case (supra) reveals that Hon'ble Supreme Court was
examining legality of judgment passed by High Court of Madhya
Pradesh quashing order passed terminating power purchase
agreement. Examining scope for interference by High Court in
exercise of jurisdiction under Article 226 of Constitution of
India, principles summarized were as follows:
"82. We may cull out our conclusions in regard to the points,
which we have framed:
82.1. It is, undoubtedly, true that the writ jurisdiction is a
public law remedy. A matter, which lies entirely within
a private realm of affairs of public body, may not lend
itself for being dealt with under the writ jurisdiction of
the Court.
82.2. The principle laid down in Bareilly Development
Authority [Bareilly Development Authority v. Ajai Pal
Singh, (1989) 2 SCC 116] that in the case of a non-
statutory contract the rights are governed only by the
terms of the contract and the decisions, which are
purported to be followed, including Radhakrishna
Agarwal [Radhakrishna Agarwal v. State of Bihar,
(1977) 3 SCC 457] , may not continue to hold good, in
the light of what has been laid down in ABL [ABL
International Ltd. v. Export Credit Guarantee Corpn. of
India Ltd., (2004) 3 SCC 553] and as followed in the
recent judgment in Sudhir Kumar Singh [State of
U.P. v. Sudhir Kumar Singh, (2021) 19 SCC 706 : 2020
SCC OnLine SC 847] .
82.3. The mere fact that relief is sought under a contract
which is not statutory, will not entitle the respondent
State in a case by itself to ward off scrutiny of its action
- 10 -
or inaction under the contract, if the complaining party
is able to establish that the action.inaction is, per se,
arbitrary.
82.4. An action will lie, undoubtedly, when the State purports
to award any largesse and, undoubtedly, this relates to
the stage prior to the contract being entered into
(see Ramana Dayaram Shetty [Ramana Dayaram
Shetty v. International Airport Authority of India,
(1979) 3 SCC 489] ). This scrutiny, no doubt, would be
undertaken within the nature of the judicial review,
which has been declared in the decision in Tata
Cellular v. Union of India [Tata Cellular v. Union of
India, (1994) 6 SCC 651] .
82.5. After the contract is entered into, there can be a variety
of circumstances, which may provide a cause of action
to a party to the contract with the State, to seek relief
by filing a writ petition.
82.6. Without intending to be exhaustive, it may include the
relief of seeking payment of amounts due to the
aggrieved party from the State. The State can, indeed,
be called upon to honour its obligations of making
payment, unless it be that there is a serious and
genuine dispute raised relating to the liability of the
State to make the payment. Such dispute, ordinarily,
would include the contention that the aggrieved party
has not fulfilled its obligations and the Court finds that
such a contention by the State is not a mere ruse or a
pretence.
82.7. The existence of an alternate remedy, is, undoubtedly, a
matter to be borne in mind in declining relief in a writ
petition in a contractual matter. Again, the question as
to whether the writ petitioner must be told off the
gates, would depend upon the nature of the claim and
relief sought by the petitioner, the questions, which
would have to be decided, and, most importantly,
whether there are disputed questions of fact, resolution
of which is necessary, as an indispensable prelude to
the grant of the relief sought. Undoubtedly, while there
is no prohibition, in the writ court even deciding
disputed questions of fact, particularly when the dispute
surrounds demystifying of documents only, the Court
may relegate the party to the remedy by way of a civil
suit.
- 11 -
82.8. The existence of a provision for arbitration, which is a
forum intended to quicken the pace of dispute
resolution, is viewed as a near bar to the entertainment
of a writ petition [see in this regard, the view of this
Court even in ABL [ABL International Ltd. v. Export
Credit Guarantee Corpn. of India Ltd., (2004) 3 SCC
553] explaining how it distinguished the decision of this
Court in State of U.P. v. Bridge & Roof Co. (India)
Ltd. [State of U.P. v. Bridge & Roof Co. (India) Ltd.,
(1996) 6 SCC 22] , by its observations in SCC para 14
in ABL [ABL International Ltd. v. Export Credit
Guarantee Corpn. of India Ltd., (2004) 3 SCC 553] ].
82.9. The need to deal with disputed questions of fact, cannot
be made a smokescreen to guillotine a genuine claim
raised in a writ petition, when actually the resolution of
a disputed question of fact is unnecessary to grant
relief to a writ applicant.
82.10. The reach of Article 14 enables a writ court to deal
with arbitrary State action even after a contract is
entered into by the State. A wide variety of
circumstances can generate causes of action for
invoking Article 14. The Court's approach in dealing
with the same, would be guided by, undoubtedly, the
overwhelming need to obviate arbitrary State action, in
cases where the writ remedy provides an effective and
fair means of preventing miscarriage of justice arising
from palpably unreasonable action by the State.
82.11. Termination of contract can again arise in a wide
variety of situations. If for instance, a contract is
terminated, by a person, who is demonstrated, without
any need for any argument, to be the person, who is
completely unauthorised to cancel the contract, there
may not be any necessity to drive the party to the
unnecessary ordeal of a prolix and avoidable round of
litigation. The intervention by the High Court, in such a
case, where there is no dispute to be resolved, would
also be conducive in public interest, apart from
ensuring the fundamental right of the petitioner under
Article 14 of the Constitution of India. When it comes to
a challenge to the termination of a contract by the
State, which is a non-statutory body, which is acting in
purported exercise of the powers.rights under such a
contract, it would be over simplifying a complex issue
to lay down any inflexible rule in favour of the Court
turning away the petitioner to alternate fora. Ordinarily,
- 12 -
the cases of termination of contract by the State, acting
within its contractual domain, may not lend itself for
appropriate redress by the writ court. This is,
undoubtedly, so if the Court is duty-bound to arrive at
findings, which involve untying knots, which are
presented by disputed questions of facts. Undoubtedly,
in view of ABL [ABL International Ltd. v. Export Credit
Guarantee Corpn. of India Ltd., (2004) 3 SCC 553] , if
resolving the dispute, in a case of repudiation of a
contract, involves only appreciating the true scope of
documentary material in the light of pleadings, the
Court may still grant relief to an applicant. We must
enter a caveat. The Courts are today reeling under the
weight of a docket explosion, which is truly alarming. If
a case involves a large body of documents and the
Court is called upon to enter upon findings of facts and
involves merely the construction of the document, it
may not be an unsound discretion to relegate the party
to the alternate remedy. This is not to deprive the
Court of its constitutional power as laid down
in ABL [ABL International Ltd. v. Export Credit
Guarantee Corpn. of India Ltd., (2004) 3 SCC 553] . It
all depends upon the facts of each case as to whether,
having regard to the scope of the dispute to be
resolved, whether the Court will still entertain the
petition.
82.12. In a case the State is a party to the contract and a
breach of a contract is alleged against the State, a civil
action in the appropriate forum is, undoubtedly,
maintainable. But this is not the end of the matter.
Having regard to the position of the State and its duty
to act fairly and to eschew arbitrariness in all its
actions, resort to the constitutional remedy on the
cause of action, that the action is arbitrary, is
permissible (see in this regard Shrilekha
Vidyarthi v. State of U.P. [Shrilekha Vidyarthi v. State
of U.P., (1991) 1 SCC 212 : 1991 SCC (L&S) 742] ).
However, it must be made clear that every case
involving breach of contract by the State, cannot be
dressed up and disguised as a case of arbitrary State
action. While the concept of an arbitrary action or
inaction cannot be cribbed or confined to any
immutable mantra, and must be laid bare, with
reference to the facts of each case, it cannot be a mere
allegation of breach of contract that would suffice. What
must be involved in the case must be action.inaction,
which must be palpably unreasonable or absolutely
irrational and bereft of any principle. An action, which is
- 13 -
completely mala fide, can hardly be described as a fair
action and may, depending on the facts, amount to
arbitrary action. The question must be posed and
answered by the Court and all we intend to lay down is
that there is a discretion available to the Court to grant
relief in appropriate cases.
82.13. A lodestar, which may illumine the path of the Court,
would be the dimension of public interest subserved by
the Court interfering in the matter, rather than
relegating the matter to the alternate forum.
82.14. Another relevant criteria is, if the Court has
entertained the matter, then, while it is not tabooed
that the Court should not relegate the party at a later
stage, ordinarily, it would be a germane consideration,
which may persuade the Court to complete what it had
started, provided it is otherwise a sound exercise of
jurisdiction to decide the matter on merits in the writ
petition itself.
82.15. Violation of natural justice has been recognised as a
ground signifying the presence of a public law element
and can found a cause of action premised on breach of
Article 14. (See Sudhir Kumar Singh [State of
U.P. v. Sudhir Kumar Singh, (2021) 19 SCC 706 : 2020
SCC OnLine SC 847] )."
18. In view of conclusions at paragraphs 82.3 and 82.4
as above, grounds urged in writ petition herein would be
tenable. Consequently, ratio in D.M.Talwar's case (supra)
would be subdued and contentions urged about invocation of
jurisdiction of this Court at pre-contract stage and for
challenging fixation of tentative allotment price as also
contention that there was no fixation of final allotment price
yet, would fade away.
- 14 -
19. Insofar as contention that fixation of allotment price
was by experts and judicial review would involve examination
of records about costing etc., for which writ jurisdiction would
not be suitable, would carry weight only where challenge is on
quantum and not on principles. As stated above, main ground
of challenge is discrimination insofar as fixation of allotment
price. Said ground would be available even at pre-contract
stage including tentative allotment price. In writ petition,
petitioner has specifically stated allotment of land in case of
M/s Prakalpa Hospitalities, Rashtrotthana Parishat (supra) is
also in same industrial area/locality. Infact, petitioner would be
justified in stating that allotment of land to M/s Prakalpa
Hospitalities was across road from that of petitioner. It is also
seen, plot allotted to petitioner is away from National Highway,
while those in favour of M/s Prakalpa Hospitalities, land about
highway and would fetch more value both commercially as well
as utilitative.
20. KIADB has not denied that allotment of land to M/s
Prakalpa Hospitalities and Rashtrotthan Parishat is on
15.02.2021 and 28.04.2019 respectively at Rs.45.55 lakhs.
Whereas, allotment in case of petitioner, it is proposed at
Rs.1.39 lakhs on 28.04.2023, which prima facie appears
- 15 -
discriminatory. Indeed, there is time gap between above
allotment and that of petitioner. But, ratio propounded by
Division Bench of this Court in Prakash Dal Mills case (supra)
is as follows:
"17. For our purpose, sub clause (b) of Clause 7 is relevant.
Sub Clause (b) of Clause 7 mandates that the power to
fix final price of site should be exercised by the Board
'as soon as it may be convenient' and that the Board
should communicate the same to the Lessee and on
such communication, the Lessee should pay balance of
the sital value. It is specifically pleaded by the
Appellants-petitioners that when the sites were handed
over to them, after allotments and execution of the
lease-cum-sale agreements, they were fully developed
sites. It is specifically stated by the appellants that the
cost of development of road, water, building works,
electricity, sanitary, drainage, stock materials etc.,
were included in the tentative price of the sites. This
factual plea of the Appellants is not seriously disputed
by the Board. It is true that Clause 7(b) reserves the
right to the Board to fix final price of the demised
premises as soon as it may be convenient to it and
communicate the same to the concerned Lessee.
Clause 7(b) further mandates that on such
communication, the lessee shall pay balance of the
value of the site and the determination made by the
Board shall bind the lessee. Although that is the term of
Clause 7(b), it cannot be said that even in a case where
the Board arbitrarily or irrationally fixes the final price
of the site without any basis, such fixation of the price
could bind the lessee and it is not permissible for the
Court to step in and set at naught such irrational action
of the Board. The Board being a 'State' within the
meaning of Article 12 of the Constitution is expected,
any, obliged to function in accordance with the
postulates of Article 14 i.e., reasonableness, fairness
and non-arbitrariness. In other words, in a given case,
if the Court finds that the fixation of the price done by
the Board violates postulates of Article 14, certainly,
the Court would be under an obligation to step in and
nullify the complained action of the Board. It also needs
to be noticed at this stage itself that though Clause
7(b) permits the Board to fix final price of the demised
premises, it does not specify as to what are the
- 16 -
components of final price. Clause 7(b) does not speak
about the power of the Board to revise or alter the
tentative price fixed at the time of allotment of the site.
In other words, Clause 7(b) does not contain any
guidelines which would guide the power of the Board in
fixing final price of the demised premises. Be that as it
may, in the present case, we were not called upon to
decide validity of Clause 7(b), However, it is necessary
that the postulates of Article 14 should be read into the
provisions of Clause 7(b). In other words, while
exercising the power to fix final price of the demised
site, the Board is required to act reasonably, fairly and
not arbitrarily nor whimsically. Article 14 postulates
also mandate that the Board in the garb of exercising
the power reserved to it under Clause 7(b) cannot fix
the price of the demised premises in such a way as to
make unlawful gain. In other words, the price that may
be fixed by the Board should reflect the actual cost of
the demised premise.
18. In appreciating the contention of Sri Basava Prabhu
Patil, that the impugned action of the respondent-Board
in revising the sital value, is one without authority and
jurisdiction, at the outset, it needs to be emphasized
that the scheme initiated by the respondent-Board in
revising the sital value, is one without authority and
jurisdiction, at the outset, it needs to be emphasized
that the scheme initiated by the respondent-Board for
allotting the industrial sites is undoubtedly a welfare
scheme and it cannot be used to the disadvantage of
the allottees. At the same time, it cannot be said that
the Board has no right to fix the final cost of the
demised premises in the event of it incurring extra
expenditure after the allotment of the site and before
registration of the site on completion of the lease
period. But in the garb of exercising the power of
fixing the final price, the Board cannot be
permitted to saddle the liability of sharing the
burden of expenditure incurred by the Board in
developing some other sites subsequent to
allotment of sites on the appellants and if that is
permitted, it is trite, it would tentamount to the
Board practicing an invidious discrimination. The
Board cannot treat unequals as equals. It is
specifically pleaded by the Appellants and is reflected
from the materials placed before the Court, that
acquisition of the land and the development of the land
is not in one-go but in different phases. All the allottees
of the sites under all phases of development cannot be
- 17 -
regarded as the persons belonging to the same class
for the purpose of Article 14 of the Constitution.
19. Even assuming that the Board has power to alter or
change the sital value according to its convenience, it is
under an obligation to explain and satisfy the Court that
its action of enhancing the price is reasonable and fair.
In that regard, what the Division Bench of this Court
observed in the case of E.R. Manjaiah v. Bangalore
Development Authority [ILR 1997 Kar 1025.] is quite
apposite and it reads:--
"The escalation of the prices of the land, the
enhancement of compensation, the payment of
development charges and other expenses incurred by
the authority may justify the alteration.revision of the
sital value. The schemes initiated by the respondent-
authority are welfare schemes and cannot be used to
their disadvantage. This does not however mean that
the authority has right to alter the sital value according
to its convenience or whims without furnishing any
explanation. The authority is under an obligation to
explain and to satisfy the Court regarding its action of
enhancing the prices. This Court can examine whether
the decision making process for enhancing the sital
value was reasonable or rational and not arbitrary
being violative of Article 14. Once it is prima facie
established that the procedure adopted by the authority
was against the mandate of Article 14, the Court has
authority to intervene and protect the rights of the
affected allotees."
20. In determining the final price of the demised premises,
no doubt, the price determinants such as, price of the
land, building material, labour charges, cost of
transport, quality and availability of land, supervision,
layout and construction charges or any other variable
factors will enter. The cost also may vary depending
upon time and place of allotment."
(emphasis supplied)
21. Perusal of objections by way of affidavit filed by
KIADB does not disclose that development of industrial area
was in multiple phases separated by large period of time. There
- 18 -
is also no justification offered that differential allotment price
was due to escalation in cost of acquisition, consequential to
enhancement of compensation, which factor was held to justify
enhancement. Contention that allotment price in respect of M/s
Prakalpa Hospitalities and Rashtrotthan Parishat was discounted
by 50% due to allotment of undeveloped land would not be
tenable, as said allottees have not yet implemented project to
claim that they had suffered any inconvenience or
disadvantage. On other hand, by retaining allotment, they
would have gained by speculation in real estate value.
Therefore, all allottees in Mummigatti Industrial Area have to
be treated as equal (excluding those who may have
implemented project even before being provided with
necessary amenities). And KIADB would not be justified in
distributing additional burden due to discount offered to said
allottees on others.
22. While learned counsel for KIADB would be justified
in contending that an allottee does not have right to seek for
allotment of plot at a particular price and that allottee would be
required either to accept allotment at price fixed or decline
same, if it is not feasible. Admittedly, due to transaction still in
pre-contract stage and KIADB is yet to fix final allotment price,
- 19 -
said contentions would require examination only in case of
challenge of final allotment price, unlike in present case.
23. Judicial notice can be taken note of about fact that
even tentative allotment price would be one of major factors of
feasibility of project proposed to be implemented at plot
allotted. In this case, tentative allotment price offered to
petitioner being more than 300% of tentative allotment price in
case of exemplars, can be considered as prohibitive pricing
calling for interference.
24. For aforesaid reasons, while fixation of differential
tentative allotment price by KIADB in case of equals cannot be
sustained, as in order dated 06.02.2023 at Annexure-D passed
by SLSWCC allotment was stated to be on prevailing land
allotment price, without indicating specified amount, it need not
be set aside. Since petitioner has submitted representations at
Annexures-H to H6, which appear to be pending, it would
suffice to issue directions for their consideration in light of
above observations.
25. Hence, writ petition is disposed of by holding
fixation of differential tentative allotment price by KIADB to
allottees in Mummigatti - Narendra Industrial Area as
- 20 -
unsustainable, demand by KIADB in Annexure-E subject to
outcome of consideration by KIADB in terms of following
directions:
KIADB is directed to consider petitioner's representations
dated 22.05.2023, 09.06.2023, 01.07.2023, 21.07.2023,
03.08.2023, 08.02.2023 and 23.08.2023, as per Annexures-H
to H6 respectively in accordance with law and in light of
observations hereinabove within an outer limit of three months
from date of receipt of certified copy of this order.
For facilitating effective consideration, petitioner is
directed to resubmit above mentioned representations along
with certified copy of this order and addition al material if any,
within one month from date of receipt of certified copy.
Until consideration, status-quo with regard to allotment of
land in favour of petitioner shall be maintained.
Sd/-
JUDGE
CLK
