Kerala High Court
Poyilakada Fisheries Pvt.Ltd vs The State Of Kerala on 11 December, 2024
2024:KER:93949
W.A.No.2028/2019
-:1:-
IN THE HIGH COURT OF KERALA AT ERNAKULAM
PRESENT
THE HONOURABLE THE CHIEF JUSTICE MR. NITIN JAMDAR
&
THE HONOURABLE MR. JUSTICE S.MANU
WEDNESDAY, THE 11TH DAY OF DECEMBER 2024 / 20TH AGRAHAYANA, 1946
WA NO. 2028 OF 2019
AGAINST THE JUDGMENT DATED 30.07.2019 IN WP(C)NO.24780 OF
2017 OF HIGH COURT OF KERALA
APPELLANT:
POYILAKADA FISHERIES PVT.LTD.,
A COMPANY INCORPORATED UNDER INDIAN COMPANIES ACT,
1956, REPRESENTED BY ITS MANAGING DIRECTOR,
G.RAJAN NAIR, S/O.P.GANGADHARAN PILLAI, AGED 69 YEARS,
PARAMESWAR NAGAR, KOLLAM-691 001.
BY ADVS.P.SATHISAN
SMT.ROHINI.S.KUMAR
RESPONDENTS:
1 THE STATE OF KERALA
REP. BY CHIEF SECRETARY, SECRETARIAT,
THIRUVANANTHAPURAM, PALAYAM, KERALA - 695 001.
2 THE DISTRICT COLLECTOR,
ERANHIPPALAM, KOZHIKODU-673 020.
3 THE DIRECTOR OF INDUSTRIES AND COMMERCE,
VIKAS BHAVAN, THIRUVANANTHAPURAM-695 033.
4 THE DISTRICT INDUSTRIES CENTRE,
VELLAYIL, KOZHIKODU-673 013,
REP. BY ITS GENERAL MANAGER.
2024:KER:93949
W.A.No.2028/2019
-:2:-
5 MUHAMMED CHAKKIRI ROCKFIELD,
CHAKKIRI ROAD, VENGARA P.O., MALAPPURAM-676 304.
6 P.MAHESH KUMAR,
AGED 44 YEARS,
S/O.LATE SREEMANUNNI NAIR, CHERUKAVIL KONOT P.O.,
MUNNAMANGALAM, KOZHIKODE-673 571.
BY ADVS.
SRI.K.RAMACHANDRAN
SRI.T.SETHUMADHAVAN(SR.)
SMT.PREETHI. P.V.
SRI.KODOTH PUSHPARAJAN
SRI.K.MOHAMMED FAISAL NAHA
OTHER PRESENT:
SRI. K P HARISH, SR.GP
THIS WRIT APPEAL HAVING BEEN FINALLY HEARD ON
08.11.2024, THE COURT ON 11.12.2024 DELIVERED THE
FOLLOWING:
2024:KER:93949
W.A.No.2028/2019
-:3:-
NITIN JAMDAR, C.J.
&
S.MANU, J.
-------------------------------------------------
W.A.No.2028 of 2019
-------------------------------------------------
Dated this the 11th day of December, 2024
JUDGMENT
S.MANU, J.
The Appellant/Original Petitioner is a private limited company incorporated under the Indian Companies Act, 1956 and is engaged in medium scale enterprise in sea-food industry. Originally Plot No.T.S.177 having an extent of 129.08 cents of land in Sy. No.R.S. No.177 part 1-5-177/3 in Katchery Village, Westhill, Kozhikode which was demarcated as Industrial Development Plot under Respondent No.1, was allotted on hire purchase basis to M/s. Sea Diamond Pvt. Ltd. for sea food industry. But, the aforesaid company did not succeed in their business resulting in huge financial liability viz., gross dues to Kerala Financial Corporation (KFC), Central Bank, District Industries Centre, Sales Tax, Electricity Charges etc. Subsequently, M/s. Sea Diamond Pvt. Ltd. approached the Petitioner with a proposal to take over the unit/assets and the same was negotiated and accepted by the Petitioner with the concurrence of Respondent No.1. In deference to 2024:KER:93949 W.A.No.2028/2019 -:4:- the acceptance of aforesaid proposal, the Petitioner issued Exhibit-P1 letter dated 10 September 1986 along with demand draft of ₹1,24,464.74 dated 10 September 1986 for clearing hire purchase installment arrears and requested them to obtain discharge certificate and title deeds from Respondent No.1.
2. The aforesaid unit was mortgaged with the KFC and they also accorded sanction for transfer of unit vide Exhibit-P2 letter dated 5 September 1986 on condition of payment of ₹13,00,000/-. After clearing the entire liabilities in respect of the unit and on compliance with other conditions, the Government vide Exhibit-P3 order dated 8 February 1988 in G.O.(Rt.) No. 118/88/ID, accorded sanction for transferring the plot subject to the terms and conditions for allotment of the land in development plot. In pursuance of Exhibit-P3, Exhibit-P4 tripartite agreement was executed on 4 March 1988 between the Petitioner, M/s. Sea Diamond Pvt. Ltd., and the Government, and in pursuance thereof, possession of the property was handed over to the Petitioner. Thereafter, the Petitioner made huge investments in the said plot and was successfully running the unit. Since the land allotted to the Petitioner was insufficient for the project, the Petitioner purchased about 19 cents adjoining private land adjacent to it and annexed with the plot.
2024:KER:93949 W.A.No.2028/2019 -:5:-
3. While the unit was flourishing, the Petitioner remitted the entire land value of the plot to the Government and Respondent No.3 recommended for assignment of land in favour of the Petitioner and resultantly, the Government vide Exhibit-P5 order dated 16 October 1989 accorded sanction for assignment of land subject to the rules governing assignment. Based on Exhibit-P5, the Government has issued Exhibit-P6 patta in respect of the plot to the Petitioner on 28 June 1990. Exhibit-P6 is issued under the Rules of Assignment of Government Land for Industrial Purposes, 1964 (Assignment Rules of 1964). As per Exhibit-P6, the land assigned is heritable but shall not be alienated or encumbered without the prior permission of the Government and in case of cancellation of registry, the Government may resume possession of the land with building and improvements on payment of market value of the building and improvements.
4. In the meantime, Respondent No.4 issued show cause notice to the Petitioner demanding to open the unit on regular basis, to which, the Petitioner submitted reply showing genuine reasons. There were also correspondence between the Petitioner with Respondent Nos.3 and 4 regarding non functioning of the unit. The Petitioner also sought co- operation from Respondent No.4 for modernization of the unit. While so, Respondent No.4, on 2 August 2014, issued Exhibit-P7 order of 2024:KER:93949 W.A.No.2028/2019 -:6:- resumption of the unit, which was communicated to the Petitioner, on 7 August 2014.
5. Challenging the legality and propriety of Exhibit-P7 order dated 2 August 2014, the Petitioner preferred W.P.(C) No.21235 of 2014 before the learned Single Judge wherein stay of the proceedings in Exhibit-P7 vide order dated 16 August 2014 was granted. While so, on 23 August 2014, the Petitioner was served with Exhibit-P8 letter dated 18 August 2014 by Respondent No.4 stating that the land and machinery were resumed on 6 August 2014 and the possession of the same was handed over to Respondent No.5.
6. This Court by Exhibit-P10 judgment dated 7 March 2016 in W.P.(C) No.21235 of 2014 found that Exhibit-P6 patta is issued by the Government and the same has not been cancelled as per the Rules of Assignment of Government Land for Industrial Purposes and Rule 14 empowers the Government to take a decision on resumption and cancellation of patta and that Exhibit-P7 can never be considered as an order of resumption in terms of Rule 14 and ordered status quo and directed the Secretary, Revenue Department to take a decision. Against Exhibit-P10, the Petitioner preferred W.A. No.808 of 2016 before the Division Bench and the Division Bench by Exhibit-P11 judgment dated 2024:KER:93949 W.A.No.2028/2019 -:7:- 7 December 2016 dismissed the writ appeal and confirmed Exhibit-P10 judgment of the learned Single Judge. Thereafter, the matter was considered by the Additional Chief Secretary to the Government, who passed Exhibit-P12 order dated 10 July 2017 setting aside Exhibit-P7 order and also cancelled Exhibit-P6 patta issued in favour of the Petitioner and directed that the land to be resumed and to be allotted to Respondent No.5. Therefore, the Petitioner has filed W.P.(C) No.24780 of 2017 challenging Exhibit-P12 order.
7. A counter affidavit was filed by the Respondents.
8. The learned Single Judge by the impugned judgment having found no merit in the petition, dismissed the same by observing that the Petitioner has been unable to utilise the land for industrial purposes for more than 15 years and large number of persons are in the queue for allotment of land, and the Government cannot overlook public interest in such a situation. However, it was observed that the Petitioner is at liberty to raise any claim for compensation or for value of improvement in accordance with the Rules. Being aggrieved, the Appellant has come up in Appeal under Section 5 of the Kerala High Court Act, 1958.
9. Mr.P.Sathisan, the learned counsel for the Appellant contended that the decision to cancel the patta and to resume the property has been 2024:KER:93949 W.A.No.2028/2019 -:8:- taken without referring to the terms and conditions of patta and also the conditions of the tripartite agreement entered at the time of occupying the land. The learned counsel argued that Rule 14 of the Rules for Assignment of Government Land for Industrial purposes does not enable resumption on the basis of non-usage of industrial land. Further, he submitted that if an assignee is issued with a patta, then the assignee has a right to sell the plot after necessary permission from the Government. He therefore submitted that the request as per Annexure- A5 ought to have been allowed by the authorities. On facts, the learned counsel submitted that due to economic crisis in the market, the functioning of the unit had to be stopped and heavy loss and damage was suffered by the Appellant. Yet the Appellant was making earnest efforts to revive the unit. This was intimated to the authorities and without paying heed to the request of the Appellant the patta of the property was cancelled in a hasty and arbitrary manner. He submitted that the learned Single Judge has not appreciated the legal contentions raised regarding the authority and circumstances under which the impugned proceedings were initiated and concluded. The learned counsel submitted that the judgment of the learned Single Judge is liable to be set aside and the reliefs sought in the writ petition are to be allowed. Mr.V.Sethumadhavan, learned Senior Counsel appearing for 2024:KER:93949 W.A.No.2028/2019 -:9:- the 6th Respondent made reference to the Rules and relevant documents. He contended that the Appellant was retaining the property, even though the operation of the industrial unit had ceased long ago. He submitted that the object of providing land for facilitating industrial growth is defeated when properties which are kept unutilized are not assumed and allotted to those who are seeking allotment. He relied on the judgment of the Hon'ble Supreme Court in Dalip Singh and others v. State of Haryana and others [(2019) 11 SCC 422] in support of his contentions. Mr.K.P.Harish, the learned Senior Government Pleader, justified the decisions of the authorities. He invited our attention to the relevant documents and pointed out that the Appellant had operated the unit only till 2004 and Ext.P16 order was passed after a decade. No sincere effort was made by the Appellant to resume the functioning of the unit in between. He also pointed out that the Appellant had admittedly permitted the unit to be utilized by another person for some time for totally different purposes. He pointed out Clauses 14 and 15 of the Rules for the Assignment of Government Land in Development Areas for Industrial Purposes as it stood at the relevant time and submitted that the Government have ample power to resume the land in case of a violation of any provision of the Rules or the order by which the assignment was made. He added that the 2024:KER:93949 W.A.No.2028/2019 -:10:- property resumed was allotted to different persons, including the 6 th Respondent, long ago, and their right to utilize the land has been infringed on account of the prolonged litigation. He also argued that resumption of lands in the case of non-utilization is necessary in public interest and in the instant case the authorities were perfectly justified in taking the impugned actions against the Appellant.
10. In our view, the following facts are pertinent to decide the issue involved. The tripartite agreement relied on by the learned counsel for the Appellant is produced as Ext.P4. Appellant is the party of the second part in Ext.P4. It is specifically provided in Clause 2 in page No.2 of Ext.P4 agreement that the party of the second part shall take possession of the industrial unit and continue the working of the unit. The patta issued in favour of the Appellant is produced as Ext.P6. Condition No.3 in Ext.P6 provides that the Registry shall be liable to be cancelled for contravention of conditions 1 and 2 and also for the conditions specified in the patta. Clause 5 reserves the right of the Government to take possession of the land with buildings and improvements in the event of cancellation of the Registry. The proceedings of the General Manager, the District Industries Centre, Kozhikode produced as Ext.P7 shows that a registered notice was sent to the unit on 17 April 2007 since the unit was found remaining closed 2024:KER:93949 W.A.No.2028/2019 -:11:- indefinitely. The power supply was disconnected by the KSEB and it was restored by January 2008. A promise was made by the Appellant by a letter dated 23 June 2008 that the unit would restart after maintenance works. On 5 March 2009, another notice was issued to the Appellant and on 29 June 2009 a personal hearing was conducted during which it was reiterated by the Appellant that the functioning would resume after lifting of a trawling ban. Again, a notice was issued on 20 April 2012, and in reply, the Managing Director, by letters dated 2 May 2012 and 19 May 2012, requested for further time to restart the unit. On 16 March 2013, yet another letter was issued, which was followed by another notice on 5 April 2013. In the personal hearing held on 8 May 2013, the Managing Director assured that the unit will start functioning by 31 December 2013. Since the Appellant failed to revive the unit, Ext.P7 order was issued, which, as noted at the beginning, was set aside by this Court and affirmed in W.A.No.808/2016.
11. We note from Ext.R5(a) letter dated 30 July 1999 from the Assistant District Industries Officer to the General Manager, Industries Centre, that during 1998-99 a portion of the building was permitted to be occupied by a third party by the Appellant a fact which was virtually admitted in Ext.R6(b) letter dated 22 July 2000 from the Appellant.
2024:KER:93949 W.A.No.2028/2019 -:12:- The land resumed was re-allotted to four persons, including the 6 th Respondent, by proceedings dated 2 August 2014 by the General Manager, District Industries Centre. We paraphrase the above relevant facts evident from the records to point out that the Appellant could not resume the functioning of the industrial unit over a long time and was protracting the proceedings by promising that the unit will be revived. The action taken by the General Manager was successfully defended on the ground of incompetency by the Appellant. The decision of the Government taken thereafter was also challenged by approaching this Court in the writ petition filed in 2017. On facts, we are convinced that the Appellant failed to run the industrial unit successfully beyond 2004 and even earlier he permitted the third party to occupy a portion of the unit unauthorisedly. Hence, we are clear in our mind that the purpose for which the allotment was made and the patta was issued was frustrated by the failure of the Appellant to run the industrial unit.
12. Having been satisfied on facts that the Appellant failed to utilize the property allotted, the next aspect to be considered is whether the revocation of allotment was proper and legal. When the General Manager of the District Industries Centre by order dated 2 August 2014 directed resumption of land, the Appellant approached this Court in W.P.(C)No.21235/2014 and succeeded in getting favourable orders on 2024:KER:93949 W.A.No.2028/2019 -:13:- the ground that the power to do so was available only to the Government. The judgment of the learned Single Judge was confirmed in W.A.No.808/2016. The Division Bench in the judgment dated 7 December 2016 in W.A.No.808/2016 adverted to Clauses 14 and 15 of the Rules for the Assignment of Government land in Development Areas for Industrial Purposes which was in vogue at the relevant time. The Bench in paragraph 6 of the judgment held as follows:-
"6. From the aforementioned Clause it is amply clear that the State Government shall have ample power to resume the land, if the industrialist contravenes any of the provisions of these rules or/of the order of the Government assigning the land or of the agreement, if any, executed by the industrialist with the Government or in the event of the company or the concern belonging to the industrialist is wound up or if the industrialist is an individual or a group of individuals, if the individual or individuals are dead."
Hence, it is certain that the Rules provide power to the Government to resume the land if the industrialist contravenes the provisions of the Rules or the order of the Government assigning the land or of the agreement.
2024:KER:93949 W.A.No.2028/2019 -:14:-
13. Tripartite agreement dated 4 March 1988 which binds the Appellant is produced as Ext.P4 in the writ petition. Clause 2 of the said agreement reads thus:-
"2. The party of the second part shall take possession of the industrial unit and continue the working of the unit."
Therefore, the Appellant, party of the second part had an obligation under Ext.P4 to continue the working of the unit. Reference to Ext.P6 patta dated 28 June 1990 issued in favour of the Appellant is also vital. The patta contains 10 conditions. Appellant/Assignee has made a declaration in Ext.P6 that it shall bind itself to all the conditions specified in the patta. Conditions 1, 3 and 10 are extracted hereunder:-
"1. (i) That the land assigned shall be heritable but shall not be alienated or encumbered without prior permission of the Government.
(ii) That the land assigned shall be used only for the following purposes:-
a) For construction of factory building and erection of plant and machinery for the manufacture of Frozen Marine Products.
..................................................................................
2024:KER:93949 W.A.No.2028/2019 -:15:-
3. That the registry shall be liable to be cancelled for contravention of conditions and I and and II above and also for the conditions specified in the Patta.
..................................................................................
10. That the assignee shall be found by the rules for the assignment of land to industrialists in the Development area in force from time to time."
14. Conditions extracted above bind the Appellant to utilize the land for operating factory for manufacture of frozen marine products. The Registry shall be liable to be cancelled if the property is not utilized for the purpose for which it has been allotted.
15. The provisions of the Rules governing the allotment, terms of the agreement and conditions of the patta leave no room for any doubt that in case the property is not utilized for the specified purpose, the allotment and assignment are liable to be revoked and the Government had precisely reserved its power to do so. Thus, the contention regarding competency of the Government to resort to the actions taken against the Appellant and propriety of the same raised by the Appellant is lacking merits.
2024:KER:93949 W.A.No.2028/2019 -:16:-
16. Remaining contention of the appellant is regarding his request dated 4 October 2019 for permission to alienate the property. This request has been made relying on Rule 15 of the Rules for Assignment of Government Land for Industrial Purposes as it stood then. The said Rule reads as follows:-
"15. In the event of the Industrialist not requiring the land for the purpose for which it is assigned, he shall intimate the Government in writing immediately and thereupon Government may either resume the land or inform the Industrialist that he may dispose of the land in any manner he likes. In case of resumption of the land under this rule, the Industrialist shall be paid the compensation in the manner fixed under Rule
16."
The said Rule aids an industrialist to intimate the Government if he does not require the land for the purpose for which it was assigned and on such information being received Government may either resume the land or inform the industrialist that he may dispose of the land in any manner he likes. Obligation is there on the part of the Government to pay compensation if the land is resumed in the manner fixed under Rule
16. It is incumbent on the industrialist to intimate the Government "immediately" when the land is not required for the purpose for which it was assigned. The object of this Rule, is in our view, to avoid the land 2024:KER:93949 W.A.No.2028/2019 -:17:- remaining unused. Discretion is held in reserve with the Government to decide the course of action on receipt of such information. This Rule does not enable an industrialist to claim permission to dispose of the land as a matter of right. The land being a valuable and limited resource, the Government can assign it to some other person who is waiting for an allotment. The avowed object of the scheme is to promote industrial development. Hence, the Rule can be understood and interpreted only in a manner consonant with the object of the scheme. Intention of Rule 16 is not to enable the industrialist to deal with the property in any manner he likes after failing to utilize the property. Therefore, we are of the firm view that the Appellant is not entitled to claim permission for alienation as a matter of right.
17. We also note that the Appellant submitted a request for permission to alienate the allotted property much after the Government proceeded against him for resumption. As we noted in the previous paragraphs Rule 16 casts a duty on the industrialist to intimate the Government immediately if the property is no longer required for the purpose for which it was allotted. In the facts of this case, the request made by the Appellant in a highly belated point of time for permission for alienation cannot be considered as one which satisfies the provisions of Rule 16. Therefore, we hold that contention of the Appellant on the 2024:KER:93949 W.A.No.2028/2019 -:18:- basis of Rule 16 is also untenable. The land resumed was re-allotted to four persons, including the 6th Respondent, by proceedings dated 2 August 2014 by the General Manager, District Industries Centre. It is hence too late for the appellant to seek such permission.
18. In Dalip Singh and others v. State of Haryana and others [(2019) 11 SCC 422] Hon'ble Supreme Court considered a challenge against resumption of an industrial plot. In paragraph 13 of the judgment the Hon'ble Apex Court held as follows:
"13. As pointed out earlier, the allotment of industrial plot was with the twin objects of economic development and generation of adequate employment. In order to achieve the said purpose, the industrial policy was framed by the State of Haryana aiming at balanced regional development and with a view to generate adequate employment. The allotment of industrial plot was at concessional rate and was subject to terms and conditions and the allottee was bound to comply with the terms and conditions. In such kind of allotment of industrial plots, based on government industrial policy with twin objectives of economic development and generation of adequate employment, sympathy cannot be the ground for considering the case of the appellants as to their non-compliance of the terms and conditions of allotment especially for twenty long years after the allotment."
2024:KER:93949 W.A.No.2028/2019 -:19:-
19. The Hon'ble Supreme Court emphasised in the above judgment that allotment of industrial plot is with twin object of economic development and generation of employment opportunities. Such plots are allotted at concessional rates with a view to provide opportunity to entrepreneurs to establish industrial units which will contribute to the industrial growth and economic development. When the allottee fails to utilize the property for the purpose for which it is allotted, the very object of the scheme gets defeated. Granting reliefs to the allottees who failed to utilize the property ignoring the purpose and provisions of the scheme out of sympathy will be against larger interests of the society.
20. Inevitable conclusion, in view of the above discussion, is that the impugned judgment calls for no interference in this intra-court appeal. The Writ Appeal is hence dismissed, affirming the impugned judgment.
Sd/-
NITIN JAMDAR, CHIEF JUSTICE Sd/-
S. MANU, JUDGE krj&skj 2024:KER:93949 W.A.No.2028/2019 -:20:- APPENDIX OF WA 2028/2019 APPELLANT'S ANNEXURES Annexure A1 TRUE COPY OF G.O.M.S.NO.60/2013/ID DATED 10/06/2013.
Annexure A2 TRUE COPY OF GOVERNMENT ORDER
NO.110/2013/ID DATED 13/09/2013.
Annexure A3 TRUE COPY OF PROOF OF REMITTANCE
ELECTRICITY BILL.
Annexure A4 TRUE COPY OF PROOF OF REMITTANCE TAX
RECEIPT.
Annexure A5 TRUE COPY OF THE LETTER SUBMITTED BY THE
APPELLANT BEFORE THE SECRETARY TO
GOVERNMENT, INDUSTRIAL AND COMMERCE
DEPARTMENT DTD.04.10.2019.
ANNEXURE A5(a) TRUE COPY OF THE ACKNOWLEDGMENT OF
ANNEXURE-A5.
RESPONDENTS' ANNEXURES
Annexure R4(a) True copy of the G.O.(Rt)No.118/88/ID
dated, 08.02.1988.
Annexure R4(b) Agreement executed between M/s Sea Diamond
Private Limited, Calicut and M/s Poyilakada
Fisheries (P) Ltd. Kollam and Government of
Kerala on 04.03.1988.
Annexure R4(c) G.o.(MS) No. 711/89/K.Dis dated, 16.10.1989
of Revenue (L) Department.
Annexure R5(a) TRUE COPY OF REPLY RECEIVED FROM THE STATE
PUBLIC INFORMATION OFFICER, DISTRICT
INDUSTRIAL CENTRE, KOZHIKODE, NO.
DICKKD/185/2024-P3 DATED 19/02/2024.
Annexure R5(a)(1) TRUE COPY OF THE ENGLISH TRANSLATION OF
ANNEXURE R5(A).