Madras High Court
Tropical Breweries (P) Ltd vs The State Of Tamil Nadu on 29 January, 2021
W.A.Nos.163 & 164 of 2020
IN THE HIGH COURT OF JUDICATURE AT MADRAS
DATED: 29.01.2021
CORAM :
THE HON'BLE MR.SANJIB BANERJEE, CHIEF JUSTICE
AND
THE HON'BLE MR.JUSTICE SENTHILKUMAR RAMAMOORTHY
W.A.Nos.163 & 164 of 2020
Tropical Breweries (P) Ltd.
rep. by its Director Sharad Kumar
No.7, College Land Appellants in
Chennai 600 006. ... both W.As.
Vs.
1. The State of Tamil Nadu
rep. by its Principal Secretary to Government
Home, Prohibition and Excise (III) Department
Secretariat
Chennai 600 009.
2. The Commissioner of Prohibition & Excise
Chepauk
Chennai 600 009.
3. State Industrial Promotion Corporation of Tamil Nadu
rep. by its Chairman and Managing Director
No.19A, Rukmini Lakshmipathy Road
Egmore Respondents in
Chennai 600 008. ... both W.As.
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Prayer: Appeals filed under Clause 15 of the Letters Patent against the
common order dated 27.04.2019 made in W.P.Nos.24840 and 25073
of 2012.
For Appellant : Mr.AR.L.Sundaresan, S.C.
For Mr.Suhrith Parthasarathy
For Respondents : Mr.E.Manoharan, Spl.G.P.
for respondents 1 & 2
Mrs.Sudharshana Sundar
for respondent-3
JUDGMENT
(Delivered by the Hon'ble Chief Justice)
This appears to be another of those cases where a business
entity gets a toe-hold on a parcel of land on certain conditions,
immediately forgets to comply with the conditions and rushes to Court
after the allotment is cancelled to stand on legal crutches to set up its
business.
2. An allotment letter was issued to the appellant company on
July 26, 2010 by the State Industries Promotion Corporation of Tamil
Nadu Limited (SIPCOT) for allotting 30 acres of land at the Industrial
Park at Thervoy, Kandigai. The commercial details are completely
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W.A.Nos.163 & 164 of 2020
irrelevant in the present context. It is equally unimportant that the
payment obligations were discharged without much delay. What is of
relevance is that the letter of allotment was followed by a lease
agreement executed on February 02, 2011 and clause (18) of such
lease agreement envisaged that construction of the buildings for
setting up the unit would commence within six months of the issuance
of the allotment order and be completed within 24 months from such
date. On the same date as the lease was executed, the parties entered
into a water supply agreement that obliged SIPCOT to provide
adequate water supply at the site. The relevant agreement contains a
clause to the effect that the allottee would use the water only for the
purpose of the project, including construction.
3. It may bear repetition that the deed of lease was executed
more than six months after the date of allotment and the writ
petitioner-allottee, the appellant herein, accepted the condition
stipulated in the 18th clause. In such circumstances, it was expected
of the writ petitioner to commence construction immediately upon
obtaining possession of the leasehold land and complete the
construction within the time stipulated. The initial time to commence
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W.A.Nos.163 & 164 of 2020
construction was unilaterally extended by SIPCOT till the end of May,
2011. By a writing dated November 21, 2011, the allotment was
cancelled since construction had not commenced some 15 months
after the allotment has been made and more than nine months after
the lease deed has been executed and possession of the leasehold land
made over to the writ petitioner.
4. The writ petitioner claims that no road was built or
development activity undertaken to make it conducive for any allottee
of any of the plots to commence construction at the Industrial Park.
The writ petitioner refers to several other entities who were afforded
further time by SIPCOT to commence and complete their construction.
The writ petitioner does not contend that since the delay on the part of
others similarly placed were condoned by SIPCOT, the writ petitioner is
entitled to the benefit of Article 14 of the Constitution in the negative
sense of equality; the writ petitioner agrees that the time for the
others was rightly extended, and suggests that the same courtesy
should have been accorded to the writ petitioner.
5. The more substantial grounds urged by the writ petitioner are
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W.A.Nos.163 & 164 of 2020
that the conditions on the ground were not such that any of the
allottees could have commenced or continued with, far less complete,
construction work at the allotted plots. The writ petitioner would have
the Court believe that SIPCOT failed in its obligation to develop the
Industrial Park, to construct roads thereat to allow men and material
to be brought in by the allottees for their construction activities, to
supply water and provide other basic infrastructural facilities. The writ
petitioner refers to the letter of allotment and the monies charged on
account of development to suggest that such basic facilities ought to
have been put in place by SIPCOT before it could expect the allottees
to commence construction.
6. As noticed above, the one feature that stands out is that
despite the lease agreement being executed more than six months
after the date of allotment of the plot, the writ petitioner accepted
clause (18) of the lease agreement without any reservation. It is all
very nice to now claim that these are one-sided contracts thrown at
private parties by government agencies which hold a superior
bargaining power; but even a request for extension of the time in view
of the lack of facilities would have sufficed as a kind of an objection to
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W.A.Nos.163 & 164 of 2020
the relevant clause if the writ petitioner had issued a contemporaneous
letter in such regard. Prima facie, what appears is that the grounds
now sought to be urged are no more than specious excuses proffered
by the writ petitioner to cover up for the failure on its part to take the
relevant clause seriously or to commence the construction activity
within the time stipulated. After all, this is India and time is hardly
regarded to be of the essence in any contract in a land where
procrastination and delay are the rule rather than the exception; and
Courts are quick to condone such conduct. Clearly, the writ petitioner
did not see it coming that for a delay of a few months beyond the
stipulated date, its allotment would be annulled.
7. By strictly applying the contractual principles, SIPCOT cannot
be blamed in the present case.
8. By the judgment and order impugned herein dated April 27,
2019, the Writ Court noticed that there were disputed questions of fact
as to whether SIPCOT had provided the facilities and to what extent
SIPCOT was obliged to provide any facilities to ensure that the
construction activity was undertaken at the site by the writ petitioner.
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The Court of the first instance also found that it was difficult to assess
on affidavits as to what the writ petitioner could have done to
commence construction or whether the conditions were at all
conducive therefor. Instead of relegating the writ petitioner to a suit,
as in the usual case when the Writ Court discovers disputed facts that
may not be convenient to be conclusively addressed on affidavit
evidence, the learned Single Bench relegated the parties to arbitration
in accordance with the arbitration agreement contained in the lease
deed of February 02, 2011, since the lease deed must be considered
to be the primary agreement between the parties.
8. The judgment and order impugned have come for some
criticism on the part of the appellant, but the divers grounds raised,
including those indicated, above do not appeal. In the light of there
being no specific duty cast on SIPCOT to provide any named facilities
prior to the writ petitioner commencing construction work at the site,
the judgment and order impugned do not call for any interference.
Indeed, it is evident that several authorities and various aspects have
been alluded to in the impugned judgment to ultimately arrive at the
conclusion that is found acceptable at this stage.
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9. The arbitration agreement between the parties provides for
the Managing Director of SIPCOT to nominate some employee or the
other to adjudicate on the disputes that may arise between the parties.
Since the parties accept that such agreement for nomination may no
longer be appropriate in the light of the amended provisions of the
Arbitration and Conciliation Act, 1996, completely without prejudice to
their rights and contentions, the relevant parties have agreed that
Mr.E.Omprakash, Senior Advocate, be appointed Arbitrator to
adjudicate upon the disputes that have arisen between the writ
petitioner company and SIPCOT. The learned Arbitrator will be free to
fix his remuneration in accordance with law and in consultation with
the parties. It is hoped that the award is rendered as expeditiously as
possible, certainly, within the time as now statutorily envisaged.
10. Notwithstanding this order, it will be open to SIPCOT to re-
consider the position, now that the letter of termination has not been
given effect to for nearly ten years. However, if SIPCOT does not re-
consider the matter, no further grievance can be aired by the writ
petitioner in this jurisdiction.
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11. It also appears that upon the termination of the lease and
the cancellation of the agreements, so to say, between the relevant
parties, the license obtained by the writ petitioner for setting up a
brewery has been cancelled. Subject to the outcome of the arbitration
proceedings or any earlier decision of SIPCOT in such regard, the writ
petitioner will be entitled to apply for and obtain the license from the
Prohibition and Excise Department of the State.
12. It is made clear that the observations in the impugned
judgment and the observations hereinabove should not unduly
influence the arbitrator in course of the adjudication.
W.A.Nos.163 and 164 of 2020 are disposed of. There will be no
order as to costs. As a consequence, CMP Nos.2378, 2379, 2384 and
2386 of 2020 are closed.
(S.B., CJ.) (S.K.R., J.)
29.01.2021
Index : Yes
kpl
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W.A.Nos.163 & 164 of 2020
To
1. The Principal Secretary to Government
Home, Prohibition and Excise (III) Department
Secretariat
Chennai 600 009.
2. The Commissioner of Prohibition & Excise
Chepauk
Chennai 600 009.
3. The Chairman and Managing Director
State Industrial Promotion Corporation of Tamil Nadu
No.19A, Rukmini Lakshmipathy Road
Egmore
Chennai 600 008.
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W.A.Nos.163 & 164 of 2020
THE HON'BLE CHIEF JUSTICE
AND
SENTHILKUMAR RAMAMOORTHY, J.
(kpl)
W.A.Nos.163 & 164 of 2020
29.01.2021
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