Punjab-Haryana High Court
M/S Eastman Cast & Forge Limited vs State Of Haryana on 22 September, 2014
Author: Kuldip Singh
Bench: Hemant Gupta, Kuldip Singh
SANJIV KUMAR SHARMA
CWP No. 19772 of 2011 2014.09.29 13:59 -1-
I attest to the accuracy and
authenticity of this document
IN THE HIGH COURT OF PUNJAB AND HARYANA
AT CHANDIGARH
CWP No. 19772 of 2011
Date of Decision : 22.9.2014
M/s Eastman Cast and Forge Limited ........ Petitioner
Versus
State of Haryana and another ...... Respondents
CORAM: HON'BLE MR. JUSTICE HEMANT GUPTA
HON'BLE MR. JUSTICE KULDIP SINGH
Present:- Mr. A.P.S. Sandhu, Advocate, for the petitioner.
Ms. Shubhra Singh, Deputy Advocate General, Haryana,
for respondent No. 1-State.
Mr. Aman Chaudhary, Advocate, for respondent No. 2.
1. Whether Reporters of local papers may be allowed
to see the judgment ?
2. To be referred to the Reporters or not ?
3. Whether the judgment should be reported in the
Digest ?
KULDIP SINGH, J.
Petitioner-Company has invoked the writ jurisdiction of this Court for quashing the order dated 1.6.2011 (Annexure-P-11), vide which the industrial plot allotted to the petitioner-Company was resumed and further order of the Appellate Committee dated 26.7.2011 (Annexure-P-
19), vide which the appeal of the petitioner-Company was dismissed. Petitioner-Company also seeks investigation by an independent investigating agency with regard to pick and choose resumption practice of respondent No. 2 for benefitting its political masters on the basis of extraneous considerations.
CWP No. 19772 of 2011 -2-
The petitioner-Company was initially allotted a 20000 sq. mtrs. Plot No. 319, Sector-3, Growth Centre, Bawal, Phase-II on 15.6.2007 at the rate of Rs. 1,850/- per square meter for the purpose of setting up of industrial project for manufacturing of high quality Automobile Tool Kits and Automobile Accessories by respondent No. 2- Haryana State Industrial and Infrastructure Development Corporation (in short 'HSIIDC'). An agreement in this regard was executed. The total cost of the plot was Rs. 3,70,00,000/-. At the time of submission of the application, 10% earnest money i.e. Rs. 44,40,000/- were deposited. After the allotment, 25% of the tentative price i.e. Rs. 85,10,000/- were also deposited on 10.8.2007. The remaining balance amount was payable in five installments including interest. An agreement dated 13.8.2007 was executed. Later on, at the time of delivery of physical possession of plot, it was found that the area of the plot was 1600 sq. mtrs. in excess. Therefore, vide letter dated 1.2.2008, petitioner-Company was directed to deposit excess amount of Rs. 29,60,000/-. The petitioner-Company, vide letter dated 19.2.2008, asked the respondent to re-schedule the excess amount in equal installments. The request was accepted and communicated, vide letter dated 29.4.2009. The petitioner-Company was asked to deposit 35% of the excess amount forthwith and the remaining amount in installments. The total cost of the plot was enhanced to around Rs. 4,00,00,000/-. Rs. 12,00,000/- being 35% of the excess amount was deposited on 29.4.2008 and the possession was delivered on the same day.
During the economic recession in the year 2008-09, there was a slow down in the business. Therefore, HSIIDC was to provide CWP No. 19772 of 2011 -3- concession to the allottees of industrial plots. After making the first installment, petitioner-Company was not able to pay other installments on time. On 15.1.2010, petitioner-Company requested HSIIDC to re-schedule the payment schedule and it also cleared the outstanding interest amounting to Rs. 28,35,685/-. The payment was accordingly re-scheduled on 19.2.2010 and a new payment schedule was issued. The outstanding interest, according to HSIIDC, was Rs. 34,55,434/-. However, Rs. 28,35,685/- as interest was already paid on 15.1.2010. As the petitioner- Company was unable to deposit whole of the interest, the re-schedulement letter dated 19.2.2010 was withdrawn. On 29.6.2010, the petitioner- Company deposited a cheque of Rs. 40 lacs, which was accepted by HSIIDC. According to the petitioner-Company, it brought the new schedule back into force. HSIIDC sent a notice dated 24.3.2011, asking the petitioner-Company to clear the dues of Rs. 1,17,69,841/-. The petitioner-Company assured to make the payment shortly and communicated that a pilot project was installed at Ludhiana from 2007 onwards with plant and machinery of about Rs. 11 crores to gauge the viability of the project at Bawal. Since the project at Ludhiana has been commissioned successfully and now results are coming up, the petitioner- Company undertook to implement the project within a very short period. It also prepared a cheque of Rs. 75 lacs on 30.5.2011. However, resumption order was passed on 1.6.2011. The appeal against the same has already been dismissed.
In reply, respondent No. 2 took the plea that petitioner- Company had applied for a plot measuring 24000 sq. mtrs. (6 acres) for CWP No. 19772 of 2011 -4- setting up a unit of Automobile Ancillary and Automobile Accessories in Industrial Estate, Growth Centre, Bawal, with an investment of Rs. 35 crores on 20.2.2007 under the on-going scheme for prestigious projects of Rs. 30 crores or above under the provisions of EMP-2005. Higher Level Plot Allotment Committee in the meeting held on 22.2.2007 decided to allot a plot measuring 6 acres to the petitioner-Company in the Growth Centre, Bawal, for setting up a unit of Automobile Ancillary and Automobile Accessories. Accordingly, the allotment of the plot was conveyed to the petitioner-Company on 7.5.2007 and regular letter of allotment with offer of possession was issued on 15.6.2007 for a plot measuring 20000 sq. mtrs. at the rate of Rs. 1,850/- per sq. mtr. An agreement dated 13.8.2007 was executed. Under the said agreement, the allottee was required to implement the project within stipulated period of three years from the date of offer of possession with an investment of Rs. 35 crores, as provided in the project report, failing which the said plot shall be resumed. As per Clause-5 of the agreement, the allottee was required to take the following steps within two years :-
"5. xxxxxx xxxxxx xxxxxxx A) Taking over possession of the plot B) Submission of building plans.
C) Placement of orders for machinery and other
capital goods.
D) Financial tie-up.
E) Technical and marketing tie up."
On 1.2.2008, when the possession was to be delivered, it came out that the actual area of the plot was 21600 sq. mtr. Therefore, cost of the excess 1600 sq. mtr. Amounting to Rs. 29,60,000/- was required to be CWP No. 19772 of 2011 -5- deposited by the petitioner-Company. On the request of the petitioner-
Company, it was asked to deposit 35% cost of the additional area for taking possession of the plot and the balance was scheduled to be paid in installments starting from 15.6.2008 to 15.12.2009.
The possession was taken over on 29.4.2008. The remaining 65% of the tentative price of the plot was payable in five equal half yearly installments commencing from 15.12.2007 to 15.12.2009. The petitioner- Company failed to deposit 2nd, 3rd, 4th and 5th installments on the due dates. On the request of the petitioner-Company, the repayment was re-scheduled effective from 28.2.2010. Rs. 28,35,685/- paid by the petitioner-Company towards overdue interest/penal interest were adjusted against the overdue interest amounting to Rs. 34,55,434/-. The re-scheduled amount was to be paid in 3 installments starting from 30.6.2010 to 30.6.2011. It was mentioned in the letter of re-schedulement that the letter shall have no force unless the payment for overdue interest/penal interest was deposited with the Corporation. The petitioner-Company did not pay the balance overdue amount of interest and defaulted in the same. Therefore, reschedulement was withdrawn on 14.6.2010. The petitioner-Company deposited further amount of Rs. 40 lacs on 30.6.2010 and vide letter dated 29.6.2010, requested to revive the reschedulement. By this date, another amount of Rs. 77,95,148/-, as per the reschedulement, became due and it defaulted in the same.
A show cause notice dated 6.9.2010 was issued to the petitioner-Company for payment of Rs. 2,16,70,344/- on account of non- implementation of the project on the said plot. The General Manager of CWP No. 19772 of 2011 -6- the petitioner-Company was given personal hearing on 16.9.2010, who assured to clear the default within two months and also assured that they would implement the project within stipulated period i.e. 14.6.2011. After hearing the petitioner-Company, vide letter dated 29.9.2010, the reschedulement was revived, subject to the condition that allottee will clear the amount of default within 30 days from the date of allotment. However, the default was not cleared. The petitioner-Company was again called for personal hearing on 10.2.2011, in which the representative of the petitioner-Company assured to clear the default within one month. Since the petitioner-Company did not make the payment within 30 days from the date of issue of notice and did not take effective steps for project implementation, therefore, the resumption order was passed. As per the site report dated 24.3.2011, the plot is lying vacant. It was asserted that the resumption order and the order in appeal are perfectly in accordance with law.
We have heard learned counsel for the petitioner-Company, learned Deputy Advocate General for the State, learned counsel for respondent No. 2 and have also carefully gone through the file.
The perusal of the impugned order of resumption shows that it was passed on two grounds :
(i) non-clearing of dues as per the schedule ;
(ii) non-implementation of the project within the stipulated period of three years.
The relevant extract from condition No. 4 of the agreement (Annexure-P-12) regarding implementation of project is reproduced as CWP No. 19772 of 2011 -7- under :-
"4.*That the allottee shall be required to implement the project, for which the aforesaid plot has been allotted, within a period of three years from the date of offer of possession; and that implementation of the project shall mean the commencement of commercial production, after coverage of construction in accordance with the norms specified in EMP and installation of the plant and machinery.
*That the allottee shall be required to implement the project, for which the aforesaid shed has been allotted, within a period of two years from the date of offer of possession; and that implementation of the project shall mean the commencement of commercial production, after installation of the plant and machinery. *Strike whichever is not applicable."
The petitioner-Company was required to take further steps for the implementation of the project on the plot. For this purpose, the relevant conditions No. 5 and 6 are reproduced as under :-
"5. That notwithstanding the period of three years stipulated qua implementation of the project on the plot, the allottee, as far as possible, shall take the following steps within the period of two years from the date of offer of possession of the aforesaid plot :-
a) Taking over possession of the plot.
b) Submission of building plans.
c) Placement of orders of machinery and other capital goods.
d) Financial tie-up.
e) Technical and marketing tie-up.
The period of three years for implementation of the project on the plot, may be further extended by HSIIDC by one year subject, however, to the conditions that the allottee has CWP No. 19772 of 2011 -8- achieved construction coverage in accordance with the norms specified in EMP, on the aforesaid plot and satisfies that the allottee had taken effective steps for the implementation of the project within the requisite period of three years, but for the reasons beyond his control, he could not commence the commercial production. Provided further that second extension of one year for the completion of the project i.e. after four years from the date of offer of possession, may be granted, only in exceptional circumstances. The period of two years for implementation of the project by allottee of the shed, may be further extended for one year by HSIIDC, in case the allottee has installed/placed orders for installation of the substantial part of the plant and machinery. Upon failure on the part of the allottee to the adhere to the schedule/time available for the implementation of the project, HSIIDC shall be competent to resume the aforesaid plot/shed after giving show notice.
6. That in case the allottee has been granted extension in the implementation of the project beyond the stipulated period of implementation, the allottee shall be required to pay extension fee at the rates, laid down in the EMP, which may be revised from time to time."
Learned counsel for the petitioner-Company has argued that due to worldwide recession in the year 2008-09, petitioner-Company could not commence the project and a general extension of one year was granted by the Government.
The letter of allotment and agreement show that the plot measuring 21600 sq. mtr. i.e. 6 acres land was allotted to the petitioner- Company for a certain purpose i.e. for setting up of industrial project for manufacturing of high quality Automobile Tool Kits and Automobile CWP No. 19772 of 2011 -9- Accessories. The possession of the plot was delivered on 29.4.2008. The petitioner-Company was required to start production within three years. It was also required to take further certain steps, as per condition No. 5. None of the steps mentioned in condition No. 5 were taken and even as per site report dated 24.3.2011, the plot was lying vacant. It shows that the petitioner-Company had no intention to carry on the project. Even in the petition, the petitioner-Company talks about starting of industry at Ludhiana and has stated that a pilot project has been established at Ludhiana from year 2007 to gauge the viability of the project at Bawal and that since the pilot project has been commissioned successfully and now the results are coming up, the petitioner-Company undertook to implement the project within very short period. The possession of the present huge plot was taken on 29.4.2008 i.e. after the commissioning of project at Ludhiana. Even thereafter till the date the order of resumption was passed, not a single step was taken by even submitting the building plan, placing the order for machinery and capital goods and financial tie up, which means the petitioner-Company had no intention to set up the project.
Coming to the repayment schedule, it is to be noted that the payment was rescheduled on 28.2.2010, but petitioner-Company failed to make the payment of interest and, therefore, the same was withdrawn. Later on, even during the personal hearing, the representative of the petitioner-Company undertook to make the payment of the defaulted amount within 30 days, but it was not done. Further undertaking was given during the next personal hearing to clear dues in 30 days, but it was not honoured. Therefore, respondents were left with no alternative, but to CWP No. 19772 of 2011 -10- resume the said plot. The plot was allotted under the 'ongoing scheme for prestigious projects of Rs. 30 crores or above' under the provisions of EMP-2005, but the petitioner-Company failed to take any effective step to start the project. It even defaulted in payments and despite repeated notices, the entire payment was not made. The order of the Appellate Committee (Annexure-P-19) shows that all the contentions of the petitioner-Company was considered. The relevant extract of the reasoning given by the Committee is as under :-
"(v) After going through the facts of the case on record, the Committee observed that the plot was allotted under the "prestigious projects category" [involving an investment of more than 30.00 crore in the fixed capital assets] considering the keenness of the allottee to implement the project immediately without even waiting for completion of infrastructure facilities by the HSIIDC. As per the Policy guidelines, the allottee was required to implement the project in a time bound manner with committed investment of Rs. 35.00 crore. However, not to talk of project implementation by investing Rs. 35.00 crore, the allottee failed to even start construction on the plot despite the stipulated period for implementation of the project having been fully availed by the allottee. Further, despite the plot price payments having been rescheduled and thereafter various opportunities granted by the Corporation, the allottee failed to clear the dues of the plot cost. From the contentions of the appellant, it appeared that even at this stage, the allottee did not have any firm plans for implementation of the project and also did not have resources to clear the plot cost dues, though it was required to invest Rs. 35.00 crore in the project. The Committee observed that the erstwhile allottee did not even have the resources to implement the project and the plot had been rightly resumed CWP No. 19772 of 2011 -11- by the Corporation on account of violations of terms and conditions of allotment. Accordingly, the Committee decided to dismiss the Appeal, being devoid of any merit."
The effect of delay in deposit of the installments of the allotted commercial site was examined by this Court in Adviser to the Administrator, UT, Chandigarh and others Versus B.K. Nanda, 2013(2) RCR (Civil) 808, wherein this Court has observed as under :-
".......... Having purchased the commercial property in an open auction, then to raise a plea of lack of insufficient funds is wholly unjustified and untenable. If the allottee has no funds, he should not have ventured into the arena of purchase of commercial property. The terms of allotment have to be strictly adhered to as it is a commercial motive, which prompted the allottee to participate in an open auction. Therefore, he is bound to honour such commercial commitments in terms of the allotment letter."
The said authority is directly applicable to the facts of the present case qua the non payment of installment and interest on the due date or on the re-scheduled date. This is in addition to the failure of the petitioner-Company to take any step within the stipulated period for commencement of the project, for which the plot was allotted, as discussed above.
We are of the view that since the petitioner-Company failed to make the entire payment as per the schedule and defaulted in the same and also failed to take any step to start the project, therefore, the impugned order resuming 21600 sq. mtrs. plot and the order passed by the Appellate CWP No. 19772 of 2011 -12- Committee, dismissing the appeal, are in accordance with law. Accordingly, the present petition is dismissed.
(HEMANT GUPTA) (KULDIP SINGH) JUDGE JUDGE 22.9.2014 sjks