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Karnataka High Court
Hanuman Silks - Appellant
Versus
Karnataka Industrial Areas Development Board, Bangalore - Respondent
Decided On : 07-24-96
R. V. RAVEENDRAN, J. - Industrial Areas Development Board - Karnataka Industrial Areas Development Act, 1966 - S. 14(4)(ii), S. 25 - The court held that the Board cannot take possession of the plots from lessees without recourse to a civil suit for possession or to an eviction proceedings under the provisions of the Karnataka Public Premises (Eviction of Unauthorised Occupants) Act, 1974. The court also rejected the contention that the lease-cum-sale agreement gives the Board the power to re-enter upon the premises without initiating any action for ejectment. The court emphasized that the action of an authority proposing to dispossess a lessee without recourse to eviction proceedings as per law, or action of the Board taking forcible possession, can be challenged in a proceeding under Art. 226, even though relating to a contract. The court also noted that delay in approaching the court disentitles the petitioners to any relief.
Fact of the Case:
The Karnataka Industrial Areas Development Board took possession of plots leased to the petitioners without following proper legal procedures. The petitioners contended that the Board's action in forcibly resuming the plots was illegal, and the consequential allotment and delivery of possession to another party was also illegal and non est in the eye of law. The petitioners also claimed that they could not commence and complete construction due to reasons beyond their control and sought an extension, which was rejected by the Board. The Board argued that it had the statutory power to resume possession from defaulting lessees and that the matter was within the sphere of contractual obligations.
Finding of the Court:
The court found that the Board's action of taking possession without following proper legal procedures was illegal and could be challenged in a proceeding under Art. 226. However, the court noted that delay in approaching the court disentitled the petitioners to any relief. The court also dismissed the petitions, but recorded a fair offer made by the Board to allot other plots to the petitioners at the same rate at which the resumed plots were allotted, provided the petitioners unconditionally approached the Board for allotment of the said plots within 45 days from the date of the judgment.
Issues: The issues included whether the Board could take possession of the plots without following proper legal procedures, whether the validity of the action of the Board in regard to termination of lease and resumption relating to a contract could be considered in a writ proceeding, and whether the delay on the part of the petitioners in approaching the court disentitled them to any relief.
Ratio Decidendi: The court held that the Board cannot take possession of the plots from lessees without recourse to a civil suit for possession or to an eviction proceedings under the provisions of the Karnataka Public Premises (Eviction of Unauthorised Occupants) Act, 1974. The court also emphasized that the action of an authority proposing to dispossess a lessee without recourse to eviction proceedings as per law, or action of the Board taking forcible possession, can be challenged in a proceeding under Art. 226, even though relating to a contract. The court also noted that delay in approaching the court disentitles the petitioners to any relief.
Final Decision: The court dismissed the petitions, but recorded a fair offer made by the Board to allot other plots to the petitioners at the same rate at which the resumed plots were allotted, provided the petitioners unconditionally approached the Board for allotment of the said plots within 45 days from the date of the judgment.
( 1 ) KARNATAKA Industrial Areas Development Board, the first respondent herein, is a statutory body established under the Karnataka Industrial Areas Development Act, 1966 ('the Act' for short ). It has established and developed an industrial layout in Chickaballapur known as Chickaballapur Industrial Area.
( 2 ) THE Board allotted Plot No. 1a and 1b in the said layout each measuring 4122 Sq. M. to the two petitioners. The Board issued confirmatory letters of allotment to the petitioners 4/6-2-1993 and 12-1-1993 respectively. The Board delivered possession of the said plots to, the petitioners on 6-2-1993 and 24-6-1993. The Board entered into lease-cum-sale agreements with the petitioners on 18-8-1993 and 19-8-1993. By clause 2 (p) (1) of the said agreements, the petitioners covenanted with the Board to complete the civil construction work and erection of the factory within 12 months, and to commence production within 24 months, from the date of confirmatory letter of allotment. Clause 4 of the said agreements provides that, if the allottee/ lessee committed breach of any of the lessee's covenants, the Board (lessor) may re-enter upon the leased premises.
( 3 ) AS the petitioners did not commence the civil construction work at all and consequently did not complete the construction nor commence production before 6-2-1995 and 12-1-1995 respectively, the Board issued notices dated 16-2-1995 and 15-2-1995 to the petitioners calling upon them to show cause why action for resumption should not be taken under clause 4 of the agreement. The petitioners gave their replies dated 4-4-1995 and 30-3-1995 stating that for want of water supply and for want of financial assistances, it was not possible for them to take up the construction and sought extension by one year, to complete the construction and commence production. Thereafter, by letters dated 22/23-6-1995 (Annexure-s 'f' and 'e' respectively in the two petitions),. the Board informed the petitioners that the petitioners had failed to implement the project before the stipulated date and the reasons given for noncompliance were not convincing and therefore, their request for extension of time was rejected; and the Board further notified the petitioners that in exercise of its powers under clause 4 of the agreements, the plots allotted to them will be resumed on 25-7-1995 at 11. 00 a. m. and on such resumption, forfeiture clauses 4 and 11 will become operative. Petitioners again sought extension of time by their letters dated 5-7-1995.
( 4 ) ON 25-7-1995, the Board took possession of both the plots (Plots 1a and 1b) as notified in its letter dated 22/23-6-1995 and a mahazar was drawn up in that behalf. Thereafter, the Board sent letters dated 28-7-1995 (Annexure-s H and F respectively in the two petitions) in reply to petitioners letters dated 5-7-1995, informing them that the plots were already resumed on 25-7-1995, but they may however, meet the Executive Member of the Board on 8-8-1995 for discussions. It would appear that the petitioners' representatives met the Executive Member accordingly on 9-8-1995. But there is conflict as to what transpired at such meeting. While the petitioners claim that the Board agreed to give back the plots subject to payment of an increased price, the Board contends that the discussion was only about refund of the amounts paid by the petitioners.
( 5 ) BY letter dated 31-l0-1995, the Board allotted the said two plots (Plots 1a and 1b) which were so resumed from the petitioners, to the fourth respondent. Possession of the plots were delivered by the Board to fourth respondent under possession certificate dated 10-11-1995 and a lease-cum-sale agreement was entered into between the Board and fourth respondent on 16-11-1995 and registered on 25-11-1995. Fourth respondent submitted a plan for construction in the said plots and the Board granted a licence on 11-1-1996.
( 6 ) THEREAFTER, petitioners filed these two petitions on 2-1-1996 an
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