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M/s. Durga Fabrication Works, Represented by its Proprietor, Prakash Ramu Rathod v/s The State of Karnataka, Represented By Its Secretary, Department of Industries & Commerce, Bengaluru & Others


    Writ Petition No. 32084 of 2019 (GM-KIADB)

    Decided On, 09 July 2020

    At, High Court of Karnataka

    By, THE HONOURABLE MR. JUSTICE JOHN MICHAEL CUNHA

    For the Petitioner: A. Nagarajappa, Advocate. For the Respondents: R1, Pramodhini Kishan, AGA, R2 & R3, J. Gopalakrishna, Advocate.



Judgment Text


(Prayer: This Writ Petition is filed Under Articles 226 and 227 of the Constitution of India praying to quash the covering letter dated 19.07.2019 and the order dated 17.07.2019 marked as Annexure-P1 and P issued by R-2 and direct R-2 to issue an order for establishing lodging and boarding at Plot No. 10d of Non-It Sez Industrial Area of Pajeera Village, Bantwal Taluk, Mangaluru District (Dakshina Kannada).

Through Video Conference:

1. Aggrieved by the order dated 17.07.2019 in No.KIADB/HO/ ALLOT/Comp.No.14378/5409/2019-20 (Annexure-'P') issued by the Chief Executive Officer-cum-Executive Member, Karnataka Industrial Area Development Board, Bengaluru and the communication dated 19.07.2019 bearing No.KIADB/HO/Allot/C.No.14378/5534/2019-20 (Annexure-'P1'), petitioner has preferred this petition under Articles 226 and 227 of the Constitution of India.

2. The outline facts leading to the issuance of Annexure-'P' and 'P1' are that an industrial shed was allotted in favour of Sri.Prakash Ramu Rathod, Proprietor of M/s.Durga Fabricators, Belagavi, as per the allotment letter dated 20.05.2016 in an area of 1.00 acre, in Plot No.10-D of Non-IT- SEZ Industrial Area (Annexure-'A') for establishing an unit for "Fabrication works". The lease-cum-sale Agreement was executed for a period of 10 years vide Annexure-'C'. The possession of the said shed was handed over to the petitioner on 01.06.2017. That being the case, petitioner - M/s Durga Fabrication Works vide letter dated 16.03.2018 addressed to the Development Officer, KIADB, Mangaluru sought for change of activity from "Fabrication Works" to "Lodging and Boarding" in the name of M/s.Hotel Madhav Residency (Annexure-'D'). The said proposal was sent to Karnataka Industrial Areas Development Board Head Office, Bengaluru seeking appropriate orders. After examining the request in detail, as per the directions of the C & I Department, Government of Karnataka vide letter No.CI.81.IAP.2014(P) dated 21.04.2017, the request of M/s.Durga Fabrication Works was not considered (Annexure- 'G'). Accordingly, the Assistant Secretary, KIADB Zonal Office, Mangaluru vide letter dt.13.12.2018 (Annexure-'L') informed M/s.Durga Fabricators that their request for change of activity from "Fabrication Works" to "Lodging & Boarding" activity was rejected.

3. The petitioner filed Writ Petition No.58180/2018 (GM-KIADB) before this Court seeking quashing of the communication dated 13.12.2018. This Court by its order dated 11.06.2019 quashed the communication dated 13.12.2018 for the reason that the allotment of land to the petitioner M/s.Durga Fabrication Works was made on 20.05.2016, prior to issuance of the order dated 21.04.2017 by the Department of Commerce and Industries, Government of Karnataka. Further, this Court directed the competent authority to decide the application submitted by the petitioner for change of user of the plot in question afresh by a speaking order within a period of one month from the date of receipt of the order, without being influenced by the order dated 21.04.2017. However, the representation of the petitioner came to be rejected by order dated 17.07.2019 (Annexure-'P') which is impugned herein. The Chief Executive Officer-cum-Executive Member has rejected the request of the petitioner for change of activity for the reason that granting permission for change in activity from Industrial to Non-Industrial activities for an already allotted land for a specific industrial purpose leads to conversion of industrial land to non- industrial purpose; sets precedent for other allottees in the industrial areas to follow the same, thereby defeating the very purpose of Karnataka Industrial Areas Development Act, 1966 (hereinafter referred to as "KIAD Act") to promote establishment and orderly development of industries.

4. The impugned order and the reasoning assigned by the second respondent to reject the request of the petitioner for change of activity has been challenged in this petition inter alia contending that the second respondent has adopted double standard and dual method in colourable exercise of powers offending Article 14, 19(1)(g) of the Constitution of India. That the impugned order is contrary to the direction issued by this Court and the judgment of this Court reported in HOTEL ROYAL INN vs. STATE OF KARNATAKA & KIADB in W.P.No.38772/2016 disposed of 22.08.2017. The activities of "hotel" fall within the definition of "amenity" defined under the KIAD Act and therefore, rejection of request of the petitioner is contrary to the orders of this Court. The industrial area set up by the respondents is not duly developed for establishing "Fabrication Work", as the area in question is situated in the costal belt and except one big industry i.e., Infosys, there are no other industries to facilitate and give impetus to the fabrication work and therefore, the petitioner sought for change of industry to Hotel industry which is also a part of industrial infrastructural activity as defined under the KIAD Act, more particularly 2(7a) of the KIAD Act for the purposes of providing industrial infrastructural facilities in and around the area and therefore, the change of activity sought for by petitioner is squarely falling within the definition clause of "Industrial Infrastructural facilities". The Legal Advisor of the respondents on examining the issue and after holding spot inspection has arrived at a conclusion that the area is a civic amenity having all ingredients of "amenity" to establish hotel i.e., Boarding & Lodging. The impugned order having been passed contrary to the legal opinion given in the matter is liable to be set-aside as being arbitrary and illegal. Further, it is stated that the petitioner has invested huge amount to put up the hotel industry by constructing a building at the industrial plot, which aspect has not been independently examined by the respondents, thereby defeating the legitimate expectation of the petitioner.

5. In the course of argument, learned counsel for petitioner has reiterated the above contentions. He has not referred to any specific provisions of law which entitles the petitioner to claim change of activities from industrial purposes to non-industrial purposes.

6. Learned counsel appearing for respondents however argued in support of the impugned order, emphasizing that eventhough "hotel" falls within the definition of "amenity" as defined under section 2(1) of the KIAD Act, yet the petitioner ought to have applied for clearance of its project at the initial stage before approval of its project for "Boarding & Lodging". While approving the project of the petitioner for fabrication, the District Level Single Window Co-ordination Committee had applied its mind and on satisfying that the industrial site in question was suitable for fabrication work has made allotment in favour of the petitioner. The plot allotted to the petitioner is an industrial plot and not a civic amenity plot. The petitioner made an application seeking issue of "no objection certificate" from the respondent - Board for obtaining 10 HP power supply connection for production activities of their industrial unit on 02.05.2018 and the same was granted on 03.05.2018. The petitioner claims that in its representations dated 16.03.2018 and 02.05.2018, it was requested for change of activity from "Fabrication to Boarding & Lodging" under the name and style of Hotel Madhav Residency as per documents issued by Karnataka Udyog Mitra". However, no such specific approval favouring Hotel Madhav Residency issued by the Karnataka Udyog Mithra has been furnished to the Board. Petitioner did not obtain the approval of building plan as per the procedures and terms of allotment of land by the respondents. The petitioner which is a "lessee" under the statute has acted against the terms of lease wherein it is explicitly indicated that approval of building plan by respondent - Board is essentially required. The petitioner has violated the terms of allotment of land and lease agreement. Respondents did not approve any building plan for construction of the building and if any illegal constructions are put up by the petitioner, the same will be dealt as per the law applicable by the respondents. The reasons for rejecting the request for change of activities are assigned in para 10 of the impugned order. This order is issued in accordance with the provisions of the Act. If the grievance of the petitioner is considered, then each allottee of the respective industrial area would request the Board for change of the projects according to their whims and fancies, as a result, the very object of the Act would be defeated. The approval for establishing "Boarding & Lodging" has to be accorded by the District Level Single Window Co-ordination Committee. The petitioner has not made any request to the said Committee for approval of its project of establishing "Boarding & Lodging". The request made by the petitioner being contrary to the approval granted by the District Level Single Window Co-ordination Committee, the impugned order does not suffer from any error or illegality warranting interference by this court. Thus, the learned counsel appearing for respondents has prayed for dismissal of the petition with exemplary costs.

7. In the light of the above contentions, the following questions arise for my consideration namely, (1) Whether the change of activity from "Fabrication Work" to "Lodging and Boarding" in respect of the industrial shed allotted to the petitioner is permissible under the provisions of the KIAD Act?

(2) Whether the reasoning assigned by the second respondent for rejecting the representations submitted by the petitioner for change of activity suffers from any arbitrariness or illegality warranting interference under Articles 226 and 227 of the Constitution of India?

8. Both these questions are answered hereinbelow: Indisputedly, an industrial shed was allotted to M/s.Durga Fabricators for the purpose of establishing an unit for "Fabrication Work". The records indicate that in terms of the allotment, the said M/s.Durga Fabricators entered into a lease- cum-sale agreement and even took possession of the shed as evidenced in Annexures-'A' to 'C'. It is only after taking possession of the allotted shed, the petitioner appears to have sought for change of activity from "Fabrication Work" to "Lodging & Boarding" by way of representation at Annexure-'D'. This representation has been rejected by the second respondent vide Annexures-'P' and 'P1'.

9. Learned counsel for petitioner has not referred to any provisions of law which enables the petitioner to seek for change of activity from "Fabrication Work" to "Lodging & Boarding". The argument canvassed by learned counsel for petitioner proceeds on the footing that the change of activity sought for by the petitioner namely the "Lodging & Boarding" is an "amenity" within the meaning of section 2(1) of the KIAD Act and therefore, rejection of representations of the petitioner is arbitrary and illegal. This argument, in my view, is wholly misconceived and has no factual or legal basis.

10. A plain reading of the statement of objects and reasons of the KIAD Act indicate that the Act has been enacted for securing the establishment of industrial areas in the State of Karnataka and for promoting the establishment and orderly development of industries therein. Section 28 of the KIAD Act empowers the State, in exercise of its eminent jurisdiction to acquire land for the purpose of development of industries or for any other purpose in furtherance of the objects of the said Act. A reading of the various provisions of the Act make it abundantly clear that under the provisions of the KIAD Act, land can be acquired for the purpose of establishing an industrial area, industrial estate, industrial infrastructural facilities and also for creating civic amenities.

11. In the instant case, since the argument of the learned counsel is centered on the plea that the proposed change of activity is an "amenity" as defined under the KIAD Act, it may be apposite to refer to the said provision as defined under Section 2(1) of the KIAD Act which reads as under:-

"2(1) 'Amenity' includes road, supply of water or electricity, street lighting, drainage, sewerage, conservancy, and such other convenience, as the State Government may, by notification specify to be an amenity for the purposes of this Act."

No doubt, judicial precedents by now have clarified that "hotel" and "lodging" fall within the expression "amenity" as defined under section 2(1) of the KIAD Act, but nevertheless to claim a site as an "amenity", in view of the above definition, the land or site must be notified as "amenity" for the purpose of the KIAD Act and should be acquired for the purpose of creating such amenity. It is only when the Government forms an opinion that a piece of land is required either for the purpose of establishing industrial area, industrial estate or industrial infrastructural facilities or for creating civic amenity, for the purpose of the Act, it can resort to section 28 of the KIAD Act for acquisition of the land. This is evident from the expression employed in section 28 of the KIAD Act which empowers the Government to acquire any land required for the purpose of development by the Board, or for any other purpose in furtherance of the objects of this Act. The expression "in furtherance of the objects of the Act" therefore means that any amenities which are incidental to the main object of industrial development. Therefore, it goes without saying that the power to declare a particular plot or site as incidental or necessary for the object of industrial development as essential amenity vests with the Government. Therefore, unless the acquired plot or site is notified as an amenity by the Government in terms of section 2(1) of the KIAD Act, a lessee or beneficiary of the acquisition cannot contend that the site allotted to him be treated as an "amenity". In the instant case, industrial shed allotted to the petitioner having not been notified as an "amenity" within the meaning of section 2(1) of the KIAD Act and the same having not been acquired for the said purpose under section 28 of the KIAD Act, the question of allotting the same to the petitioner or permitting the petitioner to change the initial activity as amenity does not arise at all.

12. That apart, a reading of the Karnataka Industrial Areas Development Board Regulations, 1969 makes it further clear that in order to secure the allotment of an industrial area or amenities established in an industrial area, an application for allotment of the land or shed in an industrial area shall have to be made to the Executive Member in the prescribed form (Form No.1) obtained from the Board in duplicate along with an earnest money as may be specified by the Government from time to time (vide Regulation 4). Regulation 5 deals with the manner of disposal of land. Regulation 7 prescribes that the Board shall notify the availability of land, the manner of disposal, the last date for submission of application and such other particulars and finally, the allotment is required to be made by the Board in terms of Regulation 10, on being satisfied that the person, firm or company who has made an application is likely to start production within a reasonable period, and is not one which is declared obnoxious under Regulation 14 and Regulation 11 empowers the Board the right to reject any application without assigning any reasons.

13. These Regulations, therefore, make it clear that even to secure the allotment of an amenity notified by the Government, an application in Form No.1 is required to be submitted and the same has to be processed in terms of KIAD Regulations. It is no

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t the case of the petitioner in the instant case that it has made any application seeking allotment of the acquired land for establishment of "Lodging & Boarding". There is nothing in the entire Act or in the Regulations referred above to indicate that an allottee of an industrial plot or an industrial area is entitled to seek change of user of the land. On the other hand, a reading of the provisions of the KIAD Act and the Regulations framed thereunder make it clear that an application for allotment of the industrial area or for amenities could be made only when the land in question has been acquired for the said purpose. There being no material on record to show that the plot allotted to the petitioner is either acquired for the purpose of establishment of the "Lodging & Boarding" or that the same is notified as an "amenity" as per section 2(1) of the Act, the second respondent was justified in rejecting the representations submitted by the petitioner. The second respondent being a statutory authority is bound by the Statute and the procedure laid down in the Statute and must act within the four corners thereof. Since the provisions of the Statute do not enable the second respondent to change the activities at the asking of the petitioner, in my view, the impugned order at Annexure-'P' cannot be faulted with. The impugned order does not suffer from any arbitrariness or illegality as sought to be made out. In the circumstances, I do not find any reason to exercise the jurisdiction under Articles 226 and 227 of the Constitution of India. As a result, petition is liable to be dismissed and accordingly, it is dismissed. In view of dismissal of the petition, I.A.No.2/2019 does not survive for consideration and the same is also dismissed.
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