Karm Bhoomi Estates vs Raj. State Industrial Development and Investment Corporation Ltd.

Alok Sharma, J.

A challenge in this petition under Article 226 of the Constitution of India has been made to the order dated 14-3-2014 whereby the amount Rs. 1,07,68,271/- were refunded to the petitioner (as earlier deposited by it on allotment of 13 acres of land) consequent to cancellation of petitioner''s aforesaid allotment in terms of the purported decision of the Infrastructure Development Committee (Infra Division) (hereinafter ''IDC'') of the Rajasthan State Industrial Development and Investment Corporation Ltd. (hereinafter ''RIICO'') in its meeting of 26-2-2014.

Heard learned counsel for the parties and perused the petition, reply thereto and RIICO''s Disposal of Land Rules, 1979 (hereinafter ''the 1979 Rules'').

The petitioner pursuant to RIICO''s Notice Inviting Tender dated 31-3-2001 for 13 acres of land situate in Industrial area Akeda Dungar, Tehsil Amer District Jaipur submitted its bid and was found to be highest at Rs. 4,26,000/- per acre for non industrial use of the land in issue. Despite the petitioner''s highest bid, RIICO again on 24-4-2001 proceeded for a fresh Notice Inviting Tender qua the same land with a reserve price of Rs. 4,26,000/- per acre. This subsequent tender notice, even without cancelling the petitioner''s highest bid pursuant to the earlier tender dated 31-3-2001 became the subject matter of civil suit No. 15/2001 at the instance of the petitioner, wherein on an application under Order 39 Rules 1 and 2 CPC, the trial court granted a temporary injunction in mandatory form on 19-5-2001 in favour of the petitioner. RIICO thereafter accepted the petitioner''s highest bid against tender notice dated 31-3-2001 and directed the petitioner to deposit 25% amount of the total bid amount. It was so done and on deposit thereof allotment letter dated 14-6-2001 was issued in favour of the petitioner demanding remainder of the 75% bid amount. That amount was also deposited within time. On 3-10-2001 the land was demarcated, lay out plan prepared and possession of land in issue is stated to have been handed over to petitioner. Thereafter the petitioner''s civil suit was decreed on 29-7-2004, wherein the RIICO was directed to execute the lease deed in respect of the land allotted to petitioner in pursuance of its highest bid of Rs. 4,26,000/- per acre pursuant to RIICO''s NIT dated 31-3-2001. RIICO preferred a first appeal against the judgment and decree dated 29-7-2004, which was allowed vide judgment and decree dated 9-8-2005. Thereafter the petitioner approached this court under S.B. Civil Second Appeal No. 589/2005. This court on 24-11-2005 directed the parties to maintain status quo with regard to disputed property. In the meantime the second appeal was admitted on 3-5-2006 and substantial questions of law arising therein in the estimation of the court framed.

During pendency of the second appeal, RIICO vide its letter dated 15-12-2011 referring to its Infrastructure Development Committee (infra) decision dated 5-12-2011 expressed its intention to regularise the allotment of 14-6-2001 in favour of petitioner in the event the second appeal was withdrawn. On 17-12-2011 an application was filed by the petitioner in his second appeal with reference to RIICO''s letter dated 15-12-2011. Consequently the court vide order dated 23-12-2011 dismissed the second appeal as withdrawn. Subsequently RIICO vide letter dated 30-12-2011 withdrew earlier letter dated 9-12-2005 of cancellation of allotment of land to petitioner following the appellate court''s judgment and decree dated 9-8-2005. Thereupon allotment of land in favour of the petitioner issued on 14-6-2001 sustained/was revived.

The matter thereupon is stated to have there stood and the case of the petitioner is that it submitted the necessary documents as required by RIICO such as registration of firm, certified copy of the order of the court for registration of the lease deed for the land in issue allotted on 14-6-2001 on payment of the entire consideration therefor, but nothing was done in spite of repeated representations.

Thereafter at some stage, because of the Advocate General''s opinion with regard to the justification of compromise between the parties before the court in the second appeal and revival of allotment of land in dispute in favour of the petitioner, as also the objection in the internal audit of riico by the office of Accountant General, riico appears to have revisited and reconsidered the matter in the meeting of its IDC on 26-2-2014 and a decision taken by IDC to withdraw its decision dated 5-12-2011 to regularise the allotment in favour of the petitioner on the basis of which its letter dated 15-12-2011 to the petitioner led to the petitioner''s second appeal before the court being withdrawn leading to the train of events in which RIICO''s letter dated 30-12-2011 resulted in the revival of allotment made to the petitioner on 14-6-2001. The DC also decided to refund the amount deposited by the petitioner. The petitioner is aggrieved of the letter of cancellation of allotment in its favour by the IDC on 26-2-2014 and RIICO''s consequent letter dated 14-3-2014 refunding the amount of consideration paid for allotment of the plot following the highest bid made/negotiated pursuant to the RIICO''s nit dated 31-3-2001.

On query being put to Mr. Ajeet Bhandari, learned counsel for the riico on RIICO''s power to cancel an allotment Rule 24 (1) of the 1979 Rules has been noticed by the court. The said Rule reads as under:--

"24(1). Cancellation

The Corporation shall have the right to cancel the plot allotment after issuing a 30 days registered ad show cause notice to the allottee by the concerned Sr. DGM/Senior Regional Manager/Regional Manager for breach of any of these rules, condition of allotment letter or terms of lease agreement. The powers of plot cancellation shall vest in Sr. DGM/Sr.RM/RM of the unit.

In show cause notice the allottee would be asked to show cause why the plot allotment should not be cancelled, lease deed of the plot should not be terminated and plot should not be taken in possession, in view of the default committed by the allottee. In the notice it would also be clarified that, the said default shall be condoned only on payment of interest/retention charges or removal of breach of terms and condition/its regularisation. In case of no response or reply to the show cause notice without commitment for deposition of dues, for regularisation of delay/default or removal of breach of terms and conditions by the allottee, allotment of plot should be cancelled terminating the lease-deed of plot. In cancellation letter party shall be asked to hand over possession of land within 7 days and take refundable amount from RIICO and it shall also be intimated that, in case of failure to hand over the possession in time, the plot shall be deemed to have been taken into possession treating the allottee as unauthorised occupant on the land. For possession of non-vacant plot, the case shall be filed in the competent E.O. Court. After taking possession of non-vacant plots on order so competent authority or deemed possession of vacant plot or possession being handed over by the party, cheque of refundable amount shall be sent to the party. Original receipt shall not be demanded from the party."

It is evident from a bare reading of the rule above that albeit RIICO has the power under the 1979 Rules to cancel an allotment made, yet the said power is not unbridled but limited to situations of breach of the 1979 Rules, or condition of allotment letter or terms of a lease agreement. Further before cancellation of allotment on any of the aforesaid ground/s it is mandatory that a show cause notice has to be issued to the allottee asking it to show cause as to why the allotment should not be cancelled or, where applicable, the lease deed should not be terminated and the possession of the plot should not be taken in view of the contravention of rules or breach of the conditions of allotment letter or terms of lease deed. Further the noticee is also entitled to an opportunity to rectify the breach of the rule or contravention of terms of allotment letter or lease deed on payment of requisite charges. It is only following the aforesaid procedure wherein a show cause notice pointing out the contravention/breach, and providing opportunity for rectification to the allottee goes unaddressed to RIICO''s satisfaction can a letter of allotment inter alia be cancelled.

Mr. R.K. Agrawal, learned Senior counsel appearing on behalf of the petitioner has submitted that quite evidently the respondent RIICO did not comply with the principles of natural justice in generality nor was the procedure detailed in Rule 24(1) of the Rules of 1979 was adhered to before the cancellation of the allotment of land in issue to the petitioner. Senior Counsel submitted that in this view of the matter the decision of the IDC in its meeting of 26-2-2014 to cancel the allotment made in favour of the petitioner and to refund the sale consideration deposited by the petitioner is liable to be quashed and set aside. It has been submitted that what compounds the illegality and arbitrariness of the respondent RIICO is that the allotment was made to petitioner on withdrawal of the second appeal before this court on 23-12-2011 acting upon the representation dated 15-12-2011 made by the RIICO seeking final closure to a pending lis and RIICO''s readiness to issue the allotment letter. Senior counsel submitted that the withdrawal of the second appeal by the petitioner was also a consideration, aside of the consideration paid for the letter of allotment in favour of the petitioner and hence the subsequent decision of RIICO''s IDC on 26-2-2014 cancelling the allotment and refunding the consideration deposited by the petitioner tantamounts to over-reaching the judicial process and even constitutes contempt of court.

In the reply to writ petition it has not been denied that the principal of natural justice were violated. It has not even been asserted that the required procedure prescribed in Rule 24(1) of the 1979 Rules was followed prior to the cancellation of the petitioner''s allotment. Mr. Ajeet Bhandari, RIICO''s counsel to this petition thus obviously not have any defence or argument on this score.

Having heard learned counsel for the parties and perused the writ petition and reply thereto, I am of the considered view that the writ petition is liable to succeed solely on the ground of denial of principles of natural justice, more particularly RIICO''s failure to adhere to the procedure for cancellation of allotment as detailed in Rule 24(1) of the 1979 Rules. It is quite clear that allotment made to petitioner was cancelled without issuing any show cause notice pointing out any violation/contravention of any rule of 1979 Rules or the conditions of the allotment. Further the petitioner was not supplied any opportunity to remove/rectify the alleged contravention/breach of allotment conditions as mandated in Rule 24(1) of the 1979 Rules. In this view of the matter it is apparent that cancellation of the allotment of land to the petitioner and the decision for refund the sale price/consideration deposited vide decision of the IDC in its meeting of 26-2-2014 communicated through letters dated 11-3-2014 and 14-3-2014 is arbitrary, illegal, unsustainable and liable to be quashed and set aside. It is so accordingly directed.

Consequences in accordance with law to follow the setting aside the order of cancellation of allotment in issue.

The writ petition stands allowed accordingly.