Karnataka High Court
M/S Sapthagiri Enterprises Pvt Ltd vs Karnataka State Electronics on 14 July, 2023
-1-
NC: 2023:KHC:24649
WP No. 31903 of 2013
IN THE HIGH COURT OF KARNATAKA AT BENGALURU
DATED THIS THE 14TH DAY OF JULY, 2023
BEFORE
THE HON'BLE MRS JUSTICE K.S. HEMALEKHA
WRIT PETITION NO. 31903 OF 2013 (GM-RES)
BETWEEN:
1. M/S SAPTHAGIRI ENTERPRISES PVT. LTD.,
A PRIVATE LIMITED COMPANY,
REGISTERED UNDER THE COMPANIES
ACT, 1956 HAVING ITS
REGISTERED OFFICE AT,
SUJATHA COMPLEX, II FLOOR,
I MAIN ROAD, GANDHINAGAR,
BANGALORE - 560 009.
REPRESENTED BY ITS DIRECTOR,
MR. N. NAGARAJA REDDY,
S/O LATE. SRI. K.NANJA REDDY,
AGED ABOUT 58 YEARS.
Digitally signed by
MAHALAKSHMI B M
Location: HIGH
COURT OF ...PETITIONER
KARNATAKA
(BY SRI. REUBEN JACOB, SENIOR COUNSEL A/W
SRI. PIYUSH KUMOL JAIN D., ADVOCATE)
AND:
1. KARNATAKA STATE ELECTRONICS
DEVELOPMENT CORPORATION LTD.,
A GOVERNMENT COMPANY,
HAVING ITS REGISTERED OFFICE,
AT NO.29/1, RACE COURSE ROAD,
-2-
NC: 2023:KHC:24649
WP No. 31903 of 2013
BANGALORE - 560 001.
REPRESENTED BY ITS CHAIRMAN AND
MANAGING DIRECTOR.
2. ELECTRONICS CITY INDUSTRIAL TOWNSHIP
AUTHORITY,
# 7(P), WEST FACE, ELECTRONIC CITY,
BENGALURU - 560 100.
REPRESENTED BY ITS CHIEF EXECUTIVE OFFICER.
...RESPONDENTS
(BY SMT. VACHANA U. M., ADVOCATE FOR R1 FOR
SRI. A. V. NISHANTH, ADVOCATE AND
KUM. TAMISRA SUNIL, ADVOCATE FOR
SRI. LOMESH KIRAN N., ADVOCATE FOR R2)
THIS W.P. IS FILED UNDER ARTICLES 226 AND 227 OF
THE CONSTITUTION OF INDIA PRAYING TO QUASH THE
COMMUNICATION BEARING REF NO.KSEDC/MD/SEP/2013/758
DATED 27.6.2013 VIDE ANNEXURE-Y AND CANCELLATION
ORDER BEARING NO.KEONICS/E-CITY/SAPTAGIRI/06-11
DATED 30.6.2011, BOTH PASSED BY THE RESPONDENT IN
RESPECT OF THE SCHEDULE PLOT VIDE ANNEXURE-P & Y TO
THE WRIT PETITION RESPECTIVELY AND ETC.
THIS PETITION, COMING ON FOR DICTATING ORDERS,
THIS DAY, THE COURT MADE THE FOLLOWING:
-3-
NC: 2023:KHC:24649
WP No. 31903 of 2013
ORDER
The petitioner in this writ petition is assailing the communication dated 27.06.2013 at Annexure-Y and the cancellation order dated 30.06.2011 at Annexure-P passed by the respondent.
2. The petitioner is termed as the 'Company' and respondent No.1 as 'Keonics' for the sake of convenience.
3. The respondent is a Corporation wholly governed by the Government of Karnataka and had formed a layout called "Keonics Electronic City" and has formed number of industrial sites in the said area and the said land where the layout has been formed was granted on lease to the respondent by Karnataka Industrial Area Development Board (hereinafter referred to as "KIADB" for short).
4. In the said layout, certain number of sites formed were earmarked for the purpose of providing the common facilities to the industrialists who were -4- NC: 2023:KHC:24649 WP No. 31903 of 2013 establishing their industries in the layout. The common facilities to be provided were in the nature of Hotel, Conference Room, Exhibition Centre, Creche and such other facilities, which were required to be established for the benefit of the entrepreneurs who had established their units in the layout and one such C.A. Site No.2 measuring 0.75 acres (which site was carved out of Sy.Nos.20 and 22 of Konappana Agrahara village).
5. The Company was allotted the said C.A. Site No.2 at the rate at Rs.10,00,000/- per acre and accordingly, the petitioner company paid a sum of Rs.7,50,000/- in the month of February, 1996 and registered lease-cum-sale agreement was executed in respect of the said site in favour of the Company by the Keonics.
6. The standard conditions attached to the allotment work are as under:-
-5-
NC: 2023:KHC:24649 WP No. 31903 of 2013
i) A specific time schedule prescribed for getting plans approved in respect of the constructions to be put up over the said site;
ii) Commencement of Civil engineering works;
iii) Completion of construction of common facility buildings for commencement of projects.
7. As per the said standard conditions, the petitioner-Company submitted the construction plan for approval, which was approved by the Keonics and thereafter, took necessary steps to develop the said C.A. Site No.2, since there were some issues regarding the developing of C.A. Site No.2, the petitioner-Company spent certain amount for the said development of the said site, later on, the petitioner-Company started the construction as per the approval plan. Respondent No.1- Keonics issued a cancellation letter dated 12.07.1999 to the petitioner-Company, canceling the allotment of the said C.A. Site No.2 on the ground that the area allotted in favour of the petitioner-Company falls under the Green Belt Zone of Electronic City layout plan. -6-
NC: 2023:KHC:24649 WP No. 31903 of 2013
8. Assailing the said order, WP No.28429/1999 was preferred before this Court, the said writ petition came to be dismissed, however, the respondent-Keonics was directed to refund the money paid by the petitioner- Company with interest. Aggrieved by the order of the dismissal, Writ Appeal No.1654/2000 was preferred before this Court, which also came to be dismissed. SLP preferred before the Apex Court in SLP (Civil) No.18549/2000 came to be allowed on the ground of violation of Principles of Natural Justice and the cancellation order was quashed directing the respondent- Keonics to issue show cause notice and then proceed in accordance with law. In the said appeal, the parties were directed to maintain status-quo in respect of C.A. Site No.2 till the final orders passed by the respondent- Keonics.
9. Show cause notice in the guise of eviction under Section 4 of the Karnataka Public Premises (Eviction of Unauthorized Occupants) Act, 1974 was issued to the -7- NC: 2023:KHC:24649 WP No. 31903 of 2013 petitioner-Company in respect of C.A. Site No.2, treating that the petitioner-company is in unauthorised occupation of the site. A reply was submitted by the petitioner- Company to the show cause notice bringing to the notice of the respondent- Keonics that the show cause notice in the guise of eviction is not sustainable. Pursuant to which, another show cause notice was issued in modification of the earlier notice issued under Section 4 of the Karnataka Public Premises (Eviction of Unauthorized Occupants) Act, 1974 (hereinafter referred to as 'the KPP Act' for short). The petitioner-Company submitted reply to the show cause notice, without considering the said reply, cancellation order dated 23.12.2002 of the allotment of C.A. Site No.2 came to be issued by respondent No.1- Keonics.
10. Aggrieved by the said order, again writ petition was preferred before this Court in WP No.5531/2003, the said writ petition came to be dismissed as withdrawn, since during the pendency of the said petition, an -8- NC: 2023:KHC:24649 WP No. 31903 of 2013 alternative site bearing No.110E measuring 0.75 acres was allotted to the Company in lieu of the cancellation of C.A. Site No.2 at the same price. Subsequent to allotment of site No.110E, the Company received a letter from the respondent-Keonics informing the Company that they would make necessary arrangements and execute necessary deeds in respect of site No.110E, which was allotted in favour of the Company. The Company received another letter from respondent No.1-Keonics on 24.07.2007 informing that respondent No.1-Keonics had decided to offer alternate site (site No.110E) in lieu of C.A. Site No.2 at the present price of Rs.1,00,00,000/- and it was informed that the respondent No.1- Keonics intends to recover the legal expenses incurred by them from the Company and another letter in the month of August-2007 was issued informing that the Company should bear the legal expenses to a sum of Rs.93,295/- and the petitioner will be given Rs.15,50,000/- towards the expenses incurred by the Company with regard to the development charges towards C.A. Site No.2.
-9-
NC: 2023:KHC:24649 WP No. 31903 of 2013
11. It is the case of the petitioner that in the month of October-2007, the petitioner came to know that the site No.110E has been allotted to third party during the pendency of the WP No.5531/2003 itself. Pursuant to which the petitioner filed an application in WP No.5531/2003 directing the respondent No.1- Keonics to allot a suitable site in the same lines where C.A. Site No.2 is situated. This Court on the said application, observing that the petitioner's grievance is of separate cause of action, dismissed the writ petition with liberty to the petitioner to agitate his right on the separate cause of action.
12. It is at that stage, the petitioner filed WP No.20068/2007 seeking to quash the letters issued by respondent-Keonics and sought a direction to respondent- Keonics to allot suitable site measuring 0.75 acres at the same rate of allotment of the original C.A. Site No.2. During the pendency of the said writ petition, an alternative site bearing No.110D was allotted to the
- 10 -
NC: 2023:KHC:24649 WP No. 31903 of 2013 petitioner as per the re-allotment order dated 20.02.2008. In view of the alternative site being allotted to the Company was confined only to the amount of Rs.93,295/- which was sought by the respondent- Keonics towards legal expenses and this Court, by its order held that the recovery sought by the respondent No.1 is unsustainable and disposed of the writ petition granting liberty to the petitioner to seek compensation for the building which was sought to be constructed in the land i.e., C.A. Site No.2, which was originally allotted to the petitioner.
13. The petitioner was re-allotted land in respect of schedule site and lease-cum-sale agreement came to be executed in favour of the company on 25.04.2008 and order dated 19.01.2009. In the meantime, there were several communication between Company and Keonics towards reimbursement of the claims towards the building construction development charges in respect of the site allotted earlier i.e., C.A. Site No.2 and the same is still pending consideration with respondent- Keonics. This
- 11 -
NC: 2023:KHC:24649 WP No. 31903 of 2013 being so, the respondent- Keonics has issued a cancellation order cancelling the allotment of the schedule site No.110D by its order dated 30.06.2011 at Annexure- P, the Company approached the respondent- Keonics by way of representation for reconsideration of the cancellation order. Since the same was not considered, writ petition was filed before this Court in WP No.37955/2011 assailing the cancellation order dated 30.06.2011 at Annexure-P, the said writ petition came to be disposed of directing the respondent to reconsider the cancellation order in light of the decision taken by the respondent in respect of M/s. Bangalore Management Association and also the order passed by this Court in WP No.1932/2003. Pursuant to the order passed by this in WP No.37955/2011, the respondent-Keonics issued communication dated 27.06.2013 stating that the representations have been considered seeking for revocation of the cancellation order, however, the cancellation order at Annexure-P stood confirmed. Aggrieved by this the present writ petition is preferred.
- 12 -
NC: 2023:KHC:24649 WP No. 31903 of 2013
14. Respondent No.1 has filed statement of objections inter-alia contending and admitting about the facts of filing writ petitions before this Court and the orders passed on the representations given by the petitioner. It is contended at Para No.21 of the statement of objection that the Board of Directors, after applying their mind and noticing that the common facilities that the petitioner proposed to offer is no longer necessary in industrial area and no purpose would be served in allotting the site to the petitioner for this particular purpose, it is stated that the impugned order of canceling the allotment in favour of the Company is justified.
15. Heard Sri.Reuben Jacob, learned Senior Counsel for the petitioner, Sri. A.V. Nishanth, learned counsel appearing for respondent No.1, Kum. Tamisra Sunil, learned counsel appearing for respondent No.2.
16. Learned Senior counsel, in addition to various other contentions raised in the writ petition, would mainly contend that the impugned order and the entire approach
- 13 -
NC: 2023:KHC:24649 WP No. 31903 of 2013 of the respondent No.1 is arbitrary, illegal and perverse since the impugned communication dated 27.06.2013 is contrary to the material on record as stated in the writ petition. Learned Senior counsel would contend that the reason assigned by the respondent No.1 for cancellation of allotment vide cancellation order dated 30.06.2011 is not conversant with the time line and in spite of the direction by this Court to reconsider the cancellation order in light of the similar plea and allottees as ordered in WP No.37955/2011, the impugned cancellation order dated 27.06.2013 came to be passed without assigning any reasons. Learned counsel has also brought notice to this Court that the impugned order dated 27.06.2013 is contrary to the statement of objections filed at para No.21 wherein the reasons stated by respondent No.1 for cancellation of the order is that the common facilities proposed by the petitioner is no more necessary.
17. Learned Senior counsel would contend that the original cancellation order at Annexure-P dated
- 14 -
NC: 2023:KHC:24649 WP No. 31903 of 2013 30.06.2011 is illegal and seeking to reconsider the order of cancellation which is passed is without assigning any reasons and sought to allow this petition.
18. Per contra, learned counsel appearing for respondent-Keonics would justify the order passed and would contend that the said order came to be passed, in view of the non-compliance of Clause-1(d) to 1(g) of the re-allotment letter issued on 20.02.2008 and sought to dismiss the petition.
19. This Court has carefully considered the rival contentions urged by the learned counsel for the parties and perused the entire material on record.
20. The fact that the petitioner was allotted C.A. Site No.2 at the rate of Rs.10,00,000/- per acre way back in the year, 1996 is not in dispute and the petitioner had paid a sum of Rs.7,50,000/- in the month of February- 1996 itself and lease-cum-sale agreement was executed by respondent No.1- Keonics in favour of the petitioner-
- 15 -
NC: 2023:KHC:24649 WP No. 31903 of 2013 Company. It is also not in dispute that the said C.A. Site No.2 came to be cancelled and writ petition was preferred before this Court. During the pendency of the writ petition in lieu of C.A. Site No.2, an alternative site No.110E was allotted in favour of the petitioner in respect of site. However, later the said site was allotted in favour of the third party. During the pendency of the said writ petition, another alternative site bearing No.110D measuring 0.75 acres was allotted in favour of the petitioner-Company at the same price in lieu of the cancellation of C.A. Site No.2 for the same consideration of Rs.10,00,000/- per acre.
21. The petitioner-Company was running from pillar to post from the year, 1996 seeking for allotment of site which was allotted in the year, 1996 and the amount was already paid in favour of the respondent No.1- Keonics. The lease-cum-sale agreement in respect of the present site which was allotted in favour of the petitioner- Company is at Annexure-G at clause-M of the agreement,
- 16 -
NC: 2023:KHC:24649 WP No. 31903 of 2013 the purpose of the allotment is mentioned, which reads as under:-
"m) To use the leased premises for the purpose of setting up common facility centre like electronic way bridges, Service Centers, Catering facilities or related commercial activity by the Lessee and not to use the leased premises or any part thereof for the purpose of any factory which may be obnoxious, or offensive by reason of emission of O' dour, liquid effluvia, dust, smoke, gas, noise, vibrations or fire hazards."
Clause-N(i) & (ii) reads as under:-
"xxxxxxxThe lessee hereby agrees:-
i) To submit the blue prints of the plan of the civil construction to the Lessor for prior approval on or before the period hereinafter mentioned i.e.date
ii) To commence the civil constructions works after obtaining prior approval/license from the Chief Inspector of Factories 7 Boilers of Karnataka state on or before."
22. Perusal of the lease-cum-sale agreement evidences that the purpose of leasing the premises in favour of the petitioner-Company was for setting up of common facilities centre and at clause-N (i) the date to
- 17 -
NC: 2023:KHC:24649 WP No. 31903 of 2013 submit the blue prints of the plan of the civil construction to the lessor for prior approval is not mentioned, it is left blank; and (ii) commencement of civil construction work the date is also left blank. It is pertinent to note that in the notice of cancellation order at Annexure-P, a reference is made that the standard conditions attached to the allotment letter dated 20.02.2008 has been violated and as such, the lease-cum-sale agreement dated 25.04.2008 in respect of site No.110D stands cancelled, the cancellation order which is referred to the re-allotment dated 20.02.2008 does not mention anything about any such clauses. The relevant portion of the re-allotment of land dated 20.02.2008, reads as under:-
"1) The allotment of land is on Lease-cum-Sale Basis for a period of 10 years. At the end of 10 years, lease shall be converted into a sale subject to fulfillment of all terms and conditions of allotment and payment of price of land in full as final fixed subject to adjustment of amounts paid by you towards premium and rents. The conversion of lease into a sale will also be subject to utilization of minimum 50% of the extent handed over as
- 18 -
NC: 2023:KHC:24649 WP No. 31903 of 2013 determined by KEONICS on the merits on each case. The decision of KEONICS in this behalf is final and binding on you.
2) the price of the land per acre has been fixed @ Rs.10 Lakhs per acre tentative cost.
3) A sum of Rs.7,42,500/- towards 99% tentative price of the land has paid by you.
a) A sum of Rs.844/- shall be paid per annum for a period of ten years as rent together with interest at the rate of 12.5% per annum or such other rates as may be fixed by KEONICS from time to time on the unpaid balance. The amount so paid by you towards the rent and Earnest Money Deposit shall be adjusted towards the cost of the land after the expiry of the lease period.
4) The Letter of Intent will be valid for a period of one month from the date of this letter.
5) Failing which the Letter of Intent granted stands expired and the Earnest Money Deposit paid by you stands automatically forfeited.
6) This Letter of Intent will be converted into Letter of Allotment on acceptance of all the terms and conditions of the Letter of Intent indicated herein before/after.
7) On receipt of the confirmation Letter of Allotment, you shall adhere to the time schedule indicated in the statement of conditions appended hereto.
- 19 -
NC: 2023:KHC:24649 WP No. 31903 of 2013
8) Failure to fulfill any of the conditions at 1(a) to
(g) of the time schedule shall result in cancellation of allotment and forfeiture of 99% of the amount paid towards the tentative cost of land (Premium and rents) together with the commitment charges, entire amount of interest and Earnest Money Deposit. Out of the amount forfeited 74% of the cost of land shall be refunded to the concerned financial institutions, which has financed the project. Forfeiture shall be restricted to 25% of the cost of the land if it is paid entirely from the promoter's funds without assistance from Financial Institutions or Banks.
9) KEONICS reserves its right to increase the tentative price of land indicated in this Letter of Intent after completion of all development works and finalization of Court awards, if any.
10) The following are additional terms and conditions for allotment of land at Electronics City:
a. Annual Maintenance Charges should be paid to M/s Elcia/Keonics as per the demand note. b. No transfer of land to other entrepreneurs are permitted."
23. The reason assigned for cancellation of the re- allotment order does not find place at Annexure-F. In the absence of the same, the cancellation order at Annexure-P
- 20 -
NC: 2023:KHC:24649 WP No. 31903 of 2013 is unsustainable. The representation was given by the petitioner-Company for reconsidering the cancellation order and also in view of the orders passed by this Court, the impugned order at Annexure-Y to reconsider the cancellation of allotment of land was rejected by respondent No.1- Keonics without assigning any reasons. The first allotment of C.A. Site No.2 was way back in the year, 1996, the sanction of alternative allotment of site No.110E was subsequently during the pendency of the second writ petition which was already allotted in favour of the third party. The third allotment is site No.110D was allotted in the year, 2008 and for the reasons best known to the respondent-Keonics, a cancellation order came to be passed. As stated supra, there being no time limit as fixed in the lease-cum-sale deed in respect of site No.110D after which the petitioner had option to go for the sale deed, if the conditions precedent were fulfilled by the petitioner- Company. It is surprising to note that the reason for cancellation of the allotment is that there is a violation of clause - 1(d) to 1(g) of the standard conditions attached
- 21 -
NC: 2023:KHC:24649 WP No. 31903 of 2013 to the allotment letter which do not find place as stated supra. Whereas in the statement of objections at para 21 is reads as under:-
"Para No.21: As regards ground No.25, this respondent has placed the issue of revocation of cancellation before the board of management which is comprised of I.T. Secretary as the Chairman and other responsible officers of the Government as Directors. The Board of Directors have applied their mind and have felt that the common facilities that the petitioner proposed to offer is no longer necessary in industrial area and no purpose would be served in allotting the site to the petitioner for this particular purpose."
24. The entire exercise by respondent No.1-Keonics is contrary to the material on record, no reasons have been assigned while reconsidering the order of cancellation at Annexure-Y and the reasons stated in the impugned order at Annexures-P is unsustainable.
- 22 -
NC: 2023:KHC:24649 WP No. 31903 of 2013
25. Accordingly, this Court pass the following:-
ORDER i. Writ petition is allowed.
ii. The impugned communication dated 27.06.2013 at Annexure-Y and cancellation order dated 30.06.2011 passed by respondent is hereby quashed.
iii. Respondent No.1-Keonics is directed to execute the sale deed in favour of the petitioner herein in respect of site No.110D.
Sd/-
JUDGE CPN