IMPORTANT POINTS
Alienation of property through registered sale deed cannot be cancelled or annulled on basis of condition in allotment letter which is not a condition in the sale deed.
Proportionality is an important aspect of Administrative law.
A plea not taken before High Court cannot be taken before Supreme Court for the first time.

JUDGMENT

A.K. Sikri, J.

Appellant No.1, Andhra Pradesh Industrial Infrastructure Corporation Limited, is a public sector undertaking incorporated under the Companies Act, 1956. Appellant Nos. 2 and 3 are its office bearers. The main object of the appellant-Corporation is to develop industrial areas at various places in the State of Andhra Pradesh and allot them to the needy entrepreneurs for the purpose of establishing industries.

2. During 1996-97, the appellant-Corporation allotted industrial plots to the respondents/ entrepreneurs herein at Visakhapatnam and other places in the State of Andhra Pradesh. All the respondents are transport companies with their headquarters all over India and they got allotted the aforesaid plots in Visakhapatnam or other places in the State with the purpose of having branch offices. Intention was to construct transport offices and godowns. The allotment letters vide which allotments were made by the appellant-Corporation contained certain terms and conditions. One of the conditions, which is the bone of contention in these appeals, was that the respondents were supposed to establish their units within two years from the date of taking possession of their plots allotted to them for industrial purposes. It was also stipulated that contravention of any of the terms and conditions of the allotment would result in cancellation of such allotment. The relevant clauses signifying the aforesaid stipulation are worded as under:

"10. The allottee should note that the Corporation forfeits all amounts paid by the allottee if any of the terms and conditions stipulated in the allotment letter are not complied with by the allottee.

xx xx xx

17. You should implement the project envisaged within two years of taking possession of the land/plot/shed. If within two years from the date of final allotment and taking possession for the land/plot/shed the project is not implemented, the allotment will be cancelled.

18. Registration of the sale deed will be made in your favour only after implementation of the unit in the allotted plot/shed. An undertaking on Rs. 100/- NJS Paper to the effect that the allottee will take sale deed for the plot/shed/ land allotted within one month of intimation from the APIIC Limited and to pay the penalties levied by the Corporation in case of failure should be furnished in the proforma enclosed."

3. Though initial allotments were made by issuing allotment letters as above, these were followed by agreements of sale which were entered between the appellant-Corporation and the respondents on different dates between 1997 and 1999. During this period, sale deeds were also executed by the appellant-Corporation in favour of the respondents, after receiving full consideration of the plots in question, thereby transferring the ownership rights in favour of the respondents herein. Almost six years after the execution of the sale deed, show-cause notices were issued to the respondents for cancellation of the plots on the ground that the respondents had failed to establish their industrial units on the said plots within the stipulated period and had kept them idle which was detrimental to the industrial development. The respondents submitted their separate replies to these showcause notices wherein, broadly speaking, the position was taken that the appellant-Corporation did not provide basic infrastructure facilities like roads, water, electricity and, therefore, the plots could not be utilised for the purpose of construction of godowns.

4. Interestingly, the aforesaid facilities were provided in the year 2006 only, i.e. after the issuance of show-cause notices and replies thereto by the respondents. In these circumstances, the respondents applied for permission to construct the godowns. Vide letter dated January 20, 2006, the appellant-Corporation approved the building plans, in pursuance whereof the respondents commenced construction. However, thereafter, the appellant-Corporation passed orders dated Marc