Madras High Court
Tech Mahindra Limited vs The State Industries Promotion on 12 September, 2011
Author: K.Chandru
Bench: K.Chandru
IN THE HIGH COURT OF JUDICATURE AT MADRAS
DATED : 12.09.2011
CORAM
THE HONOURABLE MR.JUSTICE K.CHANDRU
W.P.No.6872 of 2009
and
M.P.No.2 of 2009
Tech Mahindra Limited,
rep by its Vice President &
Chief Legal Officer,
Atanu Sarkar
S/o.Late Asoke Kumar Sarkar,
Sharada Center,
Erandwane,
Pune-411 004. .. Petitioner
Vs.
1.The State Industries Promotion
Corporation of Tamil Nadu Ltd.,
(A Government of Tamil Nadu undertaking),
rep by its Chairman and Managing Director,
No.19-A,Rukmani Lakshmipathy Road,
Post Box No.7223,
Egmore, Chennai-600 008.
2.The Estate Officer,
SIPCOT Information Technology Park,
Padur Post,
Siruseri,
Kancheepuram District-603 103. .. Respondents
This writ petition is preferred under Article 226 of the Constitution of India praying for the issue of a writ of certiorarified mandamus to call for the records relating to the order made in D-II/SITP/ATPL/06, dated 26.07.2006 passed by the first respondent and the consequential order made in Ref.No.PO/SITP/198/08 (ATIPL) dated 25.07.2008 and the order made in Ref.No.PO/SITP/198/08 (ATIPL), dated 11.02.2009 passed by the second respondent and quash the same and forbear the respondents from evicting or resuming and allotting the land bearing plot No.6/D-6 comprised in S.No.76(part) of Egattur Village, SIPCOT Information Technology Park, Siruseri, Kancheepuram District admeasuring an extent of 3.07 acres of land to any third parties.
For Petitioner : Mr.G.Ethirajulu
For Respondents : Ms.Narmadha Sampath,
Standing Counsel for SIPCOT
- - - -
ORDER
The writ petition is filed by the petitioner company represented by its Vice President, challenging an order dated 11.2.2009 passed by the second respondent Estate Office, SIPCOT IT Park, Padur Post, Siruseri. By the impugned order, the petitioner company was informed that an allotment made in favour of M/s.Axes Technologies India Private Limited in plot No.6/D-6 to an extent of 3.07 acres at the SIPCOT Information Technology Park was cancelled by an order dated 26.7.2006 by the Chairman-cum-Managing Director as they had failed to observe the terms and conditions cited in the show cause notice, dated 12.4.2006. They were also given a direction to execute a cancellation deed in favour of the SIPCOT. The petitioner company was further informed that since the original allottee had failed to comply with the conditions of allotment, dated 20.12.2004 and they had failed to surrender physical possession of the plot to the SIPCOT and to execute a cancellation deed, actions were initiated under the Tamil Nadu Public Premises (Eviction of Unauthorised Occupants) Act, 1975.
2.According to the respondent SIPCOT, the original allottee pursuant to the allotment order dated 20.12.2004 had executed a lease deed on 10.3.2005 and the plot was registered in their name in the Sub Registrar's Office at Thiruporur. Under clause 18 of the lease deed, construction of the factory buildings should commence within 6 months from the date of allotment and should be completed within 24 months. Clauses 14 and 15 provide for determination of lease and resumption of unutilized land for violation of conditions of lease deed. It is claimed that the original allottee should have commenced the construction activities before 20.6.2005 under clause 18. It was also stated that the plot was not used for the purpose for which it was allotted and no extension of time was sought for implementing the project. Hence, a show cause notice was given on 12.4.2006. Since they had failed to observe the norms, cancellation of allotment was made on 26.7.2006. In continuation of the cancellation order, Form-A notice was given on 3.6.2008 and Form-B notice on 3.7.2008 under the provisions of the Tamil Nadu Public Premises (Eviction of Unauthorised Occupants) Act, 1975 by the second respondent Estate Officer.
3.It is at this stage, the original allottee sent a letter dated 29.7.2008 questioning the cancellation. In the impugned order, it was further indicated that the questioning the cancellation after several years by the original allottee did not arise. They have also failed to appear for an enquiry fixed on 18.7.2008. Therefore, under the power vested on the Estate Officer, the premises handed over to the original allottee was directed to be taken possession by the Assistant Engineer, SIPCOT. Challenging the said order, the present petitioner filed the writ petition. It was admitted on 18.4.2009. Pending the writ petition, an interim injunction was granted by this court. On notice from this court, a counter affidavit, dated Nil (September, 2011) was filed by the Assistant General Manager, SIPCOT.
4.The stand of the petitioner was that M/s.Axes Technology (India) Private Ltd. had paid the cost of the plot including development charges on 14.2.2005. The respondent SIPCOT sent a proposal to convert the IT Park as a Special Economic Zone and directed the original allottee to produce certain particulars on 3.3.2005 and that particulars have also been produced. They had also issued a direction in 9.3.2005 not to proceed further. No objection was given under pressure by the original allottee. The lease agreement was executed even before taking possession in respect of the zone conversion. The possession was handed over contrary to the terms of allotment only on 22.7.2005. The original allottee had informed the respondent that Mahindra British Telecom Limited had purchased the shares with effect from 28.11.2005 and an intimation was given on 17.2.2006 about the change of name. In the meanwhile, a show cause notice was given to the original allottee for cancellation and it was also cancelled. When the present petitioner came to know about cancellation, they made a representation on 11.4.2007 to reconsider the order of cancellation. A further representation was given on 27.4.2007. But on 20.7.2007, the respondent had expressed their inability to reconside. A letter sent by the present petitioner was replied to the original allottee and the letter was also sent to their address at Bangalore. On 11.6.2008, the petitioner had intimated the respondent about the amalgamation of the present petitioner company. But however they had proceeded with the notice under Section 4. They had also refused to allow the present petitioner to participate in the eviction proceedings and the eviction order was passed without notice to the petitioner. On 8.6.2008, the petitioner company had stated that as soon as the name change after amalgamation is done, they will execute the surrender deed. They had also sent a letter dated 11.6.2008 stating that they can deal with the present company in the matter of allotment. The eviction notice itself was addressed to the old company. On 26.2.2009, a legal notice was sent by the company to the SIPCOT. It was thereafter, they moved this court and obtained an interim order.
5.The contention made by the learned counsel for the petitioner Mr.G.Ethirajulu was that after amalgamation, the petitioner was in rightful possession of the property. In fact, clause No.8 of the terms of allotment clearly states that original allottee should not assign, sublet, transfer or part with their interest in the allotted plot either in whole or in part except with the prior written consent of SIPCOT. In the event of allottee seeking approval for change in constitution or change in the management or control or amalgamation with any other company or transfer of interest to any third party either in whole or part, the SIPCOT will give approval provided the allottee agrees to pay the cost as determined by the SIPCOT.
6.In the counter affidavit filed, it was stated that in the letter dated 22.11.2005 by the original allottee, it was notified that the share holdings of the company was to be acquired by the petitioner and that the entity will remain same without undergoing any changes. Subsequently, in a letter dated 17.2.2006, the change in the name of the company was notified. But even after original allotment, the conditions regarding starting of construction and ending of construction and putting the factory for production was never done by the original allottee. Therefore, the original allotment was cancelled and the present petitioner was directed to put back the plot in possession of the SIPCOT. The original allottee had also violated clause 18 of the allotment order. While communicating the new name by a letter dated 17.2.2006, but they had failed to provide the address of their registered office. The petitioner had not made out any case either to challenge the cancellation order or the order to direct the hand over of possession under the Public Premises Act.
7.The Supreme Court in U.P. Financial Corpn. v. Gem Cap (India) (P) Ltd., reported in (1993) 2 SCC 299 has held that it is only in case of statutory violation on the part of the SIPCOT or only when they had acted unfairly or unreasonably, the question of jurisdiction under Article 226 can be invoked. The following passages found in paragraphs 3,12 and 10 from the said judgment reads as follows:
"3.With great respect to the learned judges who allowed the writ petition we feel constrained to say this: a reading of the judgment shows that they have not kept in mind the well-recognised limitations of their jurisdiction under Article 226 of the Constitution. The judgment reads as if they were sitting as an appellate authority over the appellant-corporation. Not a single provision of law is said to have been violated. ......
12.While this is not the occasion to examine the content and contours of the doctrine of fairness, it is enough to reiterate for the purpose of this case that the power of the High Court while reviewing the administrative action is not that of an appellate court. The judgment under appeal precisely does that and for that reason is liable to be and is herewith set aside.
10.It is true that the appellant-corporation is an instrumentality of the State created under the State Financial Corporations Act, 1951. The said Act was made by the Parliament with a view to promote industrialisation of the States by encouraging small and medium industries by giving financial assistance in the shape of loans and advances, repayable within a period not exceeding 20 years from the date of loan. We agree that the corporation is not like an ordinary money-lender or a Bank which lends money. It is a lender with a purpose the purpose being promoting the small and medium industries. At the same time, it is necessary to keep certain basic facts in view. The relationship between the corporation and the borrower is that of creditor and debtor. The corporation is not supposed to give loans once and go out of business. It has also to recover them so that it can give fresh loans to others. The corporation no doubt has to act within the four corners of the Act and in furtherance of the object underlying the Act. But this factor cannot be carried to the extent of obligating the corporation to revive and resurrect every sick industry irrespective of the cost involved. Promoting industrialisation at the cost of public funds does not serve the public interest; it merely amounts to transferring public money to private account. The fairness required of the corporation cannot be carried to the extent of disabling it from recovering what is due to it. While not insisting upon the borrower to honour the commitments undertaken by him, the corporation alone cannot be shackled hand and foot in the name of fairness. Fairness is not a one way street, more particularly in matters like the present one. The above narration of facts shows that the respondents have no intention of repaying any part of the debt. They are merely putting forward one or other ploy to keep the corporation at bay. Approaching the courts through successive writ petitions is but a part of this game. Another circumstance. These corporations are not sitting on King Solomon's mines. They too borrow monies from Government or other financial corporations. They too have to pay interest thereon. The fairness required of it must be tempered nay, determined, in the light of all these circumstances. Indeed, in a matter between the corporation and its debtor, a writ court has no say except in two situations: (1) there is a statutory violation on the part of the corporation or (2) where the corporation acts unfairly i.e., unreasonably. While the former does not present any difficulty, the latter needs a little reiteration of its precise meaning. What does acting unfairly or unreasonably mean? Does it mean that the High Court exercising its jurisdiction under Article 226 of the Constitution can sit as an appellate authority over the acts and deeds of the corporation and seek to correct them? Surely, it cannot be. That is not the function of the High Court under Article 226. Doctrine of fairness, evolved in administrative law was not supposed to convert the writ courts into appellate authorities over administrative authorities. The constraints self-imposed undoubtedly of writ jurisdiction still remain. Ignoring them would lead to confusion and uncertainty. The jurisdiction may become rudderless."
8.The Supreme Court in Karnataka State Industrial Investment & Development Corpn. Ltd. v. Cavalet India Ltd., reported in (2005) 4 SCC 456, laid down parameters for exercise of the jurisdiction under Article 226. Hence it is necessary to refer to the relevant passage found in paragraph 19, which reads as follows:
"19.From the aforesaid, the legal principles that emerge are:
(i) The High Court while exercising its jurisdiction under Article 226 of the Constitution does not sit as an appellate authority over the acts and deeds of the Financial Corporation and seek to correct them. The doctrine of fairness does not convert the writ courts into appellate authorities over administrative authorities.
(ii) In a matter between the Corporation and its debtor, a writ court has no say except in two situations:
(a) there is a statutory violation on the part of the Corporation, or
(b) where the Corporation acts unfairly i.e. unreasonably."
(sub paras (iii) to (ix) omitted)
9.Subsequently, the Supreme Court in Punjab Financial Corporation v. Surya Auto Industries reported in (2010) 1 SCC 297 has also held that relationship between the corporation ad the borrower is that of creditor and debtor and the action initiated by the corporation cannot be nullified by the court unless there is violation of any statutory provisions. In paragraph 22, it was observed as follows:
"22.The relationship between the Corporation and borrower is that of creditor and debtor. .......The proceedings initiated by the Corporation ..... cannot be nullified by the courts except when such action is found to be in violation of any statutory provision resulting in prejudice to the borrower or where such proceeding/action is shown to be wholly arbitrary, unreasonable and unfair. The court cannot sit as an appellate authority over the action of the Corporation and substitute its decision for the one taken by the Corporation.
10.In the present case, it is not clear as to how the petitioner has locus standi to challenge either the cancellation order or the eviction notice. Even if it is taken that the original allottee's company was amalgamated with the present petitioner, they have no right to challenge the same. Such amalgamation came long after the cancellation. Even now, there is no explanation for not proceeding with the construction. There is clear violation of clause 18 of the condition of allotment. This court do not find any unreasonableness in the action taken by the respondents. Hence there is no case made out.
11.The writ petition will stand dismissed. However, there will be no order as to costs. Consequently, connected miscellaneous petition stands closed.
12.09.2011 Index : Yes Internet : Yes vvk To
1.The Chairman and Managing Director, The State Industries Promotion Corporation of Tamil Nadu Ltd., (A Government of Tamil Nadu undertaking), No.19-A,Rukmani Lakshmipathy Road, Post Box No.7223, Egmore, Chennai-600 008.
2.The Estate Officer, SIPCOT Information Technology Park, Padur Post, Siruseri, Kancheepuram District-603 103.
K.CHANDRU, J.
vvk W.P.NO.6872 of 2009 12.09.2011