(Prayer: This writ appeal filed U/S 4 of the Karnataka High Court Act praying to set aside the order passed in the writ petition No.13028/05 dated 20/12/2007.)
1. The appellant who was the 2nd respondent in W.P.NO.13028/2005 is calling in question the order passed by the learned Single Judge in W.P.NO.13028/05 dt.20.12.2007.
2. Heard Sri. Udaya Holla, learned Senior counsel appearing for the appellant and Sri.S.Subramanya, learned counsel for the 1st respondent and Mr. Nayak, learned counsel for respondent-2.
3. The facts leading to this appeal are as hereunder:
Under an allotment letter dt.22.1.1999, KIADB allotted Industrial plot No.8 at Electronic City, Phase- II, Industrial Area, Bangalore, in favour of the 1st respondent who was the Writ Petitioner in order to put up a manufacturing unit of Press Metal components. As per the terms and conditions of the allotment, 1st respondent was required to put up construction and commence production within 24 months from the date of taking possession (on or before 9.3.2001). The 1st respondent was put in possession of the Industrial Plot on 10.3.1999 as per the possession certificate issued by the KIADB. A lease-cum-sale deed was also executed by the KIADB on 14.12.2001. On the request of the 1st respondent, KIADB granted extension of time for the 1st respondent to complete the project on or before 31.3.2003 as per its order dt.7.1.2002. Further on the request of the 1st respondent as per the order of KIADB dt.3.4.2003 time was further extended till 15.6.2003. Again on the request of the 1st respondent further extension was granted as per letter dt.7.7.2003 upto 3.4.2004 subject to payment of penalty of 10% amounting to Rs.3,50,155/-. The 1st respondent did not deposit the amount as demanded by the KIADB. Later several reminders and notices were got issued by the KIADB and inspite of the same, the 1st respondent did not commence construction and also did not pay the penalty imposed by the KIADB.
4. Since the 1st respondent failed to complete the construction and commence the project even after 5 years from the date of taking possession of the Industrial plot, lease granted to the 1st respondent by the Board was cancelled on 12.8.2004. Thereafter on 21.9.2004, the 1st respondent gave a representation stating that 1st respondent is willing to pay the arrears and also to pay the prevailing allotment rates as on 21.9.2004 and to reallot the site afresh. The same was not considered by the Board. Later on 23.9.2004 the possession of the plot is said to have been taken over by the KIADB. Considering the request of the 1st respondent, the KIADB by its letter dt.14.10.2004 called upon the 1st respondent to pay a sum of Rs.15,51,230/- as requested by him and which amount was also not paid by the 1st respondent.
5. Since the 1st respondent did not complete the project, as the lease granted to him was terminated in accordance with law, even though the Board was willing to allot the same site for Rs.15,51,230/- afresh as the 1st respondent was not willing to pay the same, the Industrial site which was allotted to the 1st respondent came to be allotted to the appellant herein on 25.2.2005. The appellant paid a sum of Rs.80,35,215/- and commenced the construction by putting up a compound and constructing a watchman's cabin. On 19.3.2005 the KIADB confirmed the allotment made in favour of the appellant and on 29.3.2005 possession certificate was issued and an agreement of lease-cum-sale was executed by the KIADB in favour of the appellant on 13.4.2005.
6. When the matter stood like this, in the month of April 2005, the 1st respondent filed W.P.NO.13028/2005 challenging the order of termination of the lease on the ground that the orders of termination is bad in law and the CEO who terminated the lease was without any authority of law and therefore the 1st respondent requested the court to set aside the order of termination by quashing Annexure-L dt.12.8.2004.
7. The Writ Petition was contested by the appellant as well as by the KIADB. It was the contention of the appellant and the 2nd respondent that the Writ Petition filed by the 1st respondent was not maintainable and liable to be dismissed on the ground of supression of material facts and also on the ground of delay and latches. It is also contended by them that the CEO of KIADB who terminated the lease was empowered to do so and his action has been ratified by the Board subsequently. The 1st respondent who did not complete the project even after 5 years and did not pay the penalty for having extending the time from time to time and having not challenging the order of termination within a reasonable time and having allowed the KIADB to allot the very same Industrial plot in favour of the appellant and making the appellant to spend lakhs of rupees for improving and having accepted the termination of lease, requested the KIADB to re-allot it on the then market value afresh, cannot question the termination of lease on the ground that termination is bad in law after several months. He further contended that the conduct of the 1st respondent in approaching the court by suppressing the material facts dis-entitle for the relief sought by him since the discretion under article 226 of the Constitution, can be extended to a person who approaches the court with clean hands. In the circumstances, they requested the court to dismiss the Writ Petition.
8. The learned Single Judge after hearing the parties solely on the ground of technicality that as per Annexure-L, notice dt.5.2.2003 having granted 120 days, lease has been terminated prematurely and therefore held that the termination of lease as bad in law and resumption of the land has to be quashed and that the Chief Executive Officer had no authority in law to terminate the lease in the absence of delegation of power by the Board after insertion of Sec.34-B to the Karnataka Industrial Area Development Act. Accordingly, the Writ Petition was allowed. The termination of lease dt.12.8.2004 as per Annexure-L was quashed. Consequently the allotment made in favour of the appellant is ordered to be cancelled by declaring agreement of lease dt.30.4.2005 as null and void and liberty is granted to the KIADB to terminate the lease afresh in accordance with law.
9. Being aggrieved by the order of the learned Single Judge, the present appeal is filed.
10. Mr. Holla, learned senior counsel appearing for the appellant contends that the learned Single Judge has committed a serious error in not considering the conduct of the respondent in not approaching the court with clean hands. According to him, in the Writ Petition he does not disclose the several applications filed by him for extension of time to complete the Project and he also did not disclose the levy of penalty of 10% by the KIADB to extend the time as per the Act and Rules and that the person who has failed to complete the project and who was not willing to pay the penalty in accordance with law was not entitled to knock the doors of this court invoking Article 226 of the Constitution, on account of suppression of material facts.
11. He further submits, when the respondent has approached the KIADB after the termination of lease requesting the KIADB to re-allot the very same plot on the prevailing market value would only show that he has accepted the termination of lease and having accepted the order of termination of lease and requesting the KIADB to re-allot the very same plot shows that he is estopped from contending that order of termination is bad in law and that there was no necessity for him to approach the KIADB to re-allot the very same plot on the present market value and having considered the request of the 1st respondent, when the KIADB has offered to allot the same for Rs.15,51,230/- as per Annexure-M, when he has failed to remit the said amount, 7 months later cannot challenge the order of termination as bad in law due to his subsequent conduct.
12. He further contends that the appellant being a bonafide allottee has been made to spend lakhs of rupees to improve the land and having spent so much, the learned Single Judge without considering the hardship that would be caused to the appellant, only on technicality has set aside the order of termination as bad in law without considering the conduct of the 1st respondent.
13. He further submits that an offer was also made by the KIADB to allot one of the plots in favour of the sister concern, provided the 1st respondent was willing to take the same. Even such an option was not exercised by the 1st respondent. He further contends that the order of the learned Single Judge without considering the resolution of the KIADB and that the CEO has been delegated with the power for terminating the lease with retrospective effect as there is no prohibition to ratify the action taken by the CEO with retrospective effect on account of amendment to Sec.34-B of the Act, the order of the learned Single Judge has to be set aside. Relying upon the Judgment of this court in M/S. HANUMAN SILKS AND ANOTHER VS. KARNATAKA INDUSTRIAL AREAS DEVELOPMENT BOARD AND OTHERS reported in 1996(7) Kar.L.J. 277, he contends that the learned Single Judge has committed an error in quashing the order of termination of lease and also cancelling the allotment made in favour of the appellant. He has relied upon paragraphs 15 and 15.3 which reads as here under:
" 15. The facts disclose that possession of the two plots was taken on 25-7-1995 after giving notices on 16-2-1995 and 22/23-6-1995. In the notice dated 16- 2-1995, the petitioners' attention was expressly drawn to the provisions of the agreement and the consequences of non-fulfilment of its obligations. Again by notice dated 22-6-1995, petitioners were notified that their leases were terminated and their plots would be resumed on 25-7-1995. The fact that on 25-7-1995 the Board took back possession of the plots is not disputed. Though the petitioners gave letters requesting for extension of time on 5-7-1995 and met the Executive Member of the Board in August 1995, they apparently did not pursue the matter thereafter. They, however, claim to have sent a letter dated 13-9-1995 stating that they were making arrangements for necessary finance for speedy construction and implementation of the Project and that they were making arrangements for water from a nearby borewell; and that they were agreeable to pay the difference in cost of the plots at the current rates prevailing and requesting the Board to inform the amount to be paid as difference in rate. Though the letter also refers to the meeting held on 9-8-1995, there is no reference to any assurance said to have been made by the Executive Member of the Board that on payment of the difference in cost, the plot will be given back to the petitioners. The Writ Petitions were filed only on 2-1-1996 and 20-1-1996. The Board allotted the plots to fourth respondent on 31-10-1995, delivered possession on 10-11-1995 and executed a Lease-cum-sale Agreement with fourth respondent on 16-11-1995. In the circumstances, petitioners cannot now contend that they were expecting a further communication from the Board, and, therefore, did not take any action. The inaction from 25-7-1995 to the date of filing of the writ petitions is fatal to the cases of the petitioners because, in the meanwhile, the Board having taken possession, whether rightly or wrongly, has made a fresh allotment, delivered possession and entered into a lease-cunt-sale agreement with the fourth respondent. It should also be noticed that fourth respondent is not a new applicant, but an earlier allottee of another plot who lost its plot for no fault of its, on account of the litigation between the Board and the previous owners of the land. Any interference now will upset the rights of a third party, namely the fourth Respondent.
15.1 - - - - - - -
15.2 --- - - - - - -
15.3 Even though the action of the Board in taking possession otherwise than in accordance with law can be declared to be illegal, having regard to the effect of delay on the facts and circumstances of the case and the accrual of rights to the fourth respondent before the filing of these petitions, the petitioners cannot be given any relief in these cases. If the petitioners had approached this Court either in August or September 1995, the position would have been different and as the Board's action was illegal, the petitioners would have been entitled to restoration of possession. The petitioners could have also filed suits under S. 6 of the Special Relief Act, 1963 within six months of the date of dispossession. They did not do so. As petitioners have approached this Court belatedly, they are not entitled to any relief. " He has also relied upon the Judgment of the Supreme Court reported in (1995) 4 SCC 683 in the case of STATE OF MAHARASHTRA VS. DIGAMBAR, paragraph- 23 as under:
"23. Therefore, where a High Court in exercise of its power vested under Article 226 of the Constitution issues a direction, order or writ for granting relief to a person including a citizen without considering his disentitlement for such relief due to his blameworthy conduct of undue delay or laches in claiming the same, such a direction, order or writ becomes unsustainable as that not made judiciously and reasonable in exercise of its sound judicial discretion, but as that made arbitrarily."
14. Relying upon these two Judgments, he contends that the order of the learned Single Judge has to be set aside on the ground that the respondent-1 did not approach the court with clean hands and has suppressed the material facts and that having requested the 2nd respondent - Board to allot an alternate site on the current market value is estopped from questioning the cancellation of lease and also on the ground that Writ Petition filed by the 1st respondent has to be dismissed on the ground of delay and latches.
15. Mr. Subramanya, learned counsel appearing for the 1st respondent supporting the order of the learned Single Judge contends that there is no suppression of facts in filing the Writ Petition.
16 . By looking into various orders passed by the KIADB, this court can gather the nature of representation submitted by the 1st respondent to the 2nd respondent and that there was no need or necessity for the 1st respondent to produce such correspondences.
17. He further contends that in view of section 34-B of the Act, the CEO who was not delegated with the power to terminate the lease has erroneously terminated the lease. Therefore, any order passed by CEO of KIADB is without authority of law and without jurisdiction and any further action taken thereafter is void abnitio and that there is a failure on the part of the 2nd respondent in not following the procedure contemplated under Sec.35 of the Act.
18. Mr. Ashok N.Nayak, learned counsel for the KIADB has produced the office order dt.14.6.2010 which discloses that a power was delegated by the Board in its 300th Board Meeting authorising CEO and Executive Board, KIADB for resumption of the plot in the manner provided u/s 34-B of the KIADB Act, 1966 by ratifying the action taken by C.E.O. prior to the Board Meeting. He has also adopted arguments of Sri. Holla, learned Senior counsel appearing for the appellant.
19. Having heard the counsel for the parties, we have to consider the following points in this appeal:
1) Whether the learned Single Judge has committed an error in allowing the Writ Petition on the ground that CEO had no authority to cancel the lease in view of Section 34-B of the KIAD Act?
2) Whether the Writ Petition filed by the 1st respondent was required to be dismissed on account of delay and latches?
3) Whether the learned Single Judge is justified in allowing the Writ Petition of the 1st respondent without considering the case of the appellant?
20. Having heard the counsel for the parties, the following facts are not in dispute in this appeal: That originally the Industrial plot bearing No.8 at Electronic City, Phase-II was allotted to the 1st respondent by the 2nd respondent - Board on 22.1.1999 and was put in possession on 10.3.1999. A lease-cum-sale deed was executed on 14.12.2001. As per the terms and conditions of the agreement, the entire construction work has to be completed and project has to be commenced within 24 months from taking possession. Admittedly, no construction work has been under taken by the 1st respondent even after 5 years from the date of putting in possession of the land. It is not in dispute, from time to time on the request of the 1st respondent, time was extended to complete the project. But for the reasons best known to the 1st respondent, no construction work was commenced and project was also not commenced. As per the Rules of KIADB, a penalty of 10% was also levied when the time was extended. Unfortunately, the 1st respondent did not even make the payment of 10% in a sum of Rs.3,50,155/-. Thereafter notices were issued on several occasions and ultimately CEO terminated the lease and land was resumed by the KIADB.
21. After land was resumed by the KIADB, an application was filed by the 1st respondent requesting the KIADB to reallot the same land on the then prevailing allotment rate. Even the said request was considered by calling upon the 1st respondent to pay a sum of Rs.15,51,230/- which amount was also not paid.
22. From the above discussion, it is clear that the 1st respondent who is an allottee was required to construct and complete the building and commence the project within 24 months from the date of taking possession did not implement the project and though he is a defaulter, on the request of the 1st respondent time was extended from time to time by levying a penalty of 10% which amount is also not paid by the 1st respondent. The 1st respondent having accepted the termination of lease, after resumption of plot has given a representation to re-allot the land at the current allotment value. From this, it is clear that the technical ground now raised by the 1st respondent had been given up by him because of his subsequent conduct. If the 1st respondent was of the opinion that the CEO had no authority in law, there was no necessity for him to challenge the order of CEO By filing a Writ Petition immediately. But without doing so, having accepted the order of termination has went to the extent of seeking re-allotment of the very same plot. Therefore, it is clear, the ground now invented by the 1st respondent is only an after thought when the plot in question has been allotted to the appellant herein and making the appellant to spend lakhs of rupees to improve the same. When this is the conduct of the 1st respondent and when he has not approached the court within a reasonable time, whether such a person can seek the remedy of Certiorari invoking Article 226 of the Constitution.
23. Admittedly, the learned Single Judge did not consider this vital aspects of the matter. The learned Single Judge has proceeded only on the basis that the procedure contemplated under sec.34-B of the Act has not been followed. If the learned Single Judge has considered the conduct of the appellant, we are sure that the learned Single Judge would not have allowed the Writ Petition. On the contrary he would have dismissed the Writ Petition.
24. In addition to that, in view of the Judgement of this court in M/S.HANUMAN SILKS, it is clear that the 1st respondent who did not approach the court within the reasonable time, made the KIADB to allot the plot in favour of the appellant herein, allowing the appellant to spend lakhs of rupees. At this juncture, if the site allotted to the appellant is cancelled, it will have a great impact on the appellant who is a bonafide allottee who is no way concerned with the litigation between the 1st respondent and the Board. On account of the latches on the part of the 1st respondent, the appellant cannot be penalised because the learned Single Judge having held that sec.34-B is not followed, has reserved liberty to the KIADB to initiate action afresh. Even if KIADB initiates the action afresh, we do not see any defence for the 1st respondent to defend any further action that may be initiated by following Sec.34-B or 35 of the KIAD Act, because admittedly the 1st respondent was unable to put up any construction and commence the project in time. The 1st respondent has not assigned any reason in the entire Writ
Please Login To View The Full Judgment!
Petition, for not implementing the project within the stipulated time or within the extended period. Therefore, we are of the view that by giving a liberty to the KIADB to initiate action afresh, it is nothing but a futile exercise and at any rate the 1st respondent is not going to be benefited. 25. Having held so, we are also required to consider whether there is a delay in approaching the Court or not. Admittedly, the order of termination was passed on 12.8.2004 and having accepted the termination of lease and on resumption of the property, the 1st respondent has given an application on 21.9.2004 requesting the KIADB to re-allot the very same land on the prevailing allotment rate. Therefore, it is clear, the 1st respondent was aware that the lease has been terminated and land is re-possessed by the Board as per Annexure-L dt.12.8.2004 and Writ Petition is filed on 7.4.2005, eight months after the order of termination. In the meanwhile, much water has flown due to several developments including allotment of plot in favour of the appellant who is a bonafide allottee and he has spent lakhs of rupees. In view of para-23 of the Judgment of the Apex Court in STATE OF MAHARASHTRA VS.DIGAMBAR, we have to hold that Writ Petition filed by the 1st respondent was required to be dismissed on the ground of delay and latches. Even if we hold that there is a technical error, we are of the view that the same has been cured by the KIADB as per the order dt.14.6.2010 pursuant to the resolution passed in the 300th Meeting held on 21.5.2010 ratifying the action taken by CEO in all cases not only in respect of the present case but also of other cases. Therefore, it cannot be stated that CEO had no authority to terminate the lease. As a matter of fact, prior to amendment to Section-34-B, the CEO was competent to terminate the lease. The same has been continued by the CEO, after the amendment which has been ratified by the Board. 26. In the circumstances, we do not see any reasons to cancel the allotment made in favour of the appellant. 27. In the result, the appeal is allowed. The order passed by the learned Single Judge in W.P.No.13028/2005 dt.20.12.2007 is set aside. The Writ Petition filed by the 1st respondent is dismissed. Parties to bear their costs.