Karnataka High Court
M/S Sun Valley Agro Products vs The Karnataka Industrial Areas ... on 15 March, 2017
Author: L.Narayana Swamy
Bench: L.Narayana Swamy
1
IN THE HIGH COURT OF KARNATAKA
DHARWAD BENCH
DATED THIS THE 15TH MARCH, 2017
BEFORE
THE HON'BLE MR. JUSTICE L.NARAYANA SWAMY
WRIT PETITION NO.72887/2012 (GM-KIADB)
C/W
WRIT PETITION NO.72316/2012
IN W.P.NO.72887/2012
BETWEEN
M/S SUN VALLEY AGRO PRODUCTS
C/O MITRA AGRO CORPORATION
WAMANE BUILDING, OPP.SHETTY
TYRES, GURUKUL ROAD
BIJAPUR - 586 101
REPRESENTED BY ITS MANAGING PARTNER
RAVINDRA S/O SHIVAGONDAPPA LONI
AGE: 42 YEARS, R/O C/O RAJESH LINGADAL
LINGADAL BUILDING, OPP.B.V.B.COMPLEX
BAGALKOT
...PETITIONER
(BY SRI MALLIKARJUNSWAMY B HIREMATH AND
SRI KIRAN S ANGADI, ADVOCATES)
AND
1. THE KARNATAKA INDUSTRIAL AREAS
DEVELOPMENT BOARD
PLOT NO.7/B-3BK, KANGRALI
2
INDUSTRIAL AREA, P.B.ROAD
BELGAUM - 10
REP. BY ITS DEVELOPMENT OFFICER
2. THE COMMISSIONER
THE KARNATAKA INDUSTRIAL AREAS
DEVELOPMENT BOARD
NO.14/3, II FLOOR, R.P.BUILDING
NRUPATUNGA ROAD
BANGALORE - 560 001
....RESPONDENTS
(BY SRI P.N.HATTI, ADVOCATE)
THIS WRIT PETITION IS FILED UNDER ARTICLES 226
AND 227 OF CONSTITUTION OF INDIA, PRAYING TO
QUASH THE IMPUGNED NOTICE PASSED BY THE 1ST
RESPONDENT DATED 17/30.10.2012 AS PER ANNEXURE-
F AND ETC.
IN W.P.NO.72316/2012
BETWEEN
M/S SOUTH INDIA WARE HOUSING CORPORATION
OFFICE AT F-2, SANKESHWAR RESIDENCY
BLDEA ROAD, BIJAPUR - 586 101
REPRESENTED BY ITS MANAGING PARTNER
SHRIKANT V BAHETI, AGE: 47 YEARS
R/O BEHIND DESHPANDE PETROL PUMP
KULKARNI CHAWL, LOKAPUR ROAD
MUDHOL, DIST: BAGALKOT
...PETITIONER
(BY SRI MALLIKARJUNSWAMY B HIREMATH AND
SRI KIRAN S ANGADI, ADVOCATES)
3
AND
1. THE KARNATAKA INDUSTRIAL AREAS
DEVELOPMENT BOARD
PLOT NO.7/B-3BK, KANGRALI
INDUSTRIAL AREA, P.B.ROAD
BELGAUM - 10
REP. BY ITS DEVELOPMENT OFFICER
2. THE COMMISSIONER
THE KARNATAKA INDUSTRIAL AREAS
DEVELOPMENT BOARD
NO.14/3, II FLOOR, R.P.BUILDING
NRUPATUNGA ROAD
BANGALORE - 560 001
....RESPONDENTS
(BY SRI P.N.HATTI, ADVOCATE)
THIS WRIT PETITION IS FILED UNDER ARTICLES 226
AND 227 OF CONSTITUTION OF INDIA, PRAYING TO
QUASH THE IMPUGNED NOTICE PASSED BY THE 1ST
RESPONDENT DATED 30.10.2012 AS PER ANNEXURE-F
AND ETC.
THESE WRIT PETITIONS COMING ON FOR
PRELIMINARY HEARING-B GROUP, THIS DAY, THE COURT
MADE THE FOLLOWING:
ORDER
Petitioners are the allottees of various lands by the respondent No.1-KIADB. The tentative price fixed per acre is Rs.5,00,000/-. The petitioners paid the said amount and the respondent No.1 executed the lease- 4 cum-sale agreement. From the date of taking over the possession of land, the petitioners are carrying on industrial activities. After some time, the respondents issued an escalated price of Rs.7,50,000/- as per Annexure-H. Thereafter, one more notification has been issued increasing the price from Rs.7,50,000/- to Rs.38,00,000/- as per Annexure-F.
2. Learned counsel for the petitioners submit that the escalation of price is arbitrary. When land is allotted and possession is handed over to the petitioners; and the petitioners had paid the entire amount, the escalation does not arise. As per the resolution of the respondent No.1, it applies only to the fresh allottees or to the allottees to whom lease-cum-sale agreement has not been executed. In the instant case, petitioners have been allotted and completed the procedure and possession has been handed over after paying the entire amount. Hence, the escalation is arbitrary and 5 unreasonable and unfair on the part of the respondents. In support of his submissions, the learned counsel referred to a judgment of the Hon'ble Supreme Court in Civil Appeal Nos.5406-5445/2005 between Karnataka Industrial Areas Development Board and another V/s M/s Prakash Dal Mill and others disposed of on 06.04.2011 and submitted that escalations shall be arbitrary and respondent No.1 is state for the purpose of Article 12 of the Constitution of India. Their action should be fair, reasonable and not arbitrary. In the instant case, the action of the respondents is unfair and arbitrary. Hence, escalation of price is to be set aside. Petitioners counsel also referred a judgment of this Court in W.P.No.7143/2008 and C/w W.P.Nos.7144/2008 and 7145/2008 decided on 21.11.2013 and submitted that KIADB is not doing business of real estate and escalation of price is arbitrary.
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3. Learned counsel for the respondents filed statement of objections and additional statement of objections. In the statement of objections, learned counsel submitted that under the global meet, a decision is taken in order to encourage industrialization. A tentative allotment was made in view of the global meet on various conditions. As per the conditions and decision by the global meet, land was allotted to the petitioners on the basis of their requirement with a tentative price of Rs.5,00,000/- without indicating the particular place or area, allotment was made as per the decision taken. The petitioners also deposited the amount and lease-cum-sale agreement has been executed. After locating the land in question, dispute started at the time of allotment. It was only under developed vacant land. There was a contract between petitioners and the respondents. As per the contract the respondent was supposed to develop the area and after allotment, the respondent started developing. The area 7 in order to offer basic amenities for the industrial concern and for the said purpose a huge amount has been spent on it. Hence, there was an escalation. Accordingly, escalation is reasonable and not arbitrary and not unfair. He has stated in Para No.3 of the additional statement of objections, in order to impress this Court as to how the escalation has been made. Para No.3 of the statement of objections reads as under:-
Sl.No. Particulars Amount
1 Cost of acquisition of land for 15.795.000/- per
1 acres 1.35.00/- per acre acre
2 Compensation of Malkies 17.12.930/-
structures
3 Boards service charges at 17.50.793/-
10%
4 Auditing charges at 11% 19.25.872.30/-
5 Interest at 12.75% for the 11 24.554.871.83/-
years
Total 45.73.94.67.13/-
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Development Charges
Sl.No. Particulars Amount
1 Formation and asphalting of
Road
a) 15.00 mtr wide road 21951270.07
b) 12.00 mtr wide road 88177281.14
c) Providing pipe culvert and slab 1961713.37
culvert
2 Water supply works
a) Providing water supply work 16895435.43
for 4 lakh liter and 2 lakhs liter
ELSR including 2 sumps of 2
lakh liter capacity and
construction of 02 pump house
b) Drilling of 5 Borewells 1183044.77
c) HDPE pipe line 110 mm die for 4816975.37
distribution line
d) HDPE pipe line 250 mm dia for 18200424.77
rising line
3 Providing Fencing for park C.A. 5082003.00
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site including Avenue
plantation
4 Miscellanies 5931852.00
5 Add Electrical works 3,5000000.00
Total 199200000.00
4. Further learned counsel submitted that there was an agreement between the petitioners and respondents. Hence, if any violation of any terms of agreement, it is for the petitioners to approach the Civil Court. Learned counsel also relied upon a judgment of Hon'ble Supreme Court in (2013) 5 SCC 470 Page No.21 and 23 (Rajasthan State Industrial Development and Investment Corporation and another V/s Diamond and Gem Development Corporation Limited and another). It is his case that dispute with regard to agreement, it is the Civil Court power and not the High Court. 10
5. Heard both learned counsel appearing for the parties and perused petition papers and also the rulings submitted by the learned counsel.
6. It is not in dispute that the petitioners submitted their application for allotment as per the global industrial meet. Naturally the allotments were made without any basic amenities for running the industry. After locating the land for the purpose of industrial activities, the petitioners have been allotted as per the requirement. When that allotment was made, it was an open land, there were no basic amenities, no road and electricity, underground cables and water supply etc. The petitioners stated that they have made arrangement within the allotted area. But facts remains that whole industrial area is not a plain land and allotment it must include the development, which is to be termed as basic amenities unless providing all these things there cannot be industrial activities. Allotment 11 price was fixed on the plain land excluding the development. When this development has taken place, which is part of the agreement, it incurs huge amount. This huge amount spent by the respondents, which has to be shared by the industrial concerns. Under these circumstances, escalation in price is inevitable for the industrial development.
7. When such escalation is unavoidable, the escalation price has to be distributed among all the industrial concerns. Petitioners are such concerns and they have to be issued demand notice for escalation price. Respondent submits that as per Annexure-F, escalation of Rs.38,00,000/- and further reduced to Rs.25,00,000/-. It is not forthcoming from the submissions of the respondent on what basis the escalation reduced to Rs.25,00,000/-. Once the petitioners are made party to the industrial dispute, nothing can be unilateral. However from the table 12 furnished above, it looks a reasonability in escalating the prices that has been disputed by the petitioners since they were not parties. They cannot be heard before making any improvement at least it requires that petitioners sought to be given a sort of notice as to escalation on account of development. For the said purpose, it is right for the first respondent to enlighten the petitioners as to be inevitable escalation of price.
8. Annexure-E produced by the petitioner in W.P.No.72316/2012 which is 318th meeting dated 10.08.2012 reads as under:-
"Approval of Cost Structure and Layout Plan for the development works at Aliyabad Block-II Industrial Area, Bijapur District covering an extent of 117.51 acres of land.
After detailed discussions, it was
resolved that:
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1. Approval be accorded for
development of Aliyabad Block-II layout
covering an extent of 117.51 acres of land.
2. Administrative approval and financial sanction be accorded for taking up the development works including UGD to the tune of Rs.2368.63 lakhs.
3. Approval be accorded for fixing the tentative allotment rate of land at Rs.38.00 lakhs per acre for allotment of plots in Aliabad Block-II Industrial Area to absorb the additional expenditure to be incurred for providing Under-
Ground Drainage (UGD) facility.
4. The revised tentative allotment rate of Rs.38.00 lakhs per acre be levied for fresh allotments, restoration of allotments and transfer of leasehold rights etc., made at Aliabad Block-I and also Mahalbagayat Industrial Area with immediate effect."14
9. The reduced tentative allotment rate reduced to Rs.38,00,000/- per acre be leveled for fresh allotments restorations of allotments and transfer of leasehold rights etc., meeting at Aliabad Block-I and also Manalbagayat Industrial Areas with immediate effect.
10. On plain reading of this clause, it applies only fresh allotment, restoration etc. These petitioners case is not a fresh allotment. Under these circumstances, 318th meeting dated 10.08.2012 may not be applicable to the petitioners. In this regard and also in the light of the above observations, it is appropriate for the petitioners to get into the resolution as to the escalation of price. The petitioners who are having right over the leasehold on the basis of which they started industrial activities.
11. Keeping above, I feel escalation notice made to the petitioners are required to be resolved. 15
12. It is the judgment cited by the petitioners in Karnataka Industrial Areas Development Board and another V/s M/s Prakash Dal Mill and others wherein it has been held at Para No.18, which reads as under:-
"18. The Board being a State within the meaning of Article 12 of the Constitution of India is required to act fairly, reasonably and not arbitrarily or whimsically. The guarantee of equality before law or equal protection of the law, under Article 14 embraces within its realm exercise of discretionary powers by the State. The High Court examined the entire issue on the touchstone of Article 14 of the Constitution of India. It has been observed that the fixation of price done by the Board has violated the Article 14 of the Constitution of India. It is correctly 2 observed that though Clause 7(b) permits the Board to fix the final price of the demised premises, it cannot be said that 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. In such circumstances, the Court will have the jurisdiction to annul the decision, upon declaring the same to be void and non-est. A 16 bare perusal of Clause 7(b) would show that it does not lay down any fixed components of final price."
13. The Hon'ble Supreme Court emphasizes much that action of the first respondent should be fair, reasonable and shall not be arbitrary or whimsical.
14. In the light of the above judgment, I do not find that the entire action of the first respondent is arbitrary or whimsical, but the said order if it should be reasonable the petitioners are to be provided a say in the matter of escalation. This Court is aware that providing opportunity to the petitioners will prolong the issue.
15. Under these circumstances, petitions stand disposed of directing the first respondent to reconsider in the light of observations made and petitioners are directed to make detailed representations to the Annexure-F and H within a period of four weeks from today. Thereafter the same shall be disposed at an early 17 date furnishing particulars of escalation in each development.
Till resolution of the same the first respondent shall not insist for payment of escalation price.
Sd/-
JUDGE CLK