M/S Samtech Infonet Ltd. & Another vs State Of Uttarakhand & Others

Sharad Kumar Sharma, J

The petitioner M/S Samtech Infonet Ltd. was allotted plot No. 28 IT, situated at IT Park, Sahastradhara road, Dehradun, to be utilized for industrial purposes. The said plot was alltoed in favour of the petitioner vide letter dated 24.08.2006. The said allotment letter contained condition No. 9, which is quoted hereunder, and sole purpose of the conditions was to ensure a timely utilization of plot for the purpose for which it has been allotted and its utility is neither delayed or deviated:

"9. The lease deed shall be handed over to the allottee only when the unit becomes operational and all the dues of the Corporation are cleared. However, it can be sent to the Financial Institution for mortgage purpose after paying 50% of the total cost of the plot after and assurance from the Financial Institution in writing to SIDCUL, of making the lump sum payment of total balance premium of land out of the first disbursement of the sanctioned loan on behalf of the allottee"

Consequent to the allotment a lease deed was executed in favour of the petitioner on 16.02.2010. The terms of lease deed as it has been brought on record had various stipulations to be complied with by the lessee so as to meet the objective for which the plot was leased out to the petitioner. Clause-1.1 (a)(i) reads as under:

"(a) (i) Within the period of Twenty Four (24) months from the date of letter of allotment of the Demised Land i.e. 24.8.2006 (Stipulated Period") the Lessee shall built and erect construction, execute works and complete installation of plant and machinery and commence production in its Unit."

As per the stipulation contained in the said clause, it was made mandatory that after the allotment of the land the lessee, i.e. the petitioner, which was made as back as on 24.08.2006 the lessee was to built, erect and complete the construction and execute the work, complete the installation of plant and machinery and commence production in its unit. On its simple reading there were various other factors and conditions which were required to be complied with by the petitioner to sustain the allotment and it includes the activities as detailed in the said clause 1.1(a)(i) of lease dated 16.02.2010. It was due to its non-compliance, as the construction was not completed nor the unit was put to its effective use by the commencement of its production within the stipulated time frame as provided under clause 1.1(a)(i), the respondent had proceeded to take an action by issuance of an order dated 07.05.2016, and as a consequence thereto, an allotment which was made in favour of the petitioner on 24.08.2006, and the lease which was executed on 06.02.2010 was terminated. It is these orders dated 07.05.2016 and the consequential action to be taken, which is under challenge in the present writ petition. Thus, the petitioner in the petition has sought following relief:

"A. Issue an order, direction or writ in the nature of writ of certiorari quashing the impugned letter no. 246/RM/SIDCUL/16 dated 07.05.2016 [Annexure-1 of the Writ Petition], and

B. Issue an order, direction or writ in the nature of appropriate writ restraining the respondents from interfering in the peaceful possession of the Petitioner No. 1 Company, and

C. Issue an interim order staying the impugned letter no. 246/RM/SIDCUL/16 dated 07.05.2016 [Annexure-1 of the Writ Petition] and restraining the respondents from taking possession of the Unit and the plot no. 28IT from the Petitioner No. 1 Company.

D. Issue or pass any order in the nature of Writ or direction as this Hon'ble High Court may deem fit and proper in the circumstances of the case."

There are two fold arguments which are being raised by the learned counsel for the petitioner. (One) that in order to meet the objective under clause 1.1(a)(i), they have proceeded to raise the construction, but subsequently on a certain correspondences made by the respondent that construction was not being raised in consonance to or within the parameters required, the same was directed to be removed and the petitioner was aksed to restructure the unit afresh, that has consumed time and owing to the subsequent demand of restructuring the unit it has resulted into non-compliance of the terms contained under clause 1.1(a)(i). The (second) argument which has been extended by the learned counsel for the petitioner is in reference to the communication which was made to him on 25.04.2016, whereby, the petitioner was asked to furnish the NOC from the fire department and an NOC from the Pollution Control Board, which too consumed sufficient long time.

The grievance and argument of the petitioner is that this communication made by the SIDCUL to the petitioner for getting the NOC's mentioned above in clause second, was received in their office only on 30.04.2016. The grievance is that the respondent instead of granting a reasonable time as contemplated under clause 1.1(a)(i) to meet the condition they had proceeded to cancel the lease by the impugned order within couple of days from the date of issuance of letter dated 25.04.2016.

The learned senior advocate so as to support his contention as against the impugned action of the respondent has further argued that the action of cancellation of a lease could not be made except after adherence of principles of natural justice, which was not done in the instant case because the action was taken within seven days from the date of issuance of letter dated 25.04.2016. He wants to submit that since the cancellation is proceeded in the absence of providing an opportunity of hearing, the impugned action of cancellation of allotment made by the order dated 07.05.2016 would violate principles of natural justice and the said principle of adherence to principle of natural justice could only be a subject matter of scrutiny by the writ courts under Article 226 of the Constitution of India, once it happens to be in violation of the principle of natural justice.

In support of his contention, he has further submitted that there was a non-compliance of clause 1.1(a)(v) of the terms of lease deed dated 16.02.2010, which is quoted hereunder:

"(v) Notwithstanding any such default of the stipulation contained in Clause 1.1(a)(i) above and in case the Lessor proposes to determine the Lease as envisaged in Clause 1.1(a)(iv) above, the Lessor shall be given 60 days written notice to the Lessee, indicating its decision to determine the Lease and terminate the Lease Deed."

He wants to submit that clause 1.1(a)(v), is inclusive of the provisions contained under clause 1.1(a)(i), for the purposes of giving a prior 60 days notice for taking of an action of termination of a lease. The interpretation which has been given by the learned counsel for the petitioner that the action of termination of the lease by the impugned order dated 07.05.2016 would be in violation of clause 1. 1(a)(v) is not acceptable by this Court for the following reason:

The clause 1.1(a)(v) of the lease deed starts with a non-obstinate clause and it would include its applicability once there is a dereliction in compliance with the terms and conditions contemplated under clause 1.1(a)(i), which is the case at hand, rather this court is of the view that the implications of clause 1.1(a)(v) would only apply in relation to those circumstances where the determination of the lease happens to be in violation of the terms contained under 1.1(a)(iv) and not otherwise, i.e. it excludes its applicability, i.e. grant of 60 days' time, if the termination of lease is based on non-compliance of clause 1.1(a)(i). Hence, clause 1.1(a)(v) will not be attracted for action under clause 1.1(a)(i).

Hence, for the purposes of termination of lease, this Court is of the view that if the termination as would be apparent from the scrutiny of the impugned order dated 07.05.2016, since it happens to be due to non-compliance of clause 1.1(a)(i) the compliance of a prior 60 days notice contemplated under clause 1.1(a)(v) was not required as already held that same will not be attracted. The other limb of argument of learned senior advocate is to the effect that the subject matter of non adherence of the principles of natural justice could be scrutinized only by the writ courts is not acceptable, rather in fact and under settled principles of law that whether it is quasi judicial body or judicial body or even a superior authority exercising an administrative power, its prime concern when an action is challenged would be adherence of principles of natural justice, which is the basic principle of adjudication or decision making process, and the said principle cannot be confined to its applicability in the proceedings under Article 226 of the Constitution of India only. Hence, this argument of learned counsel for the petitioner is not acceptable by this Court and could not be said that if petitioner approaches the competent forum for redressal of his grievance, the same would not follow the principles of natural justice.

After having heard the learned counsel for the parties at length and looking to the nature of controversy involved, which emanates from a default caused due to non-compliance of clause 1.1(a)(i), it would fall to be within the ambit of the norms of violation of the terms of the contract as contained under clause 9.2 of the lease deed and as such it will fall to be a subject matter of consideration by the arbitrator, which is contemplated under clause -9 of the lease deed, which reads as under:

"9. Jurisdiction and Arbitration

9.1 The Courts in Dehradun alone shall have jurisdiction in relation to any proceedings, in relation to the matters covered under this Deed.

9.2 All disputes and differences in relation to the applicability, interpretation, rights and obligations of the parties hereunder and/or arising under these presents, shall be referred to a Sole Arbitrator, to be nominated by the Managing Director of the Lessor, Writhing thirty (30) days from the date of receipt of a request for nomination of Sole Arbitrator, the Managing Director of the Lessor shall, nomination of Sole Arbitrator and issue communication in respect of the same to the parties. In case, the Sole Arbitrator is not nominated within the period stipulated hereinabove, the parties will be at liberty to invoke the provision of the Arbitration and Conciliation Act, 1996 and any subsequent amendments thereto or enactment(s) in substitution thereof, for appointment of Sole Arbitrator.

9.3 The arbitral proceedings shall be governed by the Arbitration and Conciliation Act, 1996 and any subsequent amendments thereto of enactments in substitution thereof.

9.4 The arbitral proceedings shall be conducted in Dehradun in English language and the parties agree that the arbitral award shall be binding and enforceable against the parties. "

So far as the interpretation, which has been given to clause-9.2 of the lease deed by the learned senior counsel for the petitioner, to the effect that the cancellation of lease deed will not fall to be within the purview of consideration before the arbitrator under clause 9.2, yet this argument is not acceptable by this Court for the reason that if we go through the dicotomy of clause-9.2, it imbibes within its ambit the consideration of all rights and obligations of the parties under the contract and arises from the terms of contract, which obviously would include within its ambit the cancellation or termination of the lease on account of a default of clause 1.1(a)(i). Thus, this court is of a considered view, that the petitioner has an efficacious agreed remedy, which equally binds him because he is a signatory of the said contract or lease containing an arbitration clause.

Consequently, this writ petition fails and is dismissed. The petitioner is relegated back to approach to the arbitrator in terms of clause-9.2. However, at this stage it is made clear that any observation or remark which has been made above would not create any impediment as far as the arbitrator is concerned for deciding the controversy on its exclusive merits.

Subject to the above observation, the writ petition stands dismissed.