The government may resume industrial land for non-utilization by the allottee, with decisions supported by assignment rules and public interest considerations.

JUDGMENT

S.MANU, J.

The Appellant/Original Petitioner is a private limited company incorporated under the Indian Companies Act, 1956 and is engaged in medium scale enterprise in sea-food industry. Originally Plot No.T.S.177 having an extent of 129.08 cents of land in Sy. No.R.S. No.177 part 1-5-177/3 in Katchery Village, Westhill, Kozhikode which was demarcated as Industrial Development Plot under Respondent No.1, was allotted on hire purchase basis to M/s. Sea Diamond Pvt. Ltd. for sea food industry. But, the aforesaid company did not succeed in their business resulting in huge financial liability viz., gross dues to Kerala Financial Corporation (KFC), Central Bank, District Industries Centre, Sales Tax, Electricity Charges etc. Subsequently, M/s. Sea Diamond Pvt. Ltd. approached the Petitioner with a proposal to take over the unit/assets and the same was negotiated and accepted by the Petitioner with the concurrence of Respondent No.1. In deference to the acceptance of aforesaid proposal, the Petitioner issued Exhibit-P1 letter dated 10 September 1986 along with demand draft of ₹

1,24,464.74 dated 10 September 1986 for clearing hire purchase installment arrears and requested them to obtain discharge certificate and title deeds from Respondent No.1.

2. The aforesaid unit was mortgaged with the KFC and they also accorded sanction for transfer of unit vide Exhibit-P2 letter dated 5 ₹

September 1986 on condition of payment of 13,00,000/-. After clearing the entire liabilities in respect of the unit and on compliance with other conditions, the Government vide Exhibit-P3 order dated 8 February 1988 in G.O.(Rt.) No. 118/88/ID, accorded sanction for transferring the plot subject to the terms and conditions for allotment of the land in development plot. In pursuance of Exhibit-P3, Exhibit-P4 tripartite agreement was executed on 4 March 1988 between the Petitioner, M/s. Sea Diamond Pvt. Ltd., and the Government, and in pursuance thereof, possession of the property was handed over to the Petitioner. Thereafter, the Petitioner made huge investments in the said plot and was successfully running the unit. Since the land allotted to the Petitioner was insufficient for the project, the Petitioner purchased about 19 cents adjoining private land adjacent to it and annexed with the plot.

3. While the unit was flourishing, the Petitioner remitted the entire land value of the plot to the Government and Respondent No.3 recommended for assignment of land in favour of the Petitioner and resultantly, the Government vide Exhibit-P5 order dated 16 October 1989 accorded sanction for assignment of land subject to the rules governing assignment. Based on Exhibit-P5, the Government has issued Exhibit-P6 patta in respect of the plot to the Petitioner on 28 June 1990. Exhibit-P6 is issued under the Rules of Assignment of Government Land for Industrial Purposes, 1964 (Assignment Rules of 1964). As per Exhibit-P6, the land assigned is heritable but shall not be alienated or encumbered without the prior permission of the Government and in case of cancellation of registry, the Government may resume possession of the land with building and improvements on payment of market value of the building and improvements.

4. In the meantime, Respondent No.4 issued show cause notice to the Petitioner demanding to open the unit on regular basis, to which, the Petitioner submitted reply showing genuine reasons. There were also correspondence between the Petitioner with Respondent Nos.3 and 4 regarding non functioning of the unit. The Petitioner also sought co- operation from Respondent No.4 for modernization of the unit. While so, Respondent No.4, on 2 August 2014, iss