Karnataka High Court
M/S. Aaress Iron And Steel Limited vs The State Of Karnataka on 11 March, 2025
Author: Hemant Chandangoudar
Bench: Hemant Chandangoudar
-1-
NC: 2025:KHC-D:4689
WP No. 27387 of 2016
IN THE HIGH COURT OF KARNATAKA, DHARWAD BENCH
DATED THIS THE 11TH DAY OF MARCH, 2025
BEFORE
THE HON'BLE MR. JUSTICE HEMANT CHANDANGOUDAR
WRIT PETITION NO. 27387 OF 2016 (LA-KIADB)
BETWEEN:
1. M/S. AARESS IRON AND STEEL LIMITED
105, EMBASSY SQUARE,
148, INFANTRY ROAD, BENGALURU - 560 001
REPRESENTED BY ITS DIRECTOR
SRI RAHUL KUMAR N. BALDOTA,
S/O NARENDRA KUMAR BALDOTA,
AGED ABOUT 48 YEARS.
...PETITIONER
(BY SRI. ASHOK HARANAHALLI, SENIOR ADVOCATE FOR
SRI. SWAMY M.M., ADVOCATE)
AND:
1. THE STATE OF KARNATAKA
DEPARTMENT OF COMMERCE AND INDUSTRIES,
M.S. BUILDING, VIDHANA VEEDHI,
BANGALORE - 560 001
Digitally signed by B REP. BY ITS SECRETARY.
K
MAHENDRAKUMAR
Location: HIGH
COURT OF 2. KARNATAKA INDUSTRIAL AREAS
KARNATAKA
DEVELOPMENT BOARD
14/3, R.P. BHAVAN, NRUPATHUNGA ROAD,
BANGALORE - 560 001
REP. BY ITS MANAGING DIRECTOR.
3. KARNATAKA STATE SMALL INDUSTRIES
DEVELOPMENT CORPORATION LTD.,
INDUSTRIAL ESTATE, RAJAJINAGAR,
BANGALORE - 560 010
REP. BY ITS MANAGING DIRECTOR.
-2-
NC: 2025:KHC-D:4689
WP No. 27387 of 2016
4. THE SPECIAL LAND ACQUISITION OFFICER
KARNATAKA INDUSTRIAL AREAS
DEVELOPMENT BOARD,
LAKAMANAHALLI INDUSTRIAL ESTATE,
DHARWAD - 580 011.
5. SUDHANVA ENTERPRISES
R/BY ITS PROPRIETOR
SRI. SHARANABASAVARAJ
S/O SHIVAPPA GADAG
AGE:45 YRS, OCC: BUSINESS
R/O: # 5-53-371-3, 26TH WARD
VIJAYANAGAR COLONY GANGAVATHI
DIST: KOPPAL- 583 227.
6. VISHWANATH M PATIL
AGE:44 YRS, OCC: BUSINESS
R/O: INDRAKEEL NAGAR, GADAG ROAD.
KOPPAL- 583 231.
7. SRI RAGHAVENDRA ENTERPRISES
R/BY ITS PROPRIETOR
SRI. PAMPAPATI S/O B. SHIVAPPA
AGE:42 YRS, OCC: BUSINESS
R/O: NO.140/2, 3RD MAIN, 3RD CROSS,
M.J. NAGAR, HOSPET, DIST:BELLARY-583 201.
8. VISHNU FABRICATION
R/BY ITS PROPRIETOR
SRI. SAGAR S/O SURESH.A
AGE:28 YRS, OCC:BUSINESS
R/O: WARD NO-3, GINAGERA
KOPPAL- 583 228.
9. SINDHU BRICKS
R/BY ITS PROPRIETOR
SMT. SHANKRAMMA
W/O YANKAPPA HUNUGUND
AGE:33YRS, OCC:BUSINESS
R/O:WARD NO-1, NEAR BUS STAND,
AAGOLI, TQ: GANGAVATHI DIST: KOPPAL- 583 235.
-3-
NC: 2025:KHC-D:4689
WP No. 27387 of 2016
10. SRI. K. MURAGESH S/O T. KANNAN
AGE: 57 YRS, OCC: BUSINESS
R/O:H.NO-74, V.CAMP, T.B. DYAM POST
TQ: HOSPET, DIST: BELLARY-583 225.
11. SRI. B. GIRISHANANDA
S/O GNANSUNDAR
AGE: 40 YRS, OCC: BUSINESS
R/O:SAPTAGIRI NILAY,
SRI BASAVESHWAR NAGAR,
WARD NO-12, KOPPAL-583 231.
12. NEELA ENTERPRISES
R/BY ITS PROPRIETOR
MUTTANNA S/O RAMANNA VADDAR
AGE; 45YRS, OCC:BUSINESS
R/O H.NO-73, SREERAM COLONY,
7TH WARD,
BHAGYANAGAR KOPPAL-583 238.
13. SURESH BHOOMREDDY
AGE; 48 YRS, OCC: PWD CONTRACTOR
R/O: NEAR HANUMAN TEMPLE,
SATYADHYAN COLONY,
KOPPAL-583 238.
14. S.V.PACK
R/BY ITS PROPRIETOR
SREEMANTAPPA S/O BHEEMASAIN BARASKALE
AGE; 47 YRS, OCC: BUSINESS
R/O H.NO-204, BASAPURA VILLAGE,
POST: BANDI HARLAPURA, KOPPAL.
15. M/S SRI. LAKSHMI FABRICATION
R/BY ITS PROPRIETOR
SRI ANIL S/O ARJUN BHASKAR
AGE; 25YRS, OCC: BUSINESS
R/O HUBLI ROAD, UDAY NAGAR
GADAG-582 101.
-4-
NC: 2025:KHC-D:4689
WP No. 27387 of 2016
16. M/S DHRTI STEEL FABRICATION
R/BY ITS PROPRIETOR
SMT LAKSHMI W/O RAVI HOTKAR
AGE; 32:YRS, OCC: BUSINESS
R/O: HUBLI ROAD,
BEHIND SHANBHOG HOTEL
GADAG.
17. M/S SHREE YELLAMMADEVI ENTERPRISES
R/BY ITS PROPRIETOR
SMT REKHA SHREEKANTH SANDIGAVADA
AGE; 34 YRS, OCC: BUSINESS
R/O: DR. RADHA KRISNA NAGAR,
MULUGUNDA ROAD
GADAG.
18. SRI MANJUNATH
S/O BALAKRISHNA GHODIKE
AGE: 22 YRS, OCC: BUSINESS
R/O: KALASAPUR TQ: MUNDARAGI,
DIST:GADAG.
19. MADHUSHANKAR ENTERPRISES
R/BY ITS PROPRIETOR
VINODS/O SHANKRAPPA HADAGALI
AGE; 34 YRS,
OCC: CONTRACTOR R/O: R.S NO-155,
ADARSH NAGAR, NEAR NEELAMATAYI
ASHRAM GADAG-582 101.
20. M/S PRASHANT INDUSTRIES
R/BY ITS PROPRIETOR
SRI. PRASHANT
S/O HANAMANTAPPA BHAJANTRI
AGE; 35YRS, OCC: BUSINESS
R/O SUDI, TQ:RONA, DIST:GADAG-582 211.
21. M/S CHETAN ENTERPRISES
R/BY ITS PROPRIETOR
SRI RAJAPPA S/O HULIGEPPA BHAJANTRI
AGE; 45YRS, OCC:BUSINESS
-5-
NC: 2025:KHC-D:4689
WP No. 27387 of 2016
R/O: #6891, BHANTRI ONI,
BETAGERI
GADAG BETAGERI GADAG-582 102.
22. M/S PADMAVATI ENTERPRISES
R/BY ITS PROPRIETOR
SMT PADMAVATI
W/O BASAVARAJ BHAJANTRI
AGE; 45YRS, OCC: BUSINESS
R/O: NEAR RENUKACHARYA KALYAN MANTAP
SHARANABASAVESHWAR NAGAR,
GADAG BETAGERI-582102.
23. SRI SHREENIVAS H S/O HULUGAPPA J
AGE; 41 YRS, OCC: BUSINESS
R/O: H.NO-225, SHRI BALA ESTATE, NEAR RTE,
BENGALURU ROAD HOSPET-583201.
...RESPONDENTS
(BY SRI. ASHOK J. KATTIMANI, AGA FOR R1 & R4;
SRI. G.I. GACHCHINAMATH, ADVOCATE FOR R2 AND R3;
SRI. SURESH S. SHETTEMMANAVAR,
FOR IMPLEADING APPLICATION ON IA 1/2024)
THIS WRIT PETITION IS FILED UNDER ARTICLES 226 AND
227 OF THE CONSTITUTION OF INDIA PRAYING TO QUASH
THE NOTIFICATION DATED 20.11.2014 ISSUED IN
GOVERNMENT ORDER BY THE RESPONDENTS, VIDE
ANNEXURE-N AND QUASH THE GOVERNMENT ORDER DATED
02.11.2012 PASSED BY THE R-1 GRANTING APPROVAL IN SO
FAR AS "KIADB TO EARMARK 104.11 ACRES OF LAND TO
KSSIDC FOR FORMATION OF INDUSTRIAL ESTATE VIDE
ANNEXURE-H" AND ANY CONSEQUENTIAL ACTIONS TAKEN BY
RESPONDENTS.
THIS PETITION, COMING ON FOR FURTHER HEARING,
THIS DAY, THE COURT MADE THE FOLLOWING:
CORAM: THE HON'BLE MR. JUSTICE HEMANT CHANDANGOUDAR
-6-
NC: 2025:KHC-D:4689
WP No. 27387 of 2016
ORAL ORDER
The petitioner seeks a writ in nature of Certiorari to quash the Final Notification dated 20.11.2014 issued in G.O No. CI 137 SPQ 2014, passed by respondent No.1 vide Annexure N (the impugned document at Annexure N is dated 25.09.2014) and the G.O dated 2.11.2012, bearing No. CI 96 SPI 2008, passed by the respondent No.1, vide Annexure H, by which, the respondent No. 2 - KIADB was directed to earmark 104 acres of land to respondent No. 3
- KSSIDC for formation of an industrial estate, out of the land initially approved to the petitioner.
2. The instant petition is a challenge posed by an earlier allottee against the allotment of 104 acres (approx.) of land to respondent No. 3 - KSSIDC, out of the 965 acres (approx.) of lands initially earmarked for acquisition for the benefit of the petitioner.
3. The 8th SHLCC in its proceedings dated 23.02.2007 had resolved to approve the proposal of the petitioner to establish 1.5 mmtpa steel plant and directed the respondent No.2 - KIADB to acquire 922 acres of land in Basapura Village, Koppal Taluk. At the request of the petitioner to increase the installation capacity to 2.5 mmtpa and to further acquire and allot 965.50 acres of land for project, the 13th SHLCC in its proceedings held on -7- NC: 2025:KHC-D:4689 WP No. 27387 of 2016 13.3.2008 had resolved to approve the proposal of the petitioner by adding two following conditions, conveyed to the petitioner vide Government Order bearing No. CI 96 SPI 2008, Bangalore, dated 09.05.2008.
• the promoter shall secure consent from the respective landowners in respect of 75% of the land proposed to be acquired by the KIADB prior to commencement of acquisition; and • the project proponents shall provide employment for at least one member of the family of each land loser.
4. The same was the subject matter of the P.I.L in W.P No.11065/2008, which was ultimately withdrawn on 16.10.2014.
5. The petitioner, however, requested for extension of time to implement the project vide communication dated 03.02.2012. Given the circumstances, the respondent No. 3 - KISSIDC on 03.03.2012 sought necessary information from Karnataka Uduyog Mithra for acquiring the land for the purpose of establishing an industrial estate in the area. The 29th SHLCC on 06.09.2012 while granting extension of two years of time to the petitioner to implement the project, directed the -8- NC: 2025:KHC-D:4689 WP No. 27387 of 2016 KIADB to allot 104 acres of land out of the land approved to the petitioner.
6. Subsequently, the respondent No.1 vide order dated 2.11.2012 at Annexure H directed the KIADB to earmark 104 acres of land to KSSIDC formation of industrial estate. The petitioner's request to withdraw the earmarking 104 acres of land to the KSSIDC was not acceded to and the proceedings were initiated to acquire 104.11 acres of land for the purpose of respondent No.3 - KSSIDC, which culminated in publishing of final notification under Section 28(4) of the KIADB Act dated 25.09.2014, at Annexure N. Aggrieved, the petitioner has preferred the instant petition. The prayer impugning Annexure N however, appears to have erroneously mentioned the date of said notification as 20.11.2014.
Submissions
7. Sri Ashok Haranahalli, learned Senior Counsel appearing for the petitioner's counsel argues that the respondent No.3 - KSSIDC does not come under the ambit of entrepreneur as defined under Section 3(2) of the Karnataka Industries (Facilitation) Act, 2002. Therefore, the earmarking of 104 acres of land out of the land approved to the petitioner lacks authority. He further argues that the Government having approved the project -9- NC: 2025:KHC-D:4689 WP No. 27387 of 2016 and also promised to allot the required land, the State cannot resile from the said promise as the Government is bound by its promise.
7.1. In other words, the principle of the doctrine of estoppel that the law will not permit an unconscionable departure by one party from the subject matter of an assumption which has been adopted by other party as the basis of a code of conduct, which would affect other party if the assumption be not adhered to.
7.2. The learned counsel further argued that conjoint reading of Section 3 and Section 5 of the Karnataka Industries (Facilitation) Act, 2002, leads to the conclusion that any approval given by the single point clearance committee shall be binding on all the concerned departments or authorities and that the latter shall issue the required clearances within the stipulated time, subject to compliance of the applicable Central and State Acts and Rules made thereunder. The lands earmarked for the 'Second Phase' of the petitioner's Company's project are contiguous, ideally situated and more suitable for the project, as the vital railway sidings are to be put up for the ingress and egress of the raw materials and finished products.
- 10 -
NC: 2025:KHC-D:4689 WP No. 27387 of 2016 7.3. Furthermore, the learned counsel submitted that the respondent No. 3 has made illegal allotments of the subject property to third parties during the pendency of the instant proceedings, in violation of the order dated 25.02.2022, wherein this Court had directed the respondent No. 3 not to finalize any portion of the subject property in favor of prospective allottees.
In support, reliance is placed on the following cases -
1. Manuelson Hotels Private Ltd. v. State of Kerala and Ors. (2016) 6 SCC 766
2. K.N. Ashwathnarayana Shetty (D) Tr. LRs & Ors. v. State of Karnataka and Ors. AIR 2014 SC 279 (Para 6, 7, 8)
3. Goudappa Appaya Patil v. Shivari Bhimappa Pattar AIR 1992 Kar 71
8. Per contra, the learned counsel for the respondent Nos. 2 and 4 has argued that the SHLCC had initially approved an acquisition of a parcel of 995.50 acres of land at Basapura, Koppal and Halavarthi villages of Koppal District, in favor of the petitioner company as part of the Second Phase of the industrial production activity, titled 'Integrated Iron and Steel Plant', vide 13th SHLCC meeting held on 13.03.2008, through respondent No. 2 - KIADB. Thereafter, the respondent No. 1 vide G.O dated
- 11 -
NC: 2025:KHC-D:4689 WP No. 27387 of 2016 09.05.2008 conveyed the approval for acquisition of the parcel of 995.50 acres of land through respondent No 2 and also sought for an extension of two years of time for the implementation of the project, subject to -
1. That the promoter shall secure consent of 75% of the owners of the lands proposed to be acquired, and
2. That the project proponent shall provide employment for at least one member of the family of each land loser.
8.1. The learned counsel promptly drew attention of this Court to the fact that the company as yet, has not complied with the first condition viz. of securing the requisite consent from the landowners and, that the petitioner had yet again, vide letter dated 26.03.2012 had requested for an extension of another two years of time for implementation of the project.
8.2. Thereafter, in the 29th SHLCC meeting held on 06.09.2012, amending its earlier approval for acquisition of lands, recommended the respondent No 2 - KIADB to allot a parcel of 104.11 acres of land (hereinafter the subject lands), out of the extent of the lands initially earmarked for the petitioner to respondent No 3, for the establishment of an industrial estate. The respondent No 2 thereafter, resolved to acquire the subject land in favor of respondent No 3. And that, in pursuance of the same, the
- 12 -
NC: 2025:KHC-D:4689 WP No. 27387 of 2016 latter had made a payment of the amount of INR 17.37 crores to the respondent No. 2 as part of the initial cost of acquisition.
8.3. The learned counsel further argued that upon the issuance of the final notification dated 25.09.2014 (Annexure N) the subject lands were vested with the Government free from all encumbrances under Section 28(5) of the KIAD Act, 1966 and that the possession had been taken by the respondent No. 4 and that the latter has already settled the compensation for an extent of 80.38 acres out of the 104.11 acres of the land sought to be acquired. Furthermore, respondent No 4 has handed over to respondent No. 2 the subject lands on 04.08.2016.
8.4. Furthermore, the learned counsel vociferously contended that since the petitioners had failed to secure the consent of the 75% of the 995.50 acres of lands sought to be acquired by the petitioner, as part of the Second Phase of project expansion, the petitioner had no locus standi to assail the acquisition notifications in favor of respondent No 3. More importantly, the state government had exercised its powers under eminent domain, in order to generate employment and sub-serve public interest at large by encouraging small scale industrialists.
- 13 -
NC: 2025:KHC-D:4689 WP No. 27387 of 2016
9. Shri Gurudas S. Kannur, learned Senior Counsel representing the learned counsel Gurudev Gachchinamath for the respondent No. 3, argued that allotment of a parcel of 104.11 acres of land out of the land initially earmarked for the acquisition by the petitioner, was made because the the petitioner had not commenced with the implementation of the project, and to attain social justice and bring economic equilibrium by giving livelihood to many small entrepreneurs, in the larger public interest.
9.1. The learned Senior Counsel further reiterated the arguments canvassed above that the respondent No. 3 had made a payment of the amount of INR 17.37 crores to the respondent No. 2, against the allotment of the subject land and had already taken possession and commenced with the developmental works in full swing, and that it had thus far allotted 180 out of the 463 plots so formed to the needy entrepreneurs.
Issue
10. Upon hearing the arguments of the learned counsels for the parties and perusing the material on record, the key point that emerges for consideration is:
• Whether the issue of the impugned final notification at Annexure N, dated 25.09.2014 and the G.O dated 02.11.2012 at Annexure H
- 14 -
NC: 2025:KHC-D:4689 WP No. 27387 of 2016
- issued by respondent No.1 directing the KIADB to allot a parcel of 104 acres in favour of respondent No. 3, out of the 995.50 acres of land, which was initially approved to the Petitioner Company in the year 2012, (for the purpose of the 'Second Phase' of its 'Integrated Iron and Steel Project') by way of amending the earlier G.O. No. CI 96 SPI 2008 dated, 09.05.2008, is bad in law and vitiated due to unreasonableness, arbitrariness and irrationality?
Discussion/Analysis
11. In the instant case, the petitioners are seeking a judicial review of the preliminary notification issued under Section 3(1) of the KIAD Act, 1966 proposing the impugned acquisition, and the final notification issued under Section 28(3) of the said Act, 1966, vide G.O. dated 20.11.2014 - at Annexure N, to allot a parcel of 104 acres of lands to the respondent No. 3 - Karnataka State Small Industries Development Corporation, out of the parcel of 995.50 acres of land, initially earmarked for acquisition by the Petitioner, vide G.O. dated 09.05.2008.
12. The State Government vide GO No. CI 511 SPI 2005 dated 22.12.2005 had approved the proposal of M/s. MSPL Steel Ltd to establish 1.5 MMTA Steel Plant through
- 15 -
NC: 2025:KHC-D:4689 WP No. 27387 of 2016 Coke-Oven Sinter - Blast Furnace BOF Roof (in addition to 1 MMPTA Integrated Steel Plant). In the 8th SHLCC meeting held on 23.02.2007, it was decided to recommend the Revenue Department to permit the said company to purchase 995.50 acres of land in various Sy. Nos. of Basapura, Kidadalu, Halavarthi villages, Koppal Taluk and District, under Section 109 of KLR Act, to be thereafter converted for industrial use.
13. Thereafter, the State Government vide G.O No. CI 511 SPI 2005 dated 22.03.2006 accorded approval to the said company's wholly owned subsidiary M/s. Aaress Iron and Steel Ltd. i.e., the Petitioner Company herein to implement the specialty Integrated Iron and Steel Plant (hereinafter referred to as the specialty Plant). The said specialty Plant was to be implemented in two phases. In pursuance of the Petitioner's letter dated 26.02.2008, the SHLCC, upon discussion, in its 10th and 13th Meetings held on 23.08.2007 and 13.03.2008, respectively, approved the Petitioner's request to acquire the land through the respondent No. 2- Karnataka Industrial Areas Development Board (KIADB) because of practical difficulties besetting the acquisition.
14. Subsequently, in pursuance of the resolutions passed in the 8th SHLCC Meeting held on 23.02.2007, the respondent No. 1 - Department of Commerce and
- 16 -
NC: 2025:KHC-D:4689 WP No. 27387 of 2016 Industries, Government of Karnataka vide G.O No. CI 96 SPI 2008, Bangalore dated, 09.05.2008 conveyed to the Petitioner herein the decision of the State Government approving the acquisition of a parcel of 995.50 acres of land to establish the 'Second Phase' of the Petitioner's project, contiguous to the parcel of 1018.03 acres of land, on which the Petitioner had yet to begin implementing the 'First Phase' of the 1.0 MTPA Integrated Iron and Steel Plant. The second phase expected an increase in the capacity of the specialty Plant from 1.5 MTPA to 2.5 MTPA.
15. The said G.O. dated 09.05.2008 also granted an extension of time beyond two years for implementation of the project, subject to:
1. Promoters providing/securing the consent for 75% of the proposed land to the KIADB, prior to the commencement of acquisition;
2. And that the proponents of the project have to provide employment for at least one member of the family and of each land loser.
16. The Minutes of the 29th SHLCC Meeting, as held on 06.09.2012 (September 2012), reveals that the holding company of the Petitioner Company had been delivered possession of a parcel of 113.3 acres of land in 2010 to establish its 1.2 MTPA Iron Ore Pellet Plant, and that the
- 17 -
NC: 2025:KHC-D:4689 WP No. 27387 of 2016 holding company had started its production activity in the month of September of the year 2011.
17. The said Minutes of the Meeting however, reveal that the Petitioner company had not been able to commence its 'First Phase' operations of 1.0 MTPA specialty Plant on account of the stay imposed on the acquisition proceedings by this Court and in a challenge preferred by some erstwhile landowners of some 145 acres out of 922.9 acres of lands for enhanced compensation, and due to the delay in the issue of requisite environmental, water, forest, NHAI clearances, etc.
18. As recorded above, the G.O. issued in June 2008 had granted an extension of two years of time for the implementation of the project, subject to promoter providing / securing the consent of 75% of the landowners of the lands proposed to be acquired, prior to commencement of acquisition proceedings. However, the Minutes of the 29th SHLCC Meeting held in September, 2012 reveals that since the Petitioner Company had not been able to secure the requisite consent, the KIADB had not initiated the acquisition proceedings and had therefore, not issued a notification of intent to acquire the land under Section 28(1) of the KIADB Act, 1966.
- 18 -
NC: 2025:KHC-D:4689 WP No. 27387 of 2016
19. The above Minutes further reveal that the Petitioner Company was being hindered in completing the acquisition proceedings in the 'Second Phase' since the landowners of the lands proposed to be acquired were seeking steeper compensation, in the background of upcoming industrial projects in the Koppal sector, and that it had managed to obtain only 20% to 30% consent from the landowners.
20. Incidentally, the respondent No. 3 - KSSIDC had vide letters dated 29.03.2012 & 03.03.2012 had requested for acquisition of 104 acres of land at Basapura Village, Koppal Taluk to establish an industrial estate. The said lands coincidentally fall into the parcel of lands earmarked for the 'Second Phase' of the Petitioner Company's specialty Plant.
21. The 29th SHLCC Meeting held in September, 2012 addressed both issues and thereby:
1. Approved the request of the Petitioner Company to extend the time for implementing the 'Second Phase' of the specialty Plant by another two years, but also;
2. Recommended to KIADB to allot 104 acres out of the 995.50 acres of land earmarked for the 'Second Phase' of the Petitioner Company's project, as approved in the 8th SHLCC Meeting in February 2007.
- 19 -
NC: 2025:KHC-D:4689 WP No. 27387 of 2016
22. In pursuance of the above recommendation, the Commerce and Industries Department, Government of Karnataka issued a G.O. No. CI 96 SPI 2008, Bangalore, dated 02.11.2012 (November 2012) bringing the said recommendations to effect. Subsequently, it also issued a preliminary notification under Section 3(1) of the KIAD Act, 1966 proposing to acquire the the said 104 acres of land vide notification dated 22.02.2013 and the impugned final notification under Section 28(4) of the Act, 1966, vide, notification dated 25.09.2014, at Annexure N.
23. It is relevant to note at this stage that a P.I.L in W.P. No. 11065/2008 was preferred on 27.8.2008 challenging G.O No. CI 96 SPI 2008, Bangalore dated, 09.05.2008, (which had granted the Petitioner company an extension of time of two years to implement the 'Second Phase' of the specialty Plant whilst also approving the additional allotment of 995.50 acres of land) was disposed of as withdrawn vide final order dated 16.10.2014.
24. In response, the Petitioner Company made several representations to respondent No. 1 requesting to stop the acquisition and the allotment in favor of the respondent No.3-KSSIDC, and withdraw the final notification directing the said allotment, stating therein that the impugned allotment is a centrally allocated patch in the
- 20 -
NC: 2025:KHC-D:4689 WP No. 27387 of 2016 parcel of 995.50 acres of allotment to the Petitioner Company and shall paralyze the latter's acquisition process and cause further delay in implementing the 'Second Phase' of the specialty Project.
25. The learned Senior Counsel appearing for the petitioner contested the impugned allotment in favour of respondent No. 3 based on the doctrine of promissory estoppel and contended that State is estopped from making the impugned allotment in favour of the respondent No. 3 - KSSIDC, in view of the fact that the lands comprising the impugned allotment are part of the lands earmarked for the second phase of the specialty Plant of the Petitioner Company, more so when the lands allotted to the respondent No. 3 are absolutely necessary, for the requisite railway sidings, which are to be put up for the ingress and egress of the raw materials and finished products.
26. The learned Senior Counsel placed reliance on Manuelsons Hotels Pvt. Ltd. v. State of Kerala and Ors. 2016 6 SCC 766, wherein, the appellant had relied on the impugned Government Order under a statutory enactment therein from being exempted on the payable 'building tax' and constructed a hotel, but the concessionary provision in the governing statutory enactment itself was repealed two years after the
- 21 -
NC: 2025:KHC-D:4689 WP No. 27387 of 2016 construction, and a demand for filing of returns for payment of building tax was made, the Hon'ble Supreme Court elucidated the concept of promissory estoppel as a bar on unconscionable departure by the promisor from the subject matter of an assumption that induced the promisee as the basis of some future conduct, provided that the promisee had acted upon the the representation so made by the promisor. Importantly, it held that it was not required for the promisee to prove detriment and that promissory estoppel can be the basis of an independent cause of action.
26.1. Referring to its earlier decisions, the Court reiterated that while the government would not be permitted to resile from its assurance on "some indefinite and undisclosed ground of necessity or expediency", doctrine of promissory estoppel was essentially an equitable principle, yielding to larger public interest when equity of the case was so demanded. Further adopting the test laid down in Australian jurisprudence, it held that the "question of whether the departure from the assumption must be unconscionable must be resolved not by reference to some preconceived formula framed to serve as a universal yardstick but by reference to all the circumstances of the case, including the reasonableness of
- 22 -
NC: 2025:KHC-D:4689 WP No. 27387 of 2016 the conduct of the other party in acting upon the assumption".
26.2. On the issue of review of exercise of discretionary authority, the Apex Court concluded that promissory estoppel shall have to be upheld against where discretionary powers vested with the State were unreasonably exercised.
26.3. Further referring to its earlier decision in the case of Indian Express Newspapers (Bombay) (P) (Ltd.) v. Union of India (1985) 1 SCC 641, it observed that reasonableness of an administrative action exercising particular discretionary powers under a governing statute may be inquired into where exercise of jurisdiction appears to be without application of mind, or by considering extraneous or irrelevant matters.
27. The learned Senior Counsel further contended that, the respondent No.3 - KSSIDC, in contravention of the settled law against the transfer of property which is subject of litigation, has proceeded to finalise the allotments in respect of third parties during the pendency of the instant petition, and places reliance on the decision in the case of KN Ashwathnarayana Setty (D) Thr LRs.
and Ors v. State of Karnataka and Ors.
MANU/SC1269/2013. A perusal of the said decision,
- 23 -
NC: 2025:KHC-D:4689 WP No. 27387 of 2016 however, reveals that the substance of the doctrine of lis pendens is that the transferee cannot deprive the successful plaintiff of the fruits of the decree if the transferee had purchased the property pendente lite.
27.1. Thus, the substance of the principle of lis pendens does not bar the transfer of property pendente lite but only subjects the transfer to the outcome of the decision arrived at by the Court in the dispute. The Court in Ashwathnarayana Setty refused to concede to the appellants' cause therein and observed that transfers effected after the issue of the preliminary notification for acquisition under Land Acquisition Act, 1894, were barred in light of the litigious obstacles that arose in completing the acquisition proceedings.
27.2. The Apex Court had further referred to its earlier decision in the case Sanjay Verma v. Manik Roy (2006) 13 SCC 608, wherein it was observed that "mere pendency of a suit does not prevent one of the parties from dealing with the property constituting the subject matter of suit. The Section (52 of the TP Act, 1882) only postulates a condition that the alienation will in no manner affect the rights of other party under any decree which may be passed in the suit unless the property was alienated with the permission of the Court."
(emphasis supplied)
- 24 -
NC: 2025:KHC-D:4689 WP No. 27387 of 2016
28. Thus, the above case-law relied upon by the petitioner, does not per se bar any transfer of property pendente lite and is inapplicable to the case of the petitioner at hand.
29. Furthermore, the learned Senior Counsel for the petitioner relied upon the decision of the Division Bench of this Court in the case of Goudappa Appaya Patil v.
Shivari Bhimappa Pattar and Ors MANU/KA/0007/1992. Relying upon the ratio
enunciated in the case of S.A.L. Narayan Row v. Ishwarlal Bhagwandas MANU/SC/0160/1965, this Court opined that that the doctrine of lis pendens was extendable to proceedings related to a right to immovable property before the High Court under Articles 226 and 227 of the Constitution of India, and also observed that mere fact of a compromise between the parties in the proceeding before the writ court cannot be evidentiary of a collusive proceeding.
There is no quarrel with the said proposition, but the case-law however, is inapplicable to the case of the petitioner herein.
30. In the instant case, it remains undisputed that the Petitioner company herein was obliged to secure the consent of 75% of the landowners, prior to the
- 25 -
NC: 2025:KHC-D:4689 WP No. 27387 of 2016 commencement of acquisition of lands by the KIADB for the second phase of the Petitioner's specialty Plant, vide G.O. dated, 09. 06. 2008. Thus, where the Petitioner had been unable to timely secure the necessary consent from the requisite percentage of landowners, and consequently delayed the acquisition of lands by KIADB, the object of speedy implementation of industrial development envisaged under the Karnataka Industries (Facilitation) Act, 2002 remained far from attained.
31. Thus, where the State High Level Clearance Committee resolved in its 29th Meeting held in September 2012, to extend the time frame to implement the project by another two years, and simultaneously recommended the allotment of 104 acres out of the 995.50 acres of land earmarked for the second phase of the specialty Plant of the petitioner, in favour of respondent No. 3 - KSSIDC, which is the industrial and investment agency for small scale industries, the same cannot be faulted with in light of the apparently long delay in the commencement of acquisition of land earmarked and the utilisation thereof. The perusal of the material on record indicates that the impugned allotment has been made in public interest, and further does not appear to have been a mala fide exercise of power. A further perusal of the memorandum of the writ petition does not indicate any pleading to the contrary.
- 26 -
NC: 2025:KHC-D:4689 WP No. 27387 of 2016
32. As regards the applicability of the doctrine of promissory estoppel, it cannot be stated that the petitioner could have any vested right in the lands earmarked for the second phase of the specialty Plant, more so, when the petitioner had failed to attain the necessary consent from 75% of the landowners of the lands earmarked for acquisition. Therefore, the petitioner could not be said to have acted on the representation of earmarking of the lands, to be subsequently acquired by the KIADB upon securing the requisite consent of landowners. Furthermore, where the impugned allotment in favour of the respondent No. 3 was implicitly made in public interest, the right accruable to the petitioner under the doctrine of promissory estoppel, if any, must yield to be to the larger public interest of promotion. development, and establishment of small scale industries, particularly, in light of the unduly long delay in the commencement of acquisition. It is undisputed that although the lands were earmarked in favour of the petitioner in the year 2008, the acquisition thereof had not yet begun at the time of the filing of the instant petition i.e., 29.04.2016.
33. It is further relevant to note that the petitioner has filed the instant petition 29.04.2016, after a lapse of more than one year and five months from the date of issue
- 27 -
NC: 2025:KHC-D:4689 WP No. 27387 of 2016 of the impugned notification, which cannot be construed to be ordinarily in the fitness of things, in matters related to establishment of industry and development.
34. In view of the foregoing, the impugned notification(s) / letter(s) of allotment of lands in favour of respondent No.3-KSSIDC does not warrant any interference of this Court. In pursuance thereof, the issue of transfer of property pendente lite does not require any consideration.
Accordingly, the instant petition stands dismissed. Liberty is reserved with the petitioner to make a representation for allotment of alternate lands, and the concerned authority is hereby directed to consider the representation made, if any, in accordance with law.
Sd/-
(HEMANT CHANDANGOUDAR) JUDGE HR List No.: 19 Sl No.: 1