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2021 Supreme(Raj) 1883

RAJASTHAN HIGH COURT BENCH AT JAIPUR
Indrajit Mahanty, CJ., Satish Kumar Sharma, J.
Arfat Petrochemicals Private Limited & Ors. - Appellants
Versus
State of Rajasthan & Ors. - Respondents
D.B. Civil Writ Petition No. 3410/2020
Decided On : 20-07-2021

Advocates appeared:
Mr. Atmaram NS Nadkarni, Senior Advocate assisted by Mr. Anurag Agarwal, Ms. Arzu Paul & Mr. Vivek Jain, Mr. Salvador Santosh Rebello, for the Petitioner; Mr. Dushyant Dave, Senior Advocate with Mr. R.P. Singh, AAG assisted by Mr. J.S. Shekhawat, Ms. Neha Sangwan, Mr. Anil Mehta, AAG, Ms. Sheetal Mirdha, AAG, Mr. R.K. Agarwal, Senior Advocate assisted by Ms. Sunita Pareek, Advocate, for the Respondent

Headnote:(A) Constitution of India - Article 14, 19, 21, 226 - Rajasthan State Industrial Development and Investment Corporation Disposal of Land Rules, 1979 - The authority of the State Government under Article 138 of RIICO's Articles of Association to cancel permissions granted to a third party without following proper procedure is contested. The Court held that the directives issued lacked adherence to the principles of natural justice and thus quashed the arbitrary cancellations. (Paras 1, 11, 28, 34, 87)

(B) Administrative Law - Principle of Natural Justice - The Court emphasizes that actions affecting private rights require due process, including the opportunity for a hearing. The cancellation did not adhere to procedural safeguards established under the relevant rules. (Paras 25-34)

(C) Promissory Estoppel - The Court noted that the permissions granted to the petitioner were evidence of legitimate expectation, thereby protecting the company's reliance on the State's prior decisions. (Paras 30, 36, 33)

(D) Authority and Jurisdiction of Government - The power of the State to issue directions to public bodies is not absolute and must not violate fundamental rights guaranteed by the Constitution. (Paras 13, 17, 78) (E) Economic Development - The potential economic benefits and job creation associated with the proposed project were considered significant, reinforcing the necessity for procedural adherence. (Paras 67, 84)

JUDGMENT

Satish Kumar Sharma, J.:--

REPORTABLE

1. This petition has been filed under Article 226 of the Constitution of India challenging the scope of authority of the State Government over the Rajasthan State Industrial Development and Investment Corporation (RIICO) under Article 138 of its Articles of Association and seeking directions to quash and set aside the decision dated 03.08.2019 of the Cabinet Committee of the State Government which was constituted to review the decisions taken by the previous Government in the last six months, and consequential orders issued pursuant thereto, whereby the permissions/approvals granted to the petitioner- company by the RIICO have been cancelled.

2. On perusal of the pleadings and material made available on record, the relevant factual position has emerged out that a total 271.39 acres of land was allotted to J.K. Synthetics Ltd. (JKSL) in Large Scale Industrial Area, Kota for setting up of industries. JKSL was declared as "sick" vide order dated 02.04.1998 passed by Board for Industrial and Financial Reconstruction (BIFR), Delhi. The Appellate Authority of BIFR (AAIFR) vide its order dated 23.01.2003 sanctioned its rehabilitation scheme of JKSL and in terms thereof, 227.15 acres of land of JKSL was transferred to the petitioner-company, the scheme of JKSL had run it's course and accordingly, lease deeds were executed/renewed by the District Collector, Kota in favour of the petitioner-company.

3. The petitioner-company made the Acrylic Fibre unit operational but due to a devastating fire in the year 2007, the same was closed. In the rehabilitation scheme, a tripartite agreement was executed between JKSL, the petitioner-company and the workers unions regarding the due payment to the labourers. Liability of payment to labourers of JKSL was computed to 40.42 crores of rupees, against which 34.06 crores of rupees were paid by the petitioner-company and rest of the amount could not be paid as the whereabouts of the concerned labourers could not be known. The litigation for non revival of Kota units and regarding payment of dues to labourers attained finality with the dismissal of petitions before the Hon'ble Supreme Court on 17.08.2017 and 06.03.2018.

The petitioner-company made an application before the District Collector, Kota for clearance to develop affordable housing scheme on the lease land under Chief Minister Jan Aavas Yojana (CMJAY) scheme. Correspondence in this regard was also made between the District Collector and RIICO but it could not get the desired clearance.

4. Thereafter, the petitioner-company on 28.08.2018, 11.09.2018, 12.09.2018 and finally on 27.09.2018 submitted proposals for sub-division and change of land use of the subject land for commercial and institutional use from industrial use in a phased manner under RIICO Disposal of Land Rules , 1979 (Rules of 1979). The proposals of the petitioner-company was accepted by the Land Planning Committee (LPC) in its meeting dated 03.10.2018 and the same was approved by the Infrastructure Development Committee (IDC) on 08.10.2018. The petitioner- company deposited a total sum of Rs. 5,21,61,276/- with the RIICO as its application fees, sub-division charges, transfer of strip land, economic rent, service charges, commercial conversion charges interest and GST. On fulfillment of all the formalities, the RIICO executed necessary supplementary lease deeds and issued the required permissions/approvals in favour of the petitioner- company.

5. The State Government vide order dated 01.01.2019, constituted a Cabinet Committee to review the decisions taken by the previous Government in the last six months. The Cabinet Committee, vide its decision dated 03.08.2019 with respect to the permissions/approvals granted to the petitioner-company directed that "??????????? ????????? ?????? ?? ????????? ?? ?????? ? ?????????? ???????| | ". In pursuance thereto, the State Government vide its order dated 10.10.2019, in exercise of its powers under Artic

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