2017 Supreme(Kar) 654
IN THE HIGH COURT OF KARNATAKA
B.S. PATIL, J.
Prestige Estates Projects Limited, Represented by its Managing Director Irfan Razack & Others – Appellant
Versus
State of Karnataka, Represented by its Chief Secretary, Bangalore & Others – Respondent
W.P. Nos. 35011-12 of 2015 (KLR-RES)
Decided On : 06-10-2017
For the Petitioners:Udaya Holla, Dhyan Chinnappa, Sr. Counsels, Vivek Holla, M.V. Sundaram, Advocates.
For the Respondents:A.G. Shivanna, AAG along with T.S. Mahanthesh, AGA, Shashikiran Shetty, Sr. Counsel, I. Gopalakrishna, S. Basavaraj, P. Narayanappa, Advocates.
Headnote:KARNATAKA INDUSTRIAL AREAS DEVELOPMENT BOARD ACT, 1966 [K.A. No. 18/1966] - Sections 3(1), 14(a) - Annulment of sale deed on ground of fraud - State granting land in favour of Karnataka Industrial Areas Development Board for allotting it in favour of petitioner, company - KIADB executing absolute sale deed in favour of petitioner without any condition - Petitioner for securing financial assistance and for developing land jointly alienating property in favour of third party - Held, Mere alienation for securing financial help does not attribute fraud on part of petitioner. Subsequent sale made in favour of third party, is legal - Annulment of sale deed held, improper.
KARNATAKA INDUSTRIAL AREAS DEVELOPMENT BOARD ACT, 1966 [K.A. No. 18/1966] - Sections 3(1), 14(a) – KARNATAKA LAND GRANT RULES, 1969 - Rules 20(1)(c), 28(2) – Imposition of conditions on grant of land - Legality - State granting land in favour of KIADB (Karnataka Industrial Areas Development Board) for allotting it to petitioner, company - Deputy Commissioner while granting land imposing condition of non-alienation on KIADB - Rules not stipulating any condition to be imposed while granting land - Condition also not authorized by State Government - Held, Imposition of condition is contrary to Rules - Hence, cancellation of grant, is illegal.
1. These writ petitions are filed challenging the Government Orders dated 06.08.2015 and 11.08.2015 passed by the Principal Secretary, Department of Revenue, Government of Karnataka, and the Under Secretary to Government, Department of Revenue (Land Grant-1), respectively.
2. The background facts are, M/s. Joy Ice Creams (Bangalore) Private Limited - petitioner no.3 herein was the owner of land bearing Sy. No.2/1D of Whitefield village and Sy. Nos.160 & 157(P) of Pattandur Agrahara village and was running a factory for manufacturing ice creams. The Government land measuring 3 acres 23 guntas which was part of Sy. No.42 of Pattandur Agrahara village, subject matter of these writ petitions was located in the midst of lands belonging to petitioner no.3. According to petitioner no.3, the said land had no access to any road and was completely land locked and surrounded by the property belonging to petitioner no.3.
3. By a notification dated 16.09.1981 issued under Section 3(1) of the Karnataka Industrial Areas Development Act, 1966 (for short, 'KIAD Act'), the land in question bearing Sy. No.42 was declared as an industrial area for the purpose of KIAD Act. On 20.10.1989, petitioner no.3 requested the State Government to allot the schedule land to it. Considering the said request, Government of Karnataka leased the land to petitioner no.3 for a period of 30 years as per lease deed dated 20.10.1989. Subsequently, there were litigations between petitioner no.3 and the Government and in the year 2003, Government of Karnataka cancelled the lease and resumed the land, but the land remained unutilized.
4. Petitioner no.3 approached the Karnataka Industrial Areas Development Board (for short, 'KIADB') with a request dated 20.10.2005 for acquisition of the land and allotment of the same in their favour. KIADB moved the matter with the State Government for transfer of schedule land in their favour to enable it to allot the same to petitioner no.3. On 20.10.2005, the State Government directed the Deputy Commissioner, Bengaluru District, to transfer the schedule land in favour of KIADB. This communication is produced at Annexure-B to the writ petition.
5. A perusal of this communication discloses that a direction was issued to the Special Deputy Commissioner to grant and transfer this land in favour of KIADB as per Rule 20(c) of Karnataka Land Grant Rules 1969 (for short, 'the Rules') by collecting a sum of Rs.4,28,24,925/- being 50% of the total market value at the rate of Rs.550/- per square feet. This direction issued by the State Government also makes it clear that the land was transferred to KIADB for allotting it to petitioner no.3 on condition that they shall pay the said amount. This communication issued is in the form of prior approval of the State Government for transferring the land in favour of KIADB for the purpose stated therein.
6. Pursuant to this communication/direction of the State Government, the Special Deputy Commissioner, Bengaluru Urban District, vide letter dated 07.11.2005 called upon the KIADB to collect the market value, conversion charges, phodi charges, etc. In response, KIADB informed petitioner no.3 on 22.11.2005 as per Annexure-C to pay the market value and other charges computed against different heads as under:
(1) Value of the land measuring 3.23 acres at the rate of Rs.1,19,79,000/-
Rs.4,28,24,925/-
(2) Conversion charges
Rs. 6,22,908/-
(3) Phodi charges
Rs. 55/
Total
Rs.4,34,47,888/
(4) Service charges of the Board
Rs. 96,01,983/
Total
Rs.5,30,49,871/
7. Petitioner no.3 paid the said amount by way of demand draft dated 12.12.2005 as per letter dated 14.12.2005 addressed to the KIADB. Thereafter, on 31.03.2006, the Deputy Commissioner passed an order granting the land in question in favour of KIADB for the purpose of allotting it to petitioner no.3. The Deputy Commi