Non-compliance with payment schedules in allotment agreements leads to automatic cancellation of rights to the property.

JUDGMENT :

VIBHU BAKHRU, CJ.

1. The appellant has filed the present appeal, impugning an order dated 25.10.2025 [impugned order] passed by the learned Single Judge in W.P. No. 25036/2015 (GM-KIADB) captioned, M/s. R.S. Kalyani Hotels Pvt. Ltd. v. The State of Karnataka & Others.

2. The appellant had filed the said petition, inter alia impugning a communication dated 22.05.2015/23.05.2015 issued by respondent No.3, whereby the allotment of 'three acres of land in Plot No.51 (Corner) of Bengaluru IT Park near Devanahalli, Bengaluru Rural District' [subject land], was cancelled. The appellant also sought a declaration to the effect that the respondents had no right to change the mode of allotment from lease-cum-sale for a period of ten years to a lease for a period of 99 years after the subject land was allotted. The appellant also impugned the Government order dated 07.08.2014 directing the change in the policy of allotment. Additionally, the appellant prayed that directions be issued to the respondents to abide by the terms of the allotment letter dated 15.02.2013.

3. The learned Single Judge rejected the writ petition by the impugned order for the reason that the appellant had failed to pay the consideration within the time as stipulated. The learned Single Judge found that the appellant had lost its right to claim allotment of the subject land.

Prefatory facts:

4. In the year 2010, the appellant had sought for allotment of land for establishing a Hotel on the proposed Bengaluru IT Park in the Bengaluru Rural District. The appellant had also deposited a sum of Rs.1.08 crore by way of tentative cost of the land.

5. The respondent No.2 [KIADB] allotted the subject land to the extent of 3 acres to the appellant for establishing a Hotel and Convention Centre in terms of an allotment letter dated 15.02.2013. The allotment was on a lease-cum-sale basis for a period of 10 years. At the end of the period of 10 years, the lease would be converted into a sale, subject to the fulfillment of the terms and conditions as stipulated. The tentative price of the land was fixed at Rs.1.8 crore per acre plus 10%. The relevant clauses of the aforementioned allotment letter, which relate to the payment of the consideration for the subject land, are set out as under:

"4. The tentative price of the land and lease rents shall be paid as follows:

a. A sum of Rs.18,00,000=00 being the balance 20% tentative cost of land within 30 days from the date of issue of this letter, i.e. On or before 14.03.2013.

b. A sum of Rs.5,04,00,000=00 being the balance 80% tentative cost of land shall be paid within 180 days from the date of issue of this letter i.e. on or before 13.08.2013.

c. In the event of your furnishing Bank guarantee or letter of commitment from KSFC/KSIIDC/Financial Institutions agreeing to pay the cost of land indicated at 4 (b) directly to the Board, the allotment will be confirmed and documentation will be permitted subject to payment of interest of 12.75% per annum on amount due from the date of handing over possession of land to the date of payment which should be made within 180 days from the date of execution of agreement.

d. You should pay a lease rent at the rate of 1000/- per acre/per annum or part thereof or at such other rates as may be fixed by the Board from time to time.

e. Interest at 12.75% P.A. shall be levied in case the lease rents are not paid within one month from the date on which the lease rents fall due every year.

5. This Allotment Letter will be valid only for a period of 30 days from the date of its issue and in the event of failure to pay the amount indicated