AI Structured Summary
Not yet generated for this judgment
Judgment
K. Chandru, J.—The Petitioner was an allottee of a developed plot in the SIPCOT Industrial Park at Irungattukottai. The Petitioner was
allotted Plot No. A1 (Part) to the extent of 4 Acres. In this writ petition, the Petitioner has challenged an order dated 13.1.2009 issued by the
Respondent/SIPCOT, wherein they have indicated their intention to resume the unutilised portion of the land to the extent of 2 Acres. It was stated
that under the conditions of allotment and in paragraph 14(1) of the Lease Deed it was stipulated that if the plot allotted to the allottee is not fully
utilised, then there is no impediment for the Respondent/SIPCOT to resume the land and it was found that the Petitioner had not constructed in the
area which is allotted to it as per the conditions of lease.
As per the conditions of lease which is appended in the typed set, it is stipulated that non compliance of the terms and conditions of the allotment
will result in cancellation of the lease, including claiming of amount paid towards plot and interest already paid. One of the conditions that is set out
is that the allottee should put to use the land for the purpose for which it was allotted and if it is in excess of the actual requirement than the purpose
for which it is allotted, the Respondent/ SIPCOT can, at any time, cancel the allotment. It is also stated that the construction of the building will
have to be commenced within six months from the date of the allotment order and should be completed within 24 months from the date of the
allotment.
The lease was executed in favour of the Petitioner on 5.12.2003, pursuant to the allotment order made on 26.8.2003. Thereafter, after waiting
for five years, a notice dated 31.1.2008 was issued to the Petitioner and in that notice the Petitioner was informed that the Petitioner has violated
condition No. 6(a) of the allotment order and condition No. 14(1) of the lease deed and since the land was not put to use for the purpose for
which it was allotted and it was also found to be excess of the actual requirement, they have right to cancel the allotment in respect of the land
which was not utilized. The Petitioner was asked to show cause on the same.
The Petitioner sent a reply dated 15.5.2008 stating that they need the entire land and they have also finalized their expansion plan for the next
two/three years and they also require six to eight months for completing the work. They also sent further representation dated 11.6.2008 indicating
that they have further period of two years for completing the construction process.
In the meanwhile, the Respondent/SIPCOT, by communication dated 12.6.2008, found that since the original condition was not complied with,
they propose to resume the unutilised portion of land allotted to them. It is pursuant to the said warning the impugned order came to be passed on
13.1.2009. In the impugned order, it is stated that even after ninety days time was given for compliance of defects by the proceedings of the
Respondent dated 28.3.2008, the Petitioner had not complied with the same and it is also stated that on inspection made by the Respondent, it
was found that they have not even commenced civil works in the site and therefore, they were directed to show cause as to why allotment should
not be cancelled. Challenging the said show cause notice, the writ petition came to be filed.
The writ petition was admitted on 2.2.2009. Pending the writ petition, interim stay was granted. On notice from this Court, the
Respondent/SIPCOT is represented by Ms. Narmada Sampath, Learned Counsel. Today when the matter came up, the Learned Counsel for the
Petitioner produced further documents showing that they had made application for building approval on 21.5.2008 and they have also paid the
infrastructure and amenities charges and official plan approval was also obtained. But these conditions will not improve the case of the Petitioner.
In any event, if the Petitioner has a good case, they should give appropriate reply to the SIPCOT and convince the SIPCOT about the necessity or
legal right for it to retain the land.
Considering the fact that the transaction between the Petitioner and the Respondent/SIPCOT is purely contractual and admittedly, the
contractual conditions have been violated, this Court is not inclined to entertain the writ petition either to extend the terms and conditions of lease
or to modify the lease conditions on the basis of the difficulties pleaded by the Petitioner.
In this context, it is necessary to refer to the judgment of the Supreme Court in Kerala State Electricity Board and Another Vs. Kurien E.
Kalathil and Others, . The Supreme Court has held that a contract between the parties would not become statutory simply because it is for
construction of a public utility or because the allotment was made by a statutory body and every act of the statutory body need not involve the
exercise of statutory power. In such circumstances, the Court exercising power under Article 226 of the Constitution of India cannot exercise its
discretion to interpret the terms and conditions of such contract. In paragraph (11) of the judgment, it was held as follows:
A statute may expressly or impliedly confer power on a statutory body to enter into contracts in order to enable it to discharge its functions.
Dispute arising out of the terms of such contracts or alleged breaches have to be settled by the ordinary principles of law of contract. The fact that
one of the parties to the agreement is a statutory or public body will not by itself affect the principles to be applied. The disputes about the meaning
of a covenant in a contract or its enforceability have to be determined according to the usual principles of the Contract Act. Every act of a statutory
body need not necessarily involve an exercise of statutory power. Statutory bodies, like private parties, have power to contract or deal with
property. Such activities may not raise any issue of public law. In the present case, it has not been shown how the contract is statutory. The
contract between the parties is in the realm of private law. It is not a statutory contract. The disputes relating to interpretation of the terms and
conditions of such a contract could not have been agitated in a petition under Article 226 of the Constitution of India. That is a matter for
adjudication by a civil court or in arbitration if provided for in the contract. Whether any amount is due and if so, how much and refusal of the
Appellant to pay it is justified or not, are not the matters which could have been agitated and decided in a writ petition. The contractor should have
relegated to other remedies.
The Supreme Court subsequently in State of Bihar and Others Vs. Jain Plastics and Chemicals Ltd., has reiterated the similar opinion and it was
held that the Court exercising jurisdiction under Article 226 of the Constitution of India cannot deal with the breach of contract and grant relief to
the parties on the basis of the explanation offered by one of the parties to the contract. In paragraph (7), it was observed as follows:
In our view, it is apparent that the order passed by the High Court is, on the face of it, illegal and erroneous. It is true that many matters could be
decided after referring to the contentions raised in the affidavits and counter-affidavits, but that would hardly be a ground for exercise of
extraordinary jurisdiction under Article 226 of the Constitution in case of alleged breach of contract. Whether the alleged non-supply of road
permits by the Appellants would justify breach of contract by the Respondent would depend upon facts and evidence and is not required to be
decided or dealt with in a writ petition. Such seriously disputed questions or rival claims of the parties with regard to breach of contract are to be
investigated and determined on the basis of evidence which may be led by the parties in a properly instituted civil suit rather than by a court
exercising prerogative of issuing writs.
The Learned Counsel, Ms. Narmada Sampath, also brought to the notice of this Court the judgment of the Supreme Court in U.P. Financial
Corporation Vs. Gem Cap (India) Pvt. Ltd. and Others, for contending that the Court can exercise power only when there is a statutory violation
on the part of the Corporation or where the Corporation acts unfairly or unreasonably. The Court exercising the power under Article 226 of the
Constitution of India cannot sit as an Appellate Authority over the acts and deeds of the Corporation and seek to correct them. In that case, the
Court was dealing with an organization like the Respondent, which is created by the State Financial Corporations Act, 1951, and while dealing
with the transactions with the Corporation, the Court held that fairness is not a one-way street. It is necessary to refer to the following passage
found in paragraph (10), which is as follows:
It is true that the Appellant-corporation is an instrumentality of the State created under the State Financial Corporations Act, 1951. The said
Act was made by the Parliament with a view to promote industrialisation of the States by encouraging small and medium industries by giving
financial assistance in the shape of loans and advances, repayable within a period not exceeding 20 years from the date of loan. We agree that the
corporation is not like an ordinary money-lender or a Bank which lends money. It is a lender with a purpose - the purpose being promoting the
small and medium industries. At the same time, it is necessary to keep certain basic facts in view. The relationship between the corporation and the
borrower is that of creditor and debtor. The corporation is not supposed to give loans once and go out of business. It has also to recover them so
that it can give fresh loans to others. The corporation no doubt has to act within the four corners of the Act and in furtherance of the object
underlying the Act. But this factor cannot be carried to the extent of obligating the corporation to revive and resurrect every sick industry
irrespective of the cost involved. Promoting industrialisation at the cost of public funds does not serve the public interest; it merely amounts to
transferring public money to private account. The fairness required of the corporation cannot be carried to the extent of disabling it from recovering
what is due to it. While not insisting upon the borrower to honour the commitments undertaken by him, the corporation alone cannot be shackled
hand and foot in the name of fairness. Fairness is not a one way street, more particularly in matters like the present one. The above narration of
facts shows that the Respondents have no intention of repaying any part of the debt. They are merely putting forward one or other ploy to keep the
corporation at bay. Approaching the courts through successive writ petitions is but a part of this game. Another circumstance. These corporations
are not sitting on King Solomon''s mines. They too borrow monies from Government or other financial corporations. They too have to pay interest
thereon. The fairness required of it must be tempered - nay, determined, in the light of all these circumstances. Indeed, in a matter between the
corporation and its debtor, a writ court has no say except in two situations: (1) there is a statutory violation on the part of the corporation or (2)
where the corporation acts unfairly i.e., unreasonably. While the former does not present any difficulty, the latter needs a little reiteration of its
precise meaning. What does acting unfairly or unreasonably mean? Does it mean that the High Court exercising its jurisdiction under Article 226 of
the Constitution can sit as an appellate authority over the acts and deeds of the corporation and seek to correct them? Surely, it cannot be. That is
not the function of the High Court under Article 226. Doctrine of fairness, evolved in administrative law was not supposed to convert the writ
courts into appellate authorities over administrative authorities. The constraints - self-imposed undoubtedly - of writ jurisdiction still remain.
Ignoring them would lead to confusion and uncertainty. The jurisdiction may become rudderless.
Under the said circumstances, this Court is not inclined to interfere with the impugned notice. Hence, the writ petition is dismissed. This will not
prevent the Petitioner from filing his explanation and the time for filing explanation is extended by another fifteen days from today. No costs.
Consequently, M.P. No. 1 of 2009 is closed.