Lessees must strictly comply with contractual obligations and timelines stipulated in lease agreements; failure to do so justifies cancellation of lease and resumption of possession.

JUDGMENT :

VIBHU BAKHRU, CJ.

1. The appellant has filed the present appeal impugning an order dated 02.06.2025 [impugned order] passed by the learned Single Judge in Writ Petition No. 17778/2024 (GM-KIADB) captioned, M/s. Shiksha Infotech Private Limited v. State of Karnataka & Ors.

2. The appellant had filed the aforementioned writ petition impugning an order dated 12.06.2024 passed by respondent No.3, inter alia, directing the appellant to handover the possession of Plot No.34 to respondent No.6, the Executive Engineer-3, Karnataka Industrial Areas Development Board [KIADB]. Further, respondent No.3 had directed that in the event the appellant fails to handover the possession of the subject plot before 11.07.2024, respondent No.6 would take over the possession of the same by drawing a mahazar in terms of Section 34 -B(5) of the Karnataka Industrial Areas Development Act, 1966 [the KIAD Act].

3. The appellant had also impugned an order dated 12.08.2022 and the notice dated 15.11.2023. In terms of the impugned order dated 12.08.2022, the appellant was permitted to implement the project within a period of nine months from the date of the said order subject to payment of penalty of `25,00,000/- computed at the rate of 2% of the allotment cost, within the period of 30 days from the date of the said order. The impugned notice dated 15.11.2023 was issued under Section 34 -B(2) of the KIAD Act calling upon the appellant to show-cause why possession of the subject property not be resumed.

4. The learned Single Judge did not find any fault with the KIADB initiating proceedings for imposition of penalty and resuming the subject property in terms of the impugned orders. The learned Single Judge found that the orders were in conformity with the provisions of the KIAD Act and the terms of the lease deed executed in favour of the appellant.

Submissions

5. The appellant states that although the appellant had initially failed to comply with the terms and conditions of the allotment of the subject property within the prescribed period, the default was subsequently remedied.

6. The learned counsel appearing for the appellant contends that the application for building plans had been furnished to KIADB on 04.09.2019. However, the same had not been sanctioned. Therefore, the appellant was prevented from carrying on any construction and commencing the project for which the subject property was allotted. He contends that the appellant could not be faulted for any delay as the concerned authorities had failed to sanction the plan submitted by the appellant and the learned Single Judge had failed to consider the same. On the aforesaid basis, he contends that the impugned order resuming the land is liable to be set aside.

7. The limited question to be addressed is whether the learned Single Judge has erred in declining to interfere with the impugned orders dated 12.08.2022 and 12.06.2024, imposing penalty and resuming the subject property.

8. KIADB is a statutory body established under the KIAD Act with the object of promoting the establishment and orderly development of industries and industrial areas in the State. The State Government earmarks certain lands as industrial lands and also undertakes the exercise of acquiring the same under Section 28 of the KIAD Act. The acquired lands are handed over to the KIADB for development of industrial areas in the State of Karnataka and the same are allotted to prospective industries and entrepreneurs.

9. The appellant had applied for allotment of five Acres of land for establishing an Un