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GCL Private Limited (Formerly Known As GCL India Private Limited), Peenya Industrial Estate, Bangalore Vs. State of Karnataka and Another - Court Judgment

LegalCrystal Citation
CourtKarnataka High Court
Decided On
Case NumberWrit Petition Nos. 41431 of 2014 (GM-KIADB) Connected with 46295 of 2014, 9586 of 2015, 35401 of 2015 & 35521 of 2016 (GM-KIADB).
Judge
AppellantGCL Private Limited (Formerly Known As GCL India Private Limited), Peenya Industrial Estate, Bangalore
RespondentState of Karnataka and Another
Excerpt:
.....envisaging water supply scheme whether this itself will be final price if no other future costs towards development of layout is incurred, is something which cannot be determined now increase even if stated as revision, no fault could be found at this stage in present circumstance, when steps have been taken within short time from date of allotment, to determine provisional price for allotment, same will not call for interference request of petitioner for issue of no objection certificate shall be reconsidered by second respondent in present context petitions dismissed. (paras 16, 18) cases referred: 1. karnataka industrial areas development board and another vs. prakash dal mill and others[(2011)6 scc 714] 2. joshi technologies international inc. -vs- union of india..........industrial area, kolar district in terms of clause 6 of the allotment condition imposed in allotment letter dated 29.2.2012 and in terms of the order dated 16.6.2014 passed by this court in w.p. no. 37844/2012 [gm-kiadb] without insisting the additional tentative cost in accordance with law. this petition is filed under articles 226 and 227 of the constitution of india, with a prayer to quash the letter dtd.25.1.2014 vide annex-c and the letter dtd.18.2.2015 vide annex-f issued by the r-2 by issuing a writ in the nature of certiorari and quash the clause 22 of the registered lease-cum-sale agreement dtd.18.9.2010 vide annex-b by issuing a writ in the nature of certiorari as it confers unguided, arbitrary and unilateral power on the r-2. this petition is filed under articles 226.....
Judgment:

(Prayer: This petition is filed under Articles 226 and 227 of the constitution of India, with a prayer to quash the letter Dtd.30.12.2013 marked as Annex-e and the letter dtd.11.8.2014 marked as Annex-h issued by the R-2 by issuing a writ in the nature of certiorari and quash clause 22 of the registered lease-cum-sale Agreement Dtd.25.2.2010 marked as Annex-C by issuing a writ in the nature of certiorari as it confers unguided, arbitrary and unilateral power on R-2.

This petition is filed under Articles 226 and 227 of the constitution of india, with a prayer to quash the impugned letter dated 6.9.2014 vide Ann-N passed by the R-4 as arbitrary and violative of principles of natural justice and article 14 of the constitution of india and direct the R-3 to execute the sale deed of the land in plot no. 265-p and 266-p of Narasapura industrial area, kolar district in terms of clause 6 of the allotment condition imposed in allotment letter dated 29.2.2012 and in terms of the order dated 16.6.2014 passed by this court in W.P. No. 37844/2012 [gm-kiadb] without insisting the additional tentative cost in accordance with law.

This petition is filed under Articles 226 and 227 of the constitution of India, with a prayer to quash the letter Dtd.25.1.2014 vide Annex-C and the letter dtd.18.2.2015 vide Annex-F issued by the R-2 by issuing a writ in the nature of certiorari and quash the clause 22 of the registered lease-cum-sale agreement Dtd.18.9.2010 vide Annex-b by issuing a writ in the nature of certiorari as it confers unguided, arbitrary and unilateral power on the R-2.

This petition is filed under Articles 226 and 227 of the constitution of India, with a prayer to quash the office letter Dtd.31.10.2013 vide Annex-d and dtd.20.5.2015 wherein 12.25% interest is levied towards difference cost of land produced at annex-f and direction to r-2 authority to consider the representation dtd.01.03.2014 vide annex-g and to execute sale deed in favour of the petitioner since it had paid full consideration.

This petition is filed under articles 226 and 227 of the Constitution of india, with a prayer to quash the letter Dtd. 15.4.2016 marked as Annx-d issued by the respondent by issuing a writ in the nature of Certiorari and direct the respondent to issue the formal consent letter for the loan borrowed by the Petitioner for the Establishment of the industry from the canara bank, Peeny industrial area, Bangalore.)

1. The petitioners in all these petitions except in W.P.No.35521/2016 are assailing the communications issued to each of the petitioners whereunder the petitioners have been informed and were called upon to pay the revised tentative allotment rate for the plot allotted in favour of the petitioners in Somapura, I and II Stage Industrial area. While assailing such communication the petitioners are also seeking that clause 22 contained in the registered lease-cum-sale agreement be quashed.

2. In W.P.No.35521/2016 the very petitioner in W.P.No.41431/2014 who is the allottee of plot bearing No.67 A and 67 B measuring 3 acres is assailing the communication issued by the respondent intimating the petitioner that the 'no objection certificate' sought by them cannot be issued at that stage in view of the pendency of W.P.No.41431/2014.

3. Since common issues arise for consideration in these petitions, they are taken up together and disposed of by this common order.

4. For the purpose of convenience the facts as narrated in W.P.No.41431/2014 is noticed as the contentions in the remaining petitions are essentially the same except for the details of the allotted plot and the impugned communication being issued on different dates.

5. The respondents have acquired the lands in Bharathipura village, Somapura Hobli, Nelamangala Taluk and the Industrial Layout is formed. Plot No.375 measuring 2 acres was allotted in favour of the petitioner through the letter dated 27.09.2008. Thereafter the allotment was changed to plot No.67-A measuring 2 acres and plot No.67-B measuring 1 acre in Somapura I Stage. The tentative cost of the land was fixed at Rs.57,00,000/- per acre, a confirmatory letter dated 25.02.2010 was issued and thereafter a lease- cum-sale agreement dated 06.05.2010 was entered into between the parties. Clause 22 of the said agreement provides that the lessor viz., the second respondent will as soon as it may be convenient fix the price of the said premises at which it will be sold to the lessee and communicate it to the lessee. The decision of the lessor in this regard is stated to be final and binding on the lessee. The lessee is therefore required to pay the balance value of the property in the manner as provided therein.

6. In that background the petitioner is in possession and enjoyment of the allotted plot. When this was the position, the communication dated 30.12.2013 was issued by the second respondent to the petitioner intimating that the tentative allotment rate in Somapura I and II stage is revised from Rs.57,00,000/- lakhs per acre to Rs.73,82,000/- including the prorata costs of water supply scheme. The calculation was accordingly made and the petitioner was called upon to pay the amount as indicated therein. The petitioner got issued a notice through their counsel intimating that such demand is not justified. The second respondent has replied to the same through their communication dated 11.08.2014 and sought to justify their action and once again called upon the petitioner to pay the amount. It is in that circumstance the petitioners are before this Court.

7. The second respondent has filed the objection statement and the additional objection statement to the petitions. In addition to the terms and conditions agreed under the lease-cum-sale agreement, reference is made to the standard condition No.16 in the allotment letter whereunder the Board has reserved its right to increase the tentative price of the land indicated in the letter of allotment after completion of all developmental works and finalization of the Court awards. Hence, it is contended that the allotment made and the price fixed is not absolute but subject to the condition agreed. It is stated that though the tentative allotment rate for the I and II Stage of Industrial area was indicated, considering that the development of the layout was still under progress, the cost accounting was required to be done taking into consideration all aspects of the matter. Hence, a financial consultant was appointed to take note of all these aspects and to suggest the price based on the different components that were to be taken into consideration. The report submitted in that regard is at Annexure R.3 to the additional objection statement. The said report was placed in the 324th Board meeting wherein the report was taken into consideration and despite the consultant having suggested a higher price, the Board resolved to scale down the same and the allotment rate was fixed at Rs.73,82,000/- and 78,82,000/- per acre respectively. The copy of the resolution is at Annexure-R.4. Based on such decision, the allottees have been communicated and have been requested to pay the difference of the amount as against the tentative price that had been indicated at the first instance. The second respondent further contends that except for the petitioners herein 69 other allottees have accepted such determination and paid the difference of the amount, the details of which is indicated in Annexure-R.5. In that view, apart from contending about the right available to the second respondent to revise or fix the final price, it is contended that the procedure adopted in doing so is also in accordance with law and is not arbitrary.

8. Heard Sri Mahesh R.Uppin, Sri M.R.Vijayakumar, Sri N.Shivakumar, learned counsel appearing for the petitioners, Sri S.Vijayashankar, learned senior counsel for Sri I.Gopalakrishna, learned counsel, Sri B.R.Srinivasa Gowda, learned counsel and Sri E.S.Indiresh, learned Government Advocate for the respective respondents and perused the petition papers.

9. The very fact that the petitioners in these petitions are seeking that clause-22 of the lease-cum- sale agreement be struck down will indicate that under the said clause a right has been reserved to the second respondent Board which is the lessor therein to fix the price of the premises subsequently since the price indicated in the allotment letter is only the tentative price. While referring to the said clause-22 and on relying on the decision of the Hon'ble Supreme Court in the case of Karnataka Industrial Areas Development Board and another vs. Prakash Dal Mill and others[(2011)6 SCC 714] wherein the decision of a Division Bench of this Court has been upheld, the learned counsel for the petitioner would submit that though in the said case it is observed that clause 7(b) reserving the Board's right in that case had not been challenged, in the instant case the clause-22 itself has been challenged and as such on striking down the same it should be held that the revision of the tentative price is not justified and without such power.

10. The clause which is prayed to be struck down is evidently not a provision contained in any enactment or rule so as to consider whether the same is contrary to the position of law and to test its vires. On the other hand there is no dispute to the fact that the petitioner has been a party to the lease agreement dated 06.05.2010 by affixing the signature and all rights in respect of the plots allotted in favour of the petitioner is regulated thereunder. Though clause-22 of the said agreement is assailed at this point in time after taking the benefit of the remaining contents of the agreement, there is nothing specific pointed out to indicate that either the clause is introduced by playing fraud or misrepresentation when agreement is executed with open eyes. That apart no other legal provision is pointed out to indicate that such clause is unconscionable and hit by any of the provisions of the Contract Act. If that be the position, when the allotment letter itself indicates that the price fixed is tentative and the lease-cum-sale agreement through clause-22 provides for the price being fixed subsequently, the allottee/lessee who has paid the initial price, signed the agreement and taken possession cannot be heard to complain about the said clause merely because the lessee finds it to be inconvenient at this stage.

11. Therefore, in the background of such clause being available in the lease-cum-sale agreement, the issue for consideration is whether the action of the respondents in revising the price is justified. In that regard the learned counsel for the petitioner has made detailed reference to the judgment of the Hon'ble Supreme Court in the case of Prakash Dal Mil and others (supra) wherein it is held as hereunder:

"23. The Board being a State within the meaning of Article 12 of the Constitution of India is required to act fairly, reasonably and not arbitrarily or whimsically. The guarantee of equality before law or equal protection of the law, under Article 14 embraces within its realm exercise of discretionary powers by the State. The High Court examined the entire issue on the touchstone ofArticle 14 of the Constitution of India. It has been observed that the fixation of price done by the Board has violated the Article 14 of the Constitution of India. It is correctly observed that though Clause 7(b) permits the Board to fix the final price of the demised premises, it cannot be said that where the Board arbitrarily or irrationally fixes the final price of the site without any basis, such fixation of the price could bind the lessee. In such circumstances, the Court will have the jurisdiction to annul the decision, upon declaring the same to be void and non-est.

24.XXXXX

25. Even though the Clause gives the Board an undefined power to fix the final price, it would have to be exercised in accordance with the principle of rationality and reasonableness. The Board can and is entitled to take into account the final cost of the demised premises in the event of it incurring extra expenditure after the allotment of the site. But in the garb of exercising the power to fix the final price, it can not be permitted to saddle the earlier allottees with the liability of sharing the burden of expenditure by the Board in developing some other sites subsequent to the allotment of the site to the respondents.

26.XXXXX

27. We are also of the opinion that the Board can not be permitted to exercise its powers of fixing the final price under Clause 7(b) at any indefinite time in the future after the allotment is made. This would render the word "as soon as" in Clause 7(b) wholly redundant. As noticed earlier, in the present case, the Board has sought to fix the final price after a gap of 13 years. Such a course is not permissible in view of the expression "as soon as" contained in Clause 7(b). In our opinion, the High Court correctly concluded that the fixation of final price by the Board is without authority of law. It violates Article 14 of the Constitution of India being arbitrary and unreasonable exercise of discretionary powers."

12. The learned senior counsel for the second respondent has on the other hand referred to the decision of the Hon'ble Supreme Court in the case of Joshi Technologies International Inc. -vs- Union of India [(2015) 7 SCC 728]. In the said case, while considering the contentions relating to a tender matter, it was held that the writ petition under Article 226 of the Constitution was not intended to facilitate avoidance of an obligation voluntarily incurred and the petition is not maintainable to avoid contractual obligation. It cannot be that the licensee can work out the license if he finds it profitable to do so and he can challenge the conditions under which he agreed to take the license if he finds it commercially inexpedient to conduct his business. It is further held that the scope of judicial review in respect of disputes falling within the domain of contractual obligations may be more limited and in doubtful cases the parties may be relegated to adjudication of their rights by resort to remedies provided for adjudication of purely contractual disputes.

13. Having noticed the legal position as enunciated in the above referred decisions and since I have already indicated above that the petitioners cannot assail the mutually agreed clause contained in the lease cum sale agreement, the issue to be taken note is as to whether the action of the second respondent in fixing the revised price is exercised in accordance with the principle of rationality and reasonableness as held by the Hon'ble Supreme Court. In order to justify their action, as noticed the second respondent has referred to the procedure that was followed. The need for re- working the entire details relating to the layout is at outset attributed to the conditions imposed by the Ministry of Environment and Forests (MoEF) while granting clearance to the project. The requirements indicated therein and the provisions that were required to be made had reduced the area that was ultimately available for formation of the industrial layout, thus increasing the cost of the sites which were available for utilization and allotment to industrial establishments. The remaining area was to be retained as open area and common amenities for enjoyment of the benefits by the allottees. The copy of the letter dated 10.01.2013 of the MoEF is relied upon. This would certainly indicate the change that has occurred subsequent to the date of the allotment in the year 2010.

14. The second respondent in that light have secured the Financial consultant to work out andsuggest the pricing, which has been worked out as indicated in Annexure- R3. The Board of the second respondent in its 324th meeting has deliberated on the same and has ultimately fixed the revised price at a lesser rate than what was suggested by the Financial consultant. While doing so, the Board has also taken into consideration the factors due to which the price has increased. It is no doubt true that there is reference to the additional expenditure incurred for the II Stage industrial area. The learned counsel for the petitioner in that light would contend that as laid down in the decision cited supra the cost of developing some other sites subsequent to the allotment cannot be saddled on the earlier allottees. In that case, the Court was considering the imposition of additional cost after more than a decade. In the instant case, it is seen that though the allotment letter refers to the plot in the first stage of the layout and the continuation of the development refers to the II Stage, the acquisition process is not different. The layout was being developed as a single unit. To understand this aspect of the matter, a perusal of the clearance granted by the MoEF refers to the Expert Appraisal Committee having examined the project on 6th/7th October 2009, the public hearing being conducted on 09.01.2012 and the approval granted on 10.01.2013. In that light if the allotment in the year 2010 is kept in perspective, it will disclose the completion of the entire layout was not achieved nor is there anything to indicate that I stage was fully developed though indicated as the I and II Stage was under progress. In the said process, certain alteration to the layout was required. That apart the major water supply scheme is also to be undertaken from Maidal Tank to Somapura Industrial Area as considered by the Board in its meeting. The said water supply scheme is not limited only to II Stage, but is for the entire industrial layout.

15. The learned counsel for the petitioners however contended that such water facility has not been provided. Reference was made to the approval dated 29.08.2013 (Annexure-D) obtained by the petitioner to drill the borewell in the allotted plot. The bill for payment of the consumption charges is at Annexure-J. The bill in fact refers to the cauvery water consumption as well. Be that as it may, even if such borewell is permitted, that does not take away the fact that the water supply scheme is to be implemented and even if the same is not yet implemented, it will have to be done and the allottees will have the right to seek for the same if it is not implemented in good time since in any event the cost would include the same. Therefore, that by itself cannot be the basis to decline payment of the revised price.

16. The further contention on behalf of the petitioner is that, if clause-22 is kept in view, the same does not provide the power to revise the price as it only envisages the fixing of the final price for the execution of the sale deed. As noticed, in the instant case the provisional price was indicated at the time of the allotment and the action to fix the price has been taken soon after environmental clearance and on envisaging the water supply scheme. Whether this itself will be the final price if no other future costs towards development of the layout is incurred, is something which cannot be determined now. Hence, the increase even if stated as revision, no fault could be found at this stage. However, if in future any unreasonable increase is once again made, the same no doubt can be questioned at that stage to seek for its justification. Hence, in the present circumstance, when steps have been taken within a short time from the date of allotment, to determine the provisional price for allotment, the same will not call for interference. The procedure adopted therefore cannot be considered as arbitrary or whimsical while examining the same in a writ petition. However with regard to the components taken into consideration or the rate at which it is calculated if there are any specific grievance being contrary to the contract, the petitioners will have to avail their appropriate remedy. Since the rival contentions have been noticed in this petition, the contention that the revision of price has been made without notice to the petitioner and therefore not sustainable will loose its relevance.

17. In view of the above, if the petitioner in W.P.No.35521/2016 chooses to pay the amount demanded and makes a fresh demand for issue of 'no objection certificate', such request shall be considered by the second respondent afresh in accordance with law.

18. In the result, for the afore stated reasons, the following:

ORDER

(i) The writ petitions noted above are accordingly dismissed with no order as to costs.

(ii) The request of the petitioner in W.P.No.35521/2016 for issue of 'no objection certificate' shall be reconsidered by the second respondent in the present context.


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