1. The present appeal filed by the appellant-applicant arises out of the impugned Order dated 24.08.2015 passed by the Additional District Judge No.2, Ajmer (hereinafter referred to as the "court below") in Civil Misc. Application No.24/2015 (122/2015), whereby the court below has dismissed the application of the appellant under Section 9 of the Arbitration and Conciliation Act, 1996 (hereinafter referred to as the "said Act").
2. The short facts necessary for deciding the present appeal are that applicant-appellant is a company, who was allotted the land bearing Plot Nos. B-302, 303 and 304 in all ad-measuring 22000 sq. meters by the respondent for a period of 99 years by the letter dated 03.12.2012 subject to the conditions mentioned therein. The possession of the said land was handed over to the appellant on 17.12.2012, and the lease deed was executed in favour of the appellant on 07.02.2013. As per the terms of the allotment, the appellant was required to invest a sum of Rs. 22.75 crores during the period of 2 years from the date of allotment, however the appellant could make investment only of Rs. 6.89 crores in 3 years. The respondent therefore issued the notice on 19.05.2015, calling upon the appellant to show cause as to why the allotment should not be cancelled. The respondent thereafter gave another notice dated 25.06.2015 informing the appellant to deposit a sum of Rs. 1.6 crore by 03.07.2015, failing which the allotment in favour of the appellant would be cancelled. The appellant therefore invoked the arbitration clause as contained in the lease deed dated 07.02.2013, requesting the named Arbitrator-cum-Collector Ajmer to enter into the reference. The appellant-applicant also filed an application under Section 9 of the said Act before the court below seeking interim measure for restraining the respondent from cancelling the allotment and from recovering the amount mentioned in the notice.
3. The said application was resisted by the respondent by filing the reply before the court below contending inter-alia that appellant was allotted the plots bearing No.302, 303 and 304 by way of preferential allotment under Rule 3(W) of the RIICO Disposal of Land Rules 1979 (hereinafter referred to as the 'said Rules'), which fact was suppressed by the appellant in the application. It was further contended that as per the condition No.11 of the allotment letter, the appellant was required to make investment of Rs. 22.75 crores within two years, however the said condition having not been complied with, the appellant was issued wake up notices time and again and ultimately the notice under challenge was issued.
4. The court, below after appreciating the documents on record, dismissed the said application of the appellant under Section 9 of the said Act, holding inter-alia that the appellant had not complied with the conditions of allotment and the court below did not have the jurisdiction to decide the application. Aggrieved by the said order the present appeal has been filed under Section 37 of the said Act.
5. In the instant case, it is not disputed that the appellant was allotted the land in question under Rule 3(W) of the said Rules by way of preferential allotment. The relevant para of the said Rule reads as under:
"3(W). Industrial land allotment 'on going basis' in certain special cases in all the industrial areas.
(A) Preferential allotment of industrial land will be made in the following cases 'on going basis' in all the Industrial Areas, dispensing with the requirement of inviting expression of interest/applications etc. through advertisement in newspapers:
(i) The industrial projects envisaging minimum investment of Rs. 20 crores. The cost of project means investment on land, building, plant and Machinery and miscellaneous fixed assets. However, for evaluation purposes, the land and building cost should not exceed 20% of the total cost of project.
(B) The land allotments to the applicants/projects as specified above, will made as under:
(iii) Time limit for commencement of production will be two years to be reckoned from the date of allotment and shall be specified in the letter of allotment.
(iv) Time limit for commencement of production will be extended only when there has been delay in handing over the possession of land by RIICO free from encumbrances, delay in obtaining environment clearance/other regulatory clearances which may be beyond control of the allottee, court case/pending litigation.
(v) For such preferential allotments, generally no time extension for commencement of production will be allowed. However, in genuine cases time extension may be considered by the constituted committee under the rule.
(viii) If an allottee fails to fulfil the obligation of the terms and conditions of the allotment related to utilisation of land, investment as per the project report etc, within a stipulated/extended period, as the case may be, the allottee shall be required to pay the corporation additional cost of land to be calculated as per under:
The additional cost of land = Allotted land area x (Highest auction rate of industrial plot of industrial area concerned - Rate of allotment."
6. It is also not disputed by the appellant that the appellant had failed to make investment of Rs. 22.75 crores as per the condition mentioned in the allotment letter dated 03.12.2012, and that the investment of around Rs. 7 crores only was made in 3 years of the said allotment. It is also not disputed that as a result thereof the respondent had issued notices time and again calling upon the appellant to comply with the conditions of the allotment and make investment accordingly. The receipt of the impugned notices are also not disputed.
7. It is sought to be submitted by the learned Senior Advocate Mr. Sudhanshu Kasliwal, for the appellant that the respondent had not issued the no objection certificate to the appellant for obtaining the electricity connection and had given the same on 29.12.2014, and that the said area was also not declared as the developed area, as required to be done in view of the note to the Rule 21 of the said rules. According to the learned counsel for the appellant, the said area having not been declared as developed, the period of commencement for construction activities/production activities had to be considered from the date of such declaration and the respondent could not have been issued the impugned notices seeking recovery of the amount by way of penalty to cancel the allotment under the guise that the appellant had not complied with the conditions of the allotment letter. The learned counsel Mr. Kasliwal further submitted that the court below had committed an error by holding that it did not have the jurisdiction to entertain the appeal, though the property was situated at Ajmer and no cause of action had arisen within the court at Jaipur. He relied upon the decisions of the Apex Court in Swastik Gases Private Ltd. v. Indian Oil Corporation Ltd. (2013) SCC 32 and Hanil Era Textile Ltd. v. Puromatic Filters (P) Ltd. (2004) 4 SCC 671 in support of his submissions.
8. However, the learned senior counsel Mr. Virendra Lodha, for the respondent has vehemently submitted that the appellant was made preferential allotment of industrial plots on the terms and conditions as mentioned in the allotment letter and the lease agreement, subject to the provisions contained in the said rules, more particularly Rules 3(W) of the said Rules and the appellant was obliged to adhere to the said conditions. He further submitted that the appellant having failed to make investment as required to be made by them within the period prescribed, despite the respondent having given notices time and again, the court below has rightly dismissed the application of the appellant for interim measures under Section 9 of the said Act. He also submitted that as per the terms of the lease agreement, only the court at Jaipur had jurisdiction and therefore, the application of the appellant was rightly dismissed on the point of jurisdiction by the court below.
9. As stated herein above and not disputed by the learned counsels for the parties, the appellant was allotted the subject plots in the industrial area on preferential basis under Rule 3(W) of the said Rules, dispensing with the requirement of inviting expression of interest/application etc. through advertisement in newspapers. Such preferential allotment could be made under the said Rules to the Industrial projects envisaging minimum investment of Rs. 20 crores. Since the appellant had envisaged the investment of Rs. 22.75 crores within 2 years, the appellant was granted the preferential allotment under the said Rules. However at the end of 3 years, the appellant could make investment only of Rs. 7 crores i.e. 1/3 of the total investment promised to be made at the time of seeking preferential allotment. It is pertinent to note that appellant was allotted the said land @ Rs. 900 per Sq. meters whereas if the said land was auctioned, the allotment would have been at a much higher rate. Under the circumstances, the appellant was required to strictly adhere to and comply with the conditions as contained in the allotment letter.
10. It was specifically mentioned in para 11 of the allotment letter that the company will set up the project and start production activities within two years period from the date of allotment with minimum investment of Rs. 22.75 crores as mentioned in the application. It was further mentioned in para 12 that if the allottee failed to set up the unit within the prescribed period with investment as above, the allotment will be treated automatically cancelled and no time extension will be given for commencement of the production activities. At this juncture, it is also required to be noted that as per conditions of the lease agreement, the appellant was required to erect the industrial unit in accordance with the site plan and complete the construction activities within a period of 2 years and start commercial production within a period of 3 years from the date of possession failing which the unutilized land of the allottee plots was to revert to the lessor i.e. the respondent after the expiry of the prescribed period. Hence, considering the terms and conditions mentioned in the allotment letter and in the lease agreement there remains no shadow of doubt that the appellant was required to make investment of Rs. 22.75 crores within a period of 2 years from the date of allotment, which the appellant had failed to make.
11. Though, it was sought to be submitted by the learned counsel for the appellant that the respondent RIICO had failed to give 'No Objection Certificate' (NOC) for obtaining electricity connection till 29.12.2014 which had delayed the project of the appellant, the court does not find any substance in the said submission. As transpiring from the additional affidavit filed on behalf of the appellant, the appellant company itself had applied for NOC after 2 years of the allotment of land to it i.e. in October, 2014. If the appellant itself had applied for NOC belatedly, no fault of the respondent could be found.
12. Much emphasis was laid by the learned counsel for the appellant on the note appended to the Rule 21 of the said Rules to submit that period of commencement of production activities was required to be considered from the date of declaration of area as developed area and since the said area was not declared as developed area, the appellant was entitled to the extension of time period for commencement of production activities/utilization of allotted plots. The court also does not find substance in the said submission. Since, the allotment was made by the respondent to the appellant on preferential basis under Rule 3(W) of the said Rules, the provisions contained in the said Rule alone would apply and not other provisions.
13. As per Rule 3(W)(B)(iii), the time limit for commencement of production was 2 years to be reckoned from the date of allotment and as specified in the letter of allotment. It has been further mentioned in the Clause (v) thereof that for such preferential allotment, generally no time extension for commencement of production will be allowed. However in genuine case, time extension may be considered by the constituted committee under the said Rules. It is also further mentioned in Clause (viii) that if the allottee failed to fulfil the obligation of the terms and conditions of the allotment related to utilisation of land, investment as per the project report etc, within a stipulated/extended period, as the case may be, the allottee would be required to pay to the corporation additional cost of land to be calculated as mentioned therein.
14. So far as the facts of the present case are concerned, the case of the appellant is governed by Rule 3(W) of the said Rules and the appellant had failed to fulfil the obligation of the terms and conditions of the allotment relating to utilisation of the land and investment. Therefore, the appellant was not only liable to pay additional cost as mentioned in the said Rules but its allotment was also liable to be cancelled in view of the terms and conditions of the allotment letter. The appellant, having failed to make the investment and utilise the land as per the said allotment letter despite several notices given by the respondents, it would not be entitled to any relief, as prayed for.
15. As regards jurisdiction of the court below, it may be stated that as per the condition No.3(B) of the lease agreement, all legal proceedings including breach of the conditions of th
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e agreement were to be vested in the courts situated at Jaipur and not elsewhere. Though, it is sought to be submitted by the learned counsel for the appellant that the land in question was situated within the jurisdiction of court of Ajmer and no cause of action had arisen within the jurisdiction of the court at Jaipur, and that the parties cannot confer jurisdiction in the court by consent, the said submission cannot be accepted. There could not be any disagreement with the decisions of the Supreme Court relied upon by the learned counsel for the appellant, however in the instant case it appears that the allotment letter and the lease agreement were issued to the appellant at Jaipur and there being alleged breach of terms and conditions of the said letter and the agreement, the part of cause of action could be said to have arisen within jurisdiction of the court at Jaipur. Since the parties had agreed to submit to the jurisdiction of the court at Jaipur as per the terms of the lease agreement, the court at Jaipur had the jurisdiction to entertain the application filed by the applicant-appellant. In any case, even if its assumed that the court at Ajmer also had jurisdiction then also the appellant having failed to make out any case for exercising equitable jurisdiction under Section 9 of the said Act., the court below has rightly rejected the said application. 16. In that view of the matter, the court does not find any substance in the present appeal. The appeal being devoid of merits, is dismissed. Appeal dismissed.