The automatic cancellation of allotment in case of default in payment and the applicability of Section 34B of the Act only after execution of a lease-cum-sale agreement.

ORDER :

The petitioner is before this Court seeking a writ in the nature of declaration to declare Condition No.4 in the allotment letter issued by the 1st respondent/Karnataka Industrial Areas Development Board (‘the Board’ for short) as ultra vires the Karnataka Industrial Areas Development Act, 1966 (‘the Act’ for short) and has sought quashment of impugned notice issued to the petitioner seeking to cancel the allotment.

2. The facts adumbrated are as follows:-

The petitioner claims to be a limited liability partnership firm incorporated under the Limited Liability Partnership Act, 2008 and is in the business of constructing buildings and establishing software parks. The petitioner desirous of establishment of a software park in the lands coming under the precincts of the Board, applies for allotment of 10 acres of land in Plot No.25-P1 of IT Sector, Hi Tech Defence and Aerospace Park, Bengaluru (hereinafter referred to as the subject property). The State Level Single Window Clearance Committee (‘the Committee’ for short) in terms of its proceedings dated 24-03-2020 recommends allotment of subject property in favour of the petitioner. In terms of the recommendation for allotment, a communication is made by the Board to the petitioner informing it about the said allotment and directing payment of requisite initial deposit towards the allotment. The petitioner then makes payment of 30% of the amount and earnest money deposit in a total sum of Rs.8.40 crores to the Board. On 01-06-2020 a Government order is issued confirming the said allotment and the allotment is confirmed on 05-06-2020 by the Board as well.

3. When things stood thus, the petitioner submits a representation on 09-06-2020 seeking 5 acres of additional land to the Committee. The Committee in terms of its proceedings dated 19-09-2020 accepts the representation of the petitioner and recommends allotment of 3 acres. Further payment is made by the petitioner towards the said allotment at Rs.1,68,10,000/-. Close to three years thereafter, the petitioner receives a cancellation notice on 28-11-2023 from the 1st respondent/Board. The petitioner then represents against the said cancellation on 07-12-2023. That having not been acceded to, it has driven the petitioner to this Court in the subject petition.

4. The matter was heard and reserved on 09-01-2024. The learned counsel for the petitioner moved a memo for ‘being spoken to’ on the score that he was not afforded an opportunity to distinguish the judgment of the Division Bench, as it was handed over to his hands at the time of arguments. Therefore, the matter was listed for ‘being spoken to’ on 11-01-2024 and the parties were heard qua the judgment of the Division Bench as well.

5. Heard Sri S. Sammith, learned counsel appearing for the petitioner and Sri K.Shashikiran Shetty, learned Advocate General appearing for the 1st respondent.

6. The learned counsel for the petitioner submits that Clause 4 of the allotment letter issued to him on 05-06-2020 is arbitrary as it permits allotment to be cancelled in the event of breach of the terms of allotment. He would further contend that a notice in the least ought to have been issued to the petitioner prior to directing cancellation of allotment, as the petitioner had paid close to Rs.10 crores for the aforesaid allotments and had a right to be heard at least, in the matter. He would contend Section 34B of the Act is unequivocal and without issuing a notice, the allotment cannot be cancelled. He would submit that there is total breach of the mandate of law and, therefore, seeks quashment of the impugned order, while seeking to declare the offending clause to be ultra vires the Act. The learned counsel for the petitioner would contend that the judgment of the Division Bench is distinguishable, as two notices were issued to the appellant before the Division Bench. In the case at