w w w . L a w y e r S e r v i c e s . i n

Ramakrishna Engineering Company rep. by Managing Partner Dhinoo Gopalakrishnan v/s The State Industries Promotion Corporation of Tamil Nadu, rep. by Chairman and Managing

Company & Directors' Information:- D P ENGINEERING INDUSTRIES LIMITED [Active] CIN = U27310DL2008PLC176856

Company & Directors' Information:- A K ENGINEERING INDUSTRIES (INDIA) PRIVATE LIMITED [Active] CIN = U25206DL1997PTC085204

Company & Directors' Information:- G L ENGINEERING INDUSTRIES PRIVATE LIMITED [Active] CIN = U28920MH1981PTC023662

Company & Directors' Information:- B V M ENGINEERING INDUSTRIES LIMITED [Active] CIN = U28111DL1972PLC005983

Company & Directors' Information:- R R R ENGINEERING INDUSTRIES PRIVATE LIMITED [Strike Off] CIN = U74899DL1993PTC055069

Company & Directors' Information:- A. V. ENGINEERING INDUSTRIES PRIVATE LIMITED [Strike Off] CIN = U99999DL1974PTC007360

Company & Directors' Information:- G D R ENGINEERING INDUSTRIES PVT LTD [Strike Off] CIN = U27109UP1971PTC003388

Company & Directors' Information:- L S ENGINEERING INDUSTRIES PRIVATE LIMITED [Strike Off] CIN = U74899DL1977PTC008484

Company & Directors' Information:- I B I ENGINEERING INDUSTRIES PRIVATE LIMITED [Strike Off] CIN = U45202PB1974PTC003422

Company & Directors' Information:- A H B ENGINEERING INDUSTRIES PVT LTD [Strike Off] CIN = U35999WB1988PTC044786

Company & Directors' Information:- O K ENGINEERING INDUSTRIES PRIVATE LTD [Active] CIN = U74899DL1987PTC027660

Company & Directors' Information:- RAMAKRISHNA INDUSTRIES LTD [Not available for efiling] CIN = U74999PY1956PLC000017

Company & Directors' Information:- R P ENGINEERING INDUSTRIES PRIVATE LIMITED [Strike Off] CIN = U99999DL1973PTC006781

Company & Directors' Information:- S V ENGINEERING INDUSTRIES PVT LTD [Under Liquidation] CIN = U74210TG1981PTC003174

    W.P.No.2022 of 2009

    Decided On, 08 September 2011

    At, High Court of Judicature at Madras


    For the Petitioner: Srinath Sridevan, Advocate. For the Respondent: Narmadha Sampath, Advocate.

Judgment Text

(Prayer: Petition under Article 226 of the Constitution of India for issue of writ of Certiorari to call for the records of the respondent pertaining to the order bearing DII/SIP/IRU/REC/2003, dated 13.1.2009 and quash the same.)

1. The petitioner was an allottee of a developed plot in the SIPCOT Industrial Park at Irungattukottai. The petitioner was allotted Plot No.A1 (Part) to the extent of 4 Acres. In this writ petition, the petitioner has challenged an order dated 13.1.2009 issued by the respondent/SIPCOT, wherein they have indicated their intention to resume the unutilised portion of the land to the extent of 2 Acres. It was stated that under the conditions of allotment and in paragraph 14(1) of the Lease Deed it was stipulated that if the plot allotted to the allottee is not fully utilised, then there is no impediment for the respondent/SIPCOT to resume the land and it was found that the petitioner had not constructed in the area which is allotted to it as per the conditions of lease.

2. As per the conditions of lease which is appended in the typed set, it is stipulated that non compliance of the terms and conditions of the allotment will result in cancellation of the lease, including claiming of amount paid towards plot and interest already paid. One of the conditions that is set out is that the allottee should put to use the land for the purpose for which it was allotted and if it is in excess of the actual requirement than the purpose for which it is allotted, the respondent/ SIPCOT can, at any time, cancel the allotment. It is also stated that the construction of the building will have to be commenced within six months from the date of the allotment order and should be completed within 24 months from the date of the allotment.

3. The lease was executed in favour of the petitioner on 5.12.2003, pursuant to the allotment order made on 26.8.2003. Thereafter, after waiting for five years, a notice dated 31.1.2008 was issued to the petitioner and in that notice the petitioner was informed that the petitioner has violated condition No.6(a) of the allotment order and condition No.14(1) of the lease deed and since the land was not put to use for the purpose for which it was allotted and it was also found to be excess of the actual requirement, they have right to cancel the allotment in respect of the land which was not utilized. The petitioner was asked to show cause on the same.

4. The petitioner sent a reply dated 15.5.2008 stating that they need the entire land and they have also finalized their expansion plan for the next two/three years and they also require six to eight months for completing the work. They also sent further representation dated 11.6.2008 indicating that they have further period of two years for completing the construction process.

5. In the meanwhile, the respondent/SIPCOT, by communication dated 12.6.2008, found that since the original condition was not complied with, they propose to resume the unutilised portion of land allotted to them. It is pursuant to the said warning the impugned order came to be passed on 13.1.2009. In the impugned order, it is stated that even after ninety days time was given for compliance of defects by the proceedings of the respondent dated 28.3.2008, the petitioner had not complied with the same and it is also stated that on inspection made by the respondent, it was found that they have not even commenced civil works in the site and therefore, they were directed to show cause as to why allotment should not be cancelled. Challenging the said show cause notice, the writ petition came to be filed.

6. The writ petition was admitted on 2.2.2009. Pending the writ petition, interim stay was granted. On notice from this Court, the respondent/SIPCOT is represented by Ms.Narmada Sampath, learned counsel. Today when the matter came up, the learned counsel for the petitioner produced further documents showing that they had made application for building approval on 21.5.2008 and they have also paid the infrastructure and amenities charges and official plan approval was also obtained. But these conditions will not improve the case of the petitioner. In any event, if the petitioner has a good case, they should give appropriate reply to the SIPCOT and convince the SIPCOT about the necessity or legal right for it to retain the land.

7. Considering the fact that the transaction between the petitioner and the respondent/SIPCOT is purely contractual and admittedly, the contractual conditions have been violated, this Court is not inclined to entertain the writ petition either to extend the terms and conditions of lease or to modify the lease conditions on the basis of the difficulties pleaded by the petitioner.

8. In this context, it is necessary to refer to the judgment of the Supreme Court in Kerala State Electricity Board v. Kurien E.Kalathil, AIR 2000 SC 2573 : [2000] 6 SCC 293. The Supreme Court has held that a contract between the parties would not become statutory simply because it is for construction of a public utility or because the allotment was made by a statutory body and every act of the statutory body need not involve the exercise of statutory power. In such circumstances, the Court exercising power under Article 226 of the Constitution of India cannot exercise its discretion to interpret the terms and conditions of such contract. In paragraph [11] of the judgment, it was held as follows:

"11. A statute may expressly or impliedly confer power on a statutory body to enter into contracts in order to enable it to discharge its functions. Dispute arising out of the terms of such contracts or alleged breaches have to be settled by the ordinary principles of law of contract. The fact that one of the parties to the agreement is a statutory or public body will not by itself affect the principles to be applied. The disputes about the meaning of a covenant in a contract or its enforceability have to be determined according to the usual principles of the Contract Act. Every act of a statutory body need not necessarily involve an exercise of statutory power. Statutory bodies, like private parties, have power to contract or deal with property. Such activities may not raise any issue of public law. In the present case, it has not been shown how the contract is statutory. The contract between the parties is in the realm of private law. It is not a statutory contract. The disputes relating to interpretation of the terms and conditions of such a contract could not have been agitated in a petition under Article 226 of the Constitution of India. That is a matter for adjudication by a civil court or in arbitration if provided for in the contract. Whether any amount is due and if so, how much and refusal of the appellant to pay it is justified or not, are not the matters which could have been agitated and decided in a writ petition. The contractor should have relegated to other remedies."

9. The Supreme Court subsequently in State of Bihar v. Jain Plastics and Chemicals Ltd., AIR 2002 SC 206 : [2002] 1 SCC 216 has reiterated the similar opinion and it was held that the Court exercising jurisdiction under Article 226 of the Constitution of India cannot deal with the breach of contract and grant relief to the parties on the basis of the explanation offered by one of the parties to the contract. In paragraph [7], it was observed as follows:

"7. In our view, it is apparent that the order passed by the High Court is, on the face of it, illegal and erroneous. It is true that many matters could be decided after referring to the contentions raised in the affidavits and counter-affidavits, but that would hardly be a ground for exercise of extraordinary jurisdiction under Article 226 of the Constitution in case of alleged breach of contract. Whether the alleged non-supply of road permits by the appellants would justify breach of contract by the respondent would depend upon facts and evidence and is not required to be decided or dealt with in a writ petition. Such seriously disputed questions or rival claims of the parties with regard to breach of contract are to be investigated and determined on the basis of evidence which may be led by the parties in a properly instituted civil suit rather than by a court exercising prerogative of issuing writs."

10. The learned counsel, Ms.Narmada Sampath, also brought to the notice of this Court the judgment of the Supreme Court in U.P. Financial Corporation v. Gem Cap (India) Private Limited and others, [1993] 2 SCC 299 for contending that the Court can exercise power only when there is a statutory violation on the part of the Corporation or where the Corporation acts unfairly or unreasonably. The Court exercising the power under Article 226 of the Constitution of India cannot sit as an Appellate Authority over the acts and deeds of the Corporation and seek to correct them. In that case, the Court was dealing with an organization like the respondent, which is created by the State Financial Corporations Act, 1951, and while dealing with the transactions with the Corporation, the Court held that fairness is not a one-way street. It is necessary to refer to the following passage found in paragraph [10], which is as follows:

"10. It is true that the appellant-corporation is an instrumentality of the State created under the State Financial Corporations Act, 1951. The said Act was made by the Parliament with a view to promote industrialisation of the States by encouraging small and medium industries by giving financial assistance in the shape of loans and advances, repayable within a period not exceeding 20 years from the date of loan. We agree that the corporation is not like an ordinary money-lender or a Bank which lends money. It is a lender with a purpose - the purpose being promoting the small and medium industries. At the same time, it is necessary to keep certain basic facts in view. The relationship between the corporation and the borrower is that of creditor and debtor. The corporation is not supposed to give loans once and go out of business. It has also to recover them so that it can give fresh loans to others. The corporation no doubt has to act within the four corners of the Act and in furtherance of the object underlying the Act. But this factor cannot be carried to the extent of obligating the corporation to revive and resurrect every sick industry irrespective of the cost involved. Promoting industrialisation at the cost of public funds does not serve the public interest; it merely amounts to transferring public money to private account. The fairness required of the corporation cannot be carried to the extent of disabling it from recovering what is due to it. While not insisting upon the borrower to honour the commitments undertaken by him, the corporation alone cannot be shackled hand and foot in the name of fairness. Fairness is not a one way street, more particularly in matters like the present one. The above narration of facts shows that the respondents have no intention of repaying any part of the debt. They are merely putting forward one or other ploy to keep the corporation at bay. Approaching the courts through successive writ petitions is but a part of this game. Another circumstance. These corporations are not sitting on King Solomon's mines. They too borrow monies from Government or other financial corporations. They too have to pay interest thereon. The fairness required of it must be tempered - nay, determined, in the light of all these circumstances. Indeed, in a matter between the corporation and its debto

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r, a writ court has no say except in two situations: (1) there is a statutory violation on the part of the corporation or (2) where the corporation acts unfairly i.e., unreasonably. While the former does not present any difficulty, the latter needs a little reiteration of its precise meaning. What does acting unfairly or unreasonably mean? Does it mean that the High Court exercising its jurisdiction under Article 226 of the Constitution can sit as an appellate authority over the acts and deeds of the corporation and seek to correct them? Surely, it cannot be. That is not the function of the High Court under Article 226. Doctrine of fairness, evolved in administrative law was not supposed to convert the writ courts into appellate authorities over administrative authorities. The constraints - self-imposed undoubtedly - of writ jurisdiction still remain. Ignoring them would lead to confusion and uncertainty. The jurisdiction may become rudderless." Under the said circumstances, this Court is not inclined to interfere with the impugned notice. Hence, the writ petition is dismissed. This will not prevent the petitioner from filing his explanation and the time for filing explanation is extended by another fifteen days from today. No costs. Consequently, M.P.No.1 of 2009 is closed.