Karnataka High Court
M/S R.S. Kalyani Hotels Pvt Ltd vs The State Of Karnataka on 25 October, 2025
Author: M.Nagaprasanna
Bench: M.Nagaprasanna
1
Reserved on : 24.09.2025
Pronounced on : 25.10.2025
IN THE HIGH COURT OF KARNATAKA AT BENGALURU
DATED THIS THE 25TH DAY OF OCTOBER, 2025
BEFORE
THE HON'BLE MR. JUSTICE M. NAGAPRASANNA
WRIT PETITION No.25036 OF 2015 (GM - KIADB)
BETWEEN:
M/S. R.S. KALYANI HOTELS PVT. LTD.,
A COMPANY INCORPORATED
UNDER THE COMPANIES ACT,
REPRESENTED BY ITS DIRECTOR
R.RAVICHANDRA
AND HAVING ITS
REGISTERED OFFICE AT
NO.7,100 FEET ROAD,
4TH B BLOCK, KORAMANGALA,
BENGALURU - 560 034.
... PETITIONER
(BY SRI ASHOK HARANAHALLI, SR.ADVOCATE A/W
SRI ABHINAY Y.T., ADVOCATE)
AND:
1. THE STATE OF KARNATAKA
BY ITS PRINCIPAL SECRETARY,
AND ADDITIONAL CHIEF SECRETARY
COMMERCE AND INDUSTRIES DEPARTMENT,
VIKAS SOUDHA,
2
BENGALURU - 560 001.
2. THE KARNATAKA INDUSTRIAL AREAS
DEVELOPMENT BOARD
4TH AND 5TH FLOOR, EAST WING,
KHANIJA BHAVAN,
RACE COURSE ROAD,
BENGALURU - 560 001
REPRESENTED BY ITS
CHIEF EXECUTIVE OFFICER.
3. THE JOINT DIRECTOR
THE KARNATAKA INDUSTRIAL AREAS
DEVELOPMENT BOARD,
4TH AND 5TH FLOOR, EAST WING,
KHANIJA BHAVAN, RACE COURSE ROAD,
BENGALURU - 560 001.
... RESPONDENTS
(BY SRI SPOORTHY HEGDE N., HCGP FOR R-1;
SRI K.SHASHIKIRAN SHETTY, ADVOCATE GENERAL A/W
SRI B.B.PATIL, ADVOCATE FOR R-2 AND R-3)
THIS WRIT PETITION IS FILED UNDER ARTICLES 226 AND
227 OF THE CONSTITUTION OF INDIA PRAYING TO DECLARE THAT
THE RESPONDENTS HAVE NO RIGHT TO CHANGE THE MODE OF
ALLOTMENT FROM LEASE-CUM - SALE FOR A PERIOD OF 10 YEARS
TO A LEASE FOR A PERIOD OF 99 YEARS AFTER THE ALLOTMENT
WAS MADE; QUASH THE GOVERNMENT ORDER BEARING NO.CI 511
SPQ 2013, DATED 7.8.2014 VIDE ANN-D; QUASH THE
COMMUNICATION BEARING NO.IADB/HO/ALLOT/JD/BIT-
19172/2444/2015-16 DATED 22.5.2015 / 23.5.2015 ISSUED BY
THE R-3 VIDE ANN-G, BY WHICH THE ALLOTMENT HAS BEEN
CANCELLED; DIRECT THE RESPONDENTS TO ABIDE BY THE TERMS
OF THE ALLOTMENT LETTER DATED 15.2.2013 IN SO FAR AS IT
RELATES TO THE ALLOTMENT BY LEASE CUM SALE BASIS FOR A
PERIOD OF 10 YEARS; RESTRAIN THE RESPONDENTS FROM
DEMANDING OR COLLECTING THE BALANCE SUMS FROM THE
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PETITIONER UNTIL ALL THE AMENITIES THAT IS REQUIRED TO
ESTABLISH AN AREA AS AN INDUSTRIAL AREA ARE PROVIDED.
THIS WRIT PETITION HAVING BEEN HEARD AND RESERVED
FOR ORDERS ON 24.09.2025, COMING ON FOR PRONOUNCEMENT
THIS DAY, THE COURT MADE THE FOLLOWING:-
CORAM: THE HON'BLE MR JUSTICE M.NAGAPRASANNA
CAV ORDER
The petitioner is before this Court seeking the following
reliefs:
(a) "Declare that the respondents have no right to change
the mode of allotment from lease-cum-sale for a period of
10 years to a lease for a period of 99 years after the
allotment was made and
(b) Consequently, quash the Government order bearing No.CI
511 SPQ 2013 dated 7-08-2014 (annexure-D) and
(c) Quash the communication bearing No. IADB/HO/Allot/
JD/BIT-19172/2444/2015-16 dated 22-05-2015/
23.5.2015 issued by the 3rd respondent (Annexure-G) by
which the allotment has been cancelled.
(d) Direct the respondents to abide by the terms of the
allotment letter dated 15-02-2013 insofar as it relates to
the allotment by lease cum-sale basis for a period of 10
years.
(e) Restrain the respondents from demanding or collecting
the balance sums from the petitioner until all the
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amenities that is required to establish an area as an
Industrial Area are provided.
(f) Pass such other orders as this Hon'ble Court deems fit."
2. Heard Sri Ashok Haranahalli, learned senior counsel
appearing for the petitioner, Sri Spoorthy Hegde N, learned High
Court Government Pleader for respondent No.1 and
Sri K Shashikiran Shetty, learned Advocate General appearing for
respondents 2 and 3.
3. Facts in brief, germane, are as follows: -
3.1. The petitioner who is in the business of food industry in
the name and style of R.S.Kalyani Hotels Private Limited and
desirous of setting up of an establishment in Bangalore
International Tech Park for establishing a hotel and convention
centre, applies for allotment of land to the 2nd
respondent/Karnataka Industrial Areas Development Board through
the Single Window Clearance Committee. Pursuant to the clearance
by the Single Window Clearance Committee, the petitioner deposits
a sum of ₹1.08 crores for allotment of 3 acres of land in the
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Bangalore IT Park. This is said to have happened between July 2010
and May 2011. On 15-02-2013, land measuring 3 acres was
allotted on lease-cum-sale basis for a period of 10 years on a
tentative cost of ₹1.80 crores per acre with addition of 10% extra
for 3 acres. The petitioner then requests time till 13-08-2015 to
pay balance amount of 80% as 20% had already been paid. The
Board then extends the time by 90 days for payment of balance
amount in terms of its communication dated 05-08-2014. Pending
completion of payment, it appears that Government of Karnataka
changes the policy decision of approving allotment of land by the
Board on lease cum-sale basis existing then, only on lease basis, for
a period of 99 years. The Government order was also indicative of
the fact that the lease would apply to such projects cleared by the
Committee constituted under the Industrial Facilitation Act.
3.2. The Board then calls upon the petitioner to pay balance
amount along with interest from 05-11-2014. The petitioner is said
to have paid another ₹30/- lakhs and informed that it is
approaching the Bank for loan and would pay the balance amount
on or before 31-08-2015. The petitioner did not pay the balance
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amount and as per communication to the petitioner, the allotment
of plot was cancelled, as full payment was not made in time and at
the same time, the Board is said to have encashed ₹30/- lakhs that
was paid by the petitioner. At this juncture, the petitioner
approaches this Court in the subject petition. This Court had
protected the interest of the petitioner, by grant of an interim order
on 23-06-2015. The said order continued till the matter comes to
be disposed of, on a memo filed by the petitioner that the petition
had become infructuous. The learned counsel for the petitioner,
thereafter files an application, seeking recall of the order, on the
score that the petition had become infructuous only for the reason
that the Board had assured that it would resolve the dispute. When
the resolution did not come about, the petitioner preferred two
applications seeking recall of the order. This Court, on 29-02-2024,
had passed the following order:
"ORDER ON I.A.NOS.1/2024 AND 1/2023
Learned counsel for the petitioner submits that office
objections have been complied with.
Learned counsel appearing for the petitioner has filed
applications-I.A.Nos.1/2024 and 1/2023 seeking to condone the
delay of 419 days in seeking recalling of the order dated
05.07.2023.
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Learned counsel for the petitioner submits that the Board
has practiced discrimination inasmuch as in favour of every
allottee, who is identically placed. The Board has executed
lease-cum-sale deeds. It is only in case of the petitioner, it was
not done and therefore, he is seeking to recall the order dated
05.07.2023. The order dated 05.07.2023, in the subject
petition, was passed disposing the petition, in terms of the
memo. A perusal at the memo would indicate that the liberty
was sought by the petitioner.
The Board has no objection to condone the delay of 419
days.
For the reasons indicated in the affidavits accompanying
the applications and being satisfied with the same, the delay of
419 days caused in filing the recalling application is condoned,
the order dated 05.07.2023 is recalled and the petition is
restored to file.
Accordingly, the applications-I.A.Nos.1/2024 and 1/2023
are allowed.
List the matter on 14.03.2024."
It is then the matter is heard.
4. The learned senior counsel Sri Ashok Haranahalli appearing
for the petitioner would submit that payment of ₹30/- lakhs that
was paid even on the last day has been encashed by the 2nd
respondent. Having encashed the same, it was not open to the
Board to have simultaneously cancelled the allotment. 20%
payment was made immediately on allotment. Time was sought
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and, therefore, time ought to have been granted. He would project
procedural violation in the cancellation of allotment that is made in
favour of the petitioner.
5. Per contra, learned Advocate General Sri K Shashikiran
Shetty, appearing for respondents 2 and 3 submits that allotment
was constrained to be cancelled on account of the petitioner
violating the terms of allotment. Therefore, left with no choice, the
Board had to cancel the allotment. There is no procedure under
Section 34 of the Karnataka Industrial Areas Development Act,
1966 ('the Act' for short) to be violated for cancellation of
allotment. He would seek to place reliance upon judgment of this
Court in the case of M/s. KAMALALAYAA REAL ESTATES
LLP v. THE KARNATAKA INDUSTRIAL AREAS DEVELOPMENT
BOARD1.
6. I have given my anxious consideration to the submissions
made by the respective learned counsel and have perused the
material on record.
1
Writ Petition No.279 of 2024 decided on 12th January 2024.
9
7. The afore-narrated facts are not in dispute. The application
of the petitioner, seeking allotment of land, is processed by
issuance of an allotment letter, which reads as follows:
"No.IADB/HO/JD/BHP/19172/15453/2012-13 15-02-2013
M/s. R.S.Kalyani Hotels Private Limited,
No.7, 100ft Road, 4th 'B' Block,
Koramangala, Bangalore - 560 034.
Sir,
ALLOTMENT LETTER
Sub: Allotment of land in Bengaluru IT Park, Bangalore
Rural District.
Ref: 1.72nd SLSWCC Meeting dated 18-05-2012.
2.Your application dated 06-07-2010.
-o0o-
I am happy to inform you that you have been allotted
3.00 acres of land in Plot No.51 (Corner) of Bengaluru IT
Part, to establish "Hotel & Convention Centre", subject to
the standard terms and conditions indicated in the Annexure
appended hereto and also those mentioned hereafter. I take this
opportunity to wish you the very best in the venture you have
embarked upon.
1. The allotment of land is on lease-cum-sale basis for a
period of 10 years. At the end of 10 years, the lease will be
converted into a sale subject to fulfillment of all the terms and
conditions of allotment. Lease Cum-Sale Agreement and
payment of price of land in full, as finally fixed, subject to
adjustment of amounts paid by you towards premium. The
conversion of lease into sale will also be subject to the utilization
of a minimum 50% of as per para-12 here below whichever is
higher. The utilization of land as determined by the Board on
the merits of each case is final and binding.
10
2. The price of the land will be determined by the Board
and intimated to you in due course. However, for the purpose of
this allotment, the tentative price of the land per acre has been
fixed at ₹1.80 crores + 10% extra for the entire extent of
5.00 acres.
3. Slum development cess at ₹2.50 per smtr. amounting
to ₹30,354/- is payable on or before 14.03.2013.
4. The tentative price of the land and lese rents shall be
paid as follows:
a. A sum of ₹18,00,000/- being the balance 20%
tentative cost of land within 30 days from the date of
issue of this letter, i.e., on or before 14-03-2013.
b. A sum of ₹5,04,00,000/- being the balance 80%
tentative cost of land shall be paid within 180 days
from the date of issue of this letter i.e., on or before
13.08.2013.
c. In the event of your furnishing Bank guarantee or
letter of commitment from KSFC/KSIIDC/Financial
Institutions agreeing to pay the cost of land indicated
at 4(b) directly to the Board, the allotment will be
confirmed and documentation will be permitted
subject to payment of interest of 12.75% 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 agreement.
d. You should pay a lese rent at the rate of ₹1000/-
per acre/per annum or part thereof or at such other
rates as may be fixed by the Board from time to time.
e. Interest at 12.75% p.a. 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.
5. This allotment letter will be valid only for a period of 30
days from the date of its issue and in the event of failure to pay
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the amount indicated at para 4(a) allotment stands
automatically cancelled and E.M.D. paid stands forfeited.
6(a) In case of your failure to pay the amount mentioned
at para 4(b) before expiry of the time stipulated therein, this
offer of allotment stands automatically expired and the Earnest
Money Deposit and 25% of the amount paid by you towards
cost of land stands automatically forfeited.
(b) If the balance land cost if not paid within 180 days
from the date of execution of lease agreement in respect of
cases mentioned at para-4(c) the plot would be resumed on
expiry of the time stipulated within issuing any fresh notice.
7. Soon after receipt of the payment of 100% tentative
cost of land and on your acceptance of all the terms and
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 and at the time of taking over
possession you should produce the original receipt, issued for
the payment made to the Engineer in-charge of the area.
8(a) On taking possession of land, you shall adhere to the time
schedule indicated in the standard conditions appended
hereto.
8(b) It shall be mandatory for the lessee to obtain clearance
for the project from Karnataka State Pollution Control
Board before commencement of approved project.
9. Your failure to fulfill any of the standard terms and
conditions and also to take over possession of land within 30
days from the date of payment of the land cost shall result in
cancellation of allotment and forfeiture of 25% of the amount
paid towards the tentative cost of land and E.M.D. deposited
shall stand forfeited.
10. The cancelled allotments or the resumed plots shall
be restored, only at the rates prevailing at the time of
considering such requests provided the request in writing for
such restoration is received within one month from the date of
cancellation of allotment or resumption. Any requests received
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after expiry of 30 days from the date of cancellation/resumption
of land will be rejected.
11. Extension of time will be granted only on the
directions from High Court/Injunction order/orders from
competent judicial forum relating to acquisition proceedings and
taking over possession of plot."
The condition of allotment clearly indicated the timeline, in which
the petitioner had to make payment. 20% of tentative cost of the
land within 30 days, which the petitioner paid and remaining 80%
within 6 months thereafter, which would expire on 13-08-2013. The
petitioner does not make payment, but places a request for grant of
three months' time. The request reads as follows:
"August 12, 2023
To
Chief Executive Officer/Executive Member,
KIADB, Bangalore.
Dear Sir,
Ref: Allotment of 3 acres land for our company R.S.
Kalyaani Hotels P Ltd. in Software Park,
Devanahalli KIADB Project.
Ref: KUM/SLS/WCC-58/DD/283/2010-11 dated
07.06.10.
-----
This has reference to your above cited allotment letter.
We have paid 20% of the land cost within the stipulated time
and as per the allotment order condition we have to pay the
remaining 80% of the amount on or before 13-08-2013.
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We have visited the place and to our dismay no road is
developed, power connections were not there, there is no ETP.
There is no water supply and no industry has started their
project so far. We are planning to construct 5 star hotel and
convention centre with huge capital outlay and with the present
status of the project it is not viable for us to start the work.
Hotel rooms and restaurants are mainly depending on the
surrounding industries and no industry has started their start up
work. In the circumstances we request your good office to
kindly allow us time till 13-08-2015 to pay the remaining
balance without any interest or costs. We hope you will kindly
understand our genuine request based on the status of project
and consider our request as special case.
Thanking you in anticipation of your positive response."
The petitioner did not come forward to pay. Therefore, a
communication is sent to the petitioner on 05-08-2014 to clear the
balance amount. The communication reads as follows:
"No.IADB/HO/JD/Allot/19172/6327/14-15
Date:05-08-2014
M/s. R.K.Kalyani Hotels Private Limited,
No.7, 100ft Road, 4th 'B' Block,
Koramangala, Bangalore-560034.
Sir,
Sub: Allotment of three acres of land in Plot No.51
(Corner) of Bengaluru IT Park, near BIAL,
Devanahalli.
Ref: 1.This office allotment letter No. KIADB/HO/JD/
BIT/19172/15453/2012-13 dated 15-02-2013.
2.Your letter dated 13-03-2013.
****
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As per the terms and recommendations of the sub-
committee in its meeting held on 26-06-2014, 30-06-2014 and
05-07-2014 you are hereby granted 90 days extension of time
from the date of this letter for payment of balance land cost
amounting to ₹5,04,00,000/-.
Please note that your failure to pay the balance land cost
within the extended period shall result in levy of interest for
delay in payment as per rules in force.
On receipt of the payment, further action will be taken to
hand over the possession of land in your favour."
In the interregnum, there is a change in policy by the Government.
Lease-cum-sale is taken off and a lease for 99 years springs up.
But, the petitioner did not change. He did not make payment, but
placed a request again to extend time. The Board then issues a
communication which reads as follows:
"No.KIADB/HO/JD/Allot/19172/14680/2014-15
Date:07-02-2015
M/s. R.K.Kalyani Hotels Private Limited,
No.7, 100ft Road, 4th 'B' Block,
Koramangala, Bangalore-560034.
Sir,
Sub: Payment of balance cost of land -regarding.
Ref: 1.This office allotment letter No. KIADB/HO/JD/
BIT/19172/15453/2012-13 dated 15-02-2013.
2.This office letter No. KIADB/HO/JD (Allot)/
19172/6327/2014-15 dated 05-08-2014.
----
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With reference to the above subject, this is to inform you
that you have been allotted an extent of three acres of land
has been allotted in your favour in Plot No.51 (Corner) of
Bengaluru IT Park near Devanahalli, Bengaluru Rural District.
In accordance with the decision of the Sub-Committee in
its meetings dated 27-06-2014, 30-06-2014 and 05-07-2014,
you were intimated in the letter dated 05.08.2014 to pay the
balance land cost within 90 days from the date of
communication and also intimated that in case your failure to
pay the same within the extended period it will result in levy of
interest for delayed payment as per rules in force.
You have not paid the balance cost of the land within the
stipulated period and your have failed to comply with the notice.
Under the circumstances, you are once again requested to remit
₹5,04,00,000/- towards balance cost of land along with
interest at 12.75% p.a. from 05-11-2014 till date of payment.
In case of your failure to remit the above said amount
within 30 days from the date of receipt of this letter the
allotment made in your favour stands automatically cancelled
and no further correspondence will be made in this regard.
Yours faithfully,
Sd/- Joint Director."
Even then, the petitioner did not make any payment. Now the
Board would pass an order cancelling the allotment. It is this that
has driven the petitioner to this Court in the subject petition.
8. From the submissions of the petitioner one factor which is
clear is, that the petitioner has not made complete payment even to
this day. His submission is that he is ready and willing to make
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payment, but has not made so far. The issue, in such
circumstances, need not detain this Court for long or delve deep
into the matter. This Court, considering the entire spectrum of the
Act and conditions of allotment, had held in the case of
M/S KAMALALAYAA REAL ESTATES LLP supra as follows:
".... .... ....
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 State".
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Concessions
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:
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"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
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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
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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
21
land 14 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,
22
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
23
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
17 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, KIADB, 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)
24
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 M/S IMPERIAL CONSTRAFIN PRIVATE LIMITED, 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.
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
25
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,
Bengaluruvs. State of Karnataka and others, 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 i.e., 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
26
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.
27
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
28
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 allotteeunder 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
29
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 BOARD, 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
30
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."
Though the judgment in M/S KAMALALAYAA REAL ESTATES
LLP's case has been tossed in appeal, the Division Bench has not
disturbed it. In the case at hand, the acts of the petitioner being
similar, I deem it appropriate to follow the afore-quoted order and
hold that the petitioner has lost its right to claim that it should be
shown indulgence and the plot should be allotted at this juncture.
As on today, the petitioner is only dragging the issue without
making payment as demanded. In that light, the petitioner does
not deserve any indulgence from the hands of this Court.
9. Finding no merit, the petition stands rejected. Interim
order of any kind subsisting stands dissolved.
Sd/-
(M.NAGAPRASANNA)
JUDGE
bkp
CT:MJ
