IMPORTANT POINT
Statutory Corporation has to act as per mode prescribed by law.

Headnote:(A) Orissa Industrial Infrastructure Development Corporation Act, 1980 – Section 33 – Renewal of lease – IDCO is a statutory authority and it can act only on the basis of written lease deed – Execution of lease deed is necessary and it is in public interest to prevent unauthorized leasing out of property on its behalf – Lease is required to be executed in a prescribed format in shape of formal document which is sine qua non – In absence thereof, it would not be permissible to hold that relationship of lessor and lessee came into being – If provisions of statute are mandatory, thing done not in manner or form prescribed can have no effect or validity. (Paras 14 to 18)
       (B) Orissa Industrial Infrastructure Development Corporation Act, 1980 – Section 33 – Renewal of lease – There is a manner of executing lease deed with Corporation – Prescribed form of draft lease deed had been sent by IDCO to Mesco but it failed to execute it – There was no contract which could have been enforced and it became void due to inaction of Mesco itself – Forfeiture of amount of Rs.1.25 Crores was also appropriate – High Court adventured into an avoidable illegality while directing execution of lease deed – No equitable consideration was available with Mesco to invoke writ jurisdiction for reliefs sought – Relief granted is not permissible as per law – Principle of promissory estoppel is not attracted at all – IDCO is a statutory body and can act only in mode prescribed and Mesco was informed of lease deed to be executed in prescribed format – High Court could not have issued impugned direction – Lawful method had been exercised for resumption of land and cancellation of letter of handing over possession – Impugned order passed by High Court is hereby set aside and writ petition dismissed with costs of Rs.5 Lakhs. (Paras 21, 22 and 23)
       (C) Doctrine – Equity – Renewal of lease – Equity follows rule of common law in respect of contracts – Renewal of lease is a privilege and if a tenant wishes to claim privilege, he must do so strictly within time limited for the purpose – If delay is on part of lessee for renewal arising out of mere neglect on his part and which could have been avoided by reasonable diligence, would not entitle him to claim renewal. (Para 18)
       Facts of case:
       Instant appeals have been preferred by Orissa Industrial Infrastructure Development Corporation and also by Jindal Stainless Ltd. aggrieved by impugned judgment and order passed by High Court of Orissa, thereby directing IDCO to lease out 825.68 acres of land and to enter into a lease agreement with M/s. Mesco Kalinga Steel Ltd.
       Findings of Court:
       High Court has totally misdirected itself in directing to lease out balance land. High Court has also ignored that certain intervening events have taken place and there was total failure on part of Mesco to carry out its obligations. High Court could not have issued direction more so in changed situation and in view of defaults committed by Mesco.
       It is apparent from conduct of Mesco that it had no justification at any point of time not to execute lease deed. It was delaying the same for reasons best known to it which was wholly impermissible conduct, particularly after taking possession. Breach was not remedied for several years much less for three months in which it was to be remedied. High Court misadventured into holding action of IDCO of resumption of land to be illegal. There was no equitable or legal consideration in favour of respondent and a Writ is not issued to perpetuate an illegality.
       Result : Writ Petition dismissed with costs.

JUDGMENT

ARUN MISHRA, J.

1. Leave granted.

2. The appeals have been preferred by Orissa Industrial Infrastructure Development Corporation (in short ‘IDCO’) and also by Jindal Stainless Ltd. aggrieved by the impugned judgment and order dated 30.10.2007 passed by the High Court of Orissa, thereby directing IDCO to lease out 825.68 acres of land and to enter into a lease agreement with M/s. Mesco Kalinga Steel Ltd.

3. The factual matrix discloses that Mesco Kalinga Steel Ltd. (in short ‘Mesco’) had applied to IDCO for allotment of 2500 acres of land on 30.6.1994 and IDCO in turn, requested the Government of Orissa to issue necessary orders to process the allotment. On 28.10.1994 the State Government conveyed in principle approval for allotment of 2500 acres of land on the terms and conditions laid down in the policy decision of the State Government as revised on 25.1.1995 for establishment of steel plant.

4. Initially the State Government had agreed for equity participation of Rs.25 crores towards the cost of land. This offer was withdrawn by the State Government on 2.2.1995 and was communicated to Mesco. IDCO wrote a letter on 21.3.1995 to Mesco to deposit the land cost in twenty half-yearly equal instalments and further requested to deposit Rs.1.25 crores towards the first instalment and Rs. 13.08 lakhs towards ground rent and cess. Mesco deposited Rs.1.25 crores with IDCO on 3.4.1995. On 13.6.1996 IDCO requested Mesco to take over possession of 1756.29 acres of land in the first phase and to submit the draft lease deed for execution. Mesco took over possession of the land on 18.6.1996. However, lease deed was not executed. Thereafter, on 13.10.1997, the State Government intimated the proceedings of the meeting held on 26.9.1997 to IDCO and required it to execute the lease deed in favour of Mesco and also to realize the instalments due.

5. On 27.10.1997, IDCO requested Mesco to submit draft deed of lease agreement for execution within 15 days, failing which steps will be taken for cancellation of allotment and resumption of land. IDCO again requested on 26.11.1997 to submit the draft deed of agreement for execution. However Mesco kept quiet and failed to get the lease deed executed. Thereafter, for more than 5 ½ years nothing happened. No steps were taken by Mesco to get the lease deed executed. Thereafter, IDCO gave final notice to Mesco on 4.7.2003 to deposit the balance defaulted amount of Rs.22.44 crores along with statutory dues and to execute the lease deed by 19.7.2003 failing which it was intimated that the said land shall be resumed at their cost and the amount paid shall be adjusted towards compensation for use and occupation of the land; apart from that, Mesco shall also be liable for damages. Ultimately on 25.7.2003 on failure to get the lease deed executed, land was resumed and possession letter of 1756.29 acres of land was cancelled by IDCO. The amount of Rs.1.25 crores deposited by Mesco was forfeited and adjusted towards compensation for use and occupation of the land and damages.

6. After resumption of the land, IDCO allotted 209.59 acres of land out of the land in question to Visa Industries Ltd. on 7.11.2003 and also allotted 71.20 acres out of the disputed land to Jindal Stainless Ltd. Possession of the land was handed over to Visa Industries Ltd. on 30.8.2004 and to Jindal Stainless Ltd. on 28.2.2005.

IDCO further allotted 533.52 acres of disputed land to Jindal Stainless Ltd. and another 120 acres of land out of the disputed land to Visa Industries Ltd. and handed over possession to Jindal and Visa on 11.11.2005 and 17.11.2005 respectively. The lease deed etc. have been executed between the aforesaid parties.

7. A representation was submitted by Mesco on 20.8.2003 questioning resumption in which Mesco submitted its own terms and conditions for payment. The said representation was rejected on 26.9.2003 by IDCO. The first round of litigation in the form of W.P. (C) No.12857/2003 was filed by Mesco questioning

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2017 Supreme(SC) 157

IMPORTANT POINTStatutory Corporation has to act as per mode prescribed by law.

Cases Referred (9)

IMPORTANT POINT
Statutory Corporation has to act as per mode prescribed by law.