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Judgment
K. Chandru, J.—The writ petition is filed by the Petitioner company represented by its Vice President, challenging an order dated
11.2.2009 passed by the second Respondent Estate Office, SIndian Penal Code OT IT Park, Padur Post, Siruseri. By the impugned order, the
petitioner company was informed that an allotment made in favour of 1. Axes Technologies India Private Limited in plot No. 6/D-6 to an extent of
3.07 acres at the SIndian Penal Code OT Information Technology Park was cancelled by an order dated 26.7.2006 by the Chairman-cum-
Managing Director as they had failed to observe the terms and conditions cited in the show cause notice, dated 12.4.2006. They were also given a
direction to execute a cancellation deed in favour of the SIndian Penal Code OT. The petitioner company was further informed that since the
original allottee had failed to comply with the conditions of allotment, dated 20.12.2004 and they had failed to surrender physical possession of the
plot to the SIndian Penal Code OT and to execute a cancellation deed, actions were initiated under the Tamil Nadu Public Premises (Eviction of
Unauthorized Occupants) Act, 1975.
According to the Respondent SIPCOT, the original allottee pursuant to the allotment order dated 20.12.2004 had executed a lease deed on
10.3.2005 and the plot was registered in their name in the Sub Registrar''s Office at Thiruporur. Under Clause 18 of the lease deed, construction
of the factory buildings should commence within 6 months from the date of allotment and should be completed within 24 months. Clauses 14 and
15 provide for determination of lease and resumption of unutilized land for violation of conditions of lease deed. It is claimed that the original
allottee should have commenced the construction activities before 20.6.2005 under Clause 18. It was also stated that the plot was not used for the
purpose for which it was allotted and no extension of time was sought for implementing the project. Hence, a show cause notice was given on
12.4.2006. Since they had failed to observe the norms, cancellation of allotment was made on 26.7.2006. In continuation of the cancellation order,
Form-A notice was given on 3.6.2008 and Form-B notice on 3.7.2008 under the provisions of the Tamil Nadu Public Premises (Eviction of
Unauthorised Occupants) Act, 1975 by the second respondent Estate Officer.
It is at this stage, the original allottee sent a letter dated 29.7.2008 questioning the cancellation. In the impugned order, it was further indicated
that the questioning the cancellation after several years by the original allottee did not arise. They have also failed to appear for an enquiry fixed on
18.7.2008. Therefore, under the power vested on the Estate Officer, the premises handed over to the original allottee was directed to be taken
possession by the Assistant Engineer, SIndian Penal Code OT. Challenging the said order, the present Petitioner filed the writ petition. It was
admitted on 18.4.2009. Pending the writ petition, an interim injunction was granted by this Court. On notice from this Court, a counter affidavit,
dated Nil (September, 2011) was filed by the Assistant General Manager, SIndian Penal Code OT.
The stand of the Petitioner was that Axes Technology (India) Private Ltd. had paid the cost of the plot including development charges on
14.2.2005. The Respondent SIndian Penal Code OT sent a proposal to convert the IT Park as a Special Economic Zone and directed the original
allottee to produce certain particulars on 3.3.2005 and that particulars have also been produced. They had also issued a direction in 9.3.2005 not
to proceed further. No objection was given under pressure by the original allottee. The lease agreement was executed even before taking
possession in respect of the zone conversion. The possession was handed over contrary to the terms of allotment only on 22.7.2005. The original
allottee had informed the Respondent that Mahindra British Telecom Limited had purchased the shares with effect from 28.11.2005 and an
intimation was given on 17.2.2006 about the change of name. In the meanwhile, a show cause notice was given to the original allottee for
cancellation and it was also cancelled. When the present petitioner came to know about cancellation, they made a representation on 11.4.2007 to
reconsider the order of cancellation. A further representation was given on 27.4.2007. But on 20.7.2007, the Respondent had expressed their
inability to reconside. A letter sent by the present Petitioner was replied to the original allottee and the letter was also sent to their address at
Bangalore. On 11.6.2008, the petitioner had intimated the Respondent about the amalgamation of the present petitioner company. But however
they had proceeded with the notice u/s 4. They had also refused to allow the present Petitioner to participate in the eviction proceedings and the
eviction order was passed without notice to the Petitioner. On 8.6.2008, the Petitioner company had stated that as soon as the name change after
amalgamation is done, they will execute the surrender deed. They had also sent a letter dated 11.6.2008 stating that they can deal with the present
company in the matter of allotment. The eviction notice itself was addressed to the old company. On 26.2.2009, a legal notice was sent by the
company to the SIndian Penal Code OT. It was thereafter, they moved this Court and obtained an interim order.
The contention made by the Learned Counsel for the Petitioner Mr. G. Ethirajulu was that after amalgamation, the Petitioner was in rightful
possession of the property. In fact, clause No. 8 of the terms of allotment clearly states that original allottee should not assign, sublet, transfer or
part with their interest in the allotted plot either in whole or in part except with the prior written consent of SIndian Penal Code OT. In the event of
allottee seeking approval for change in constitution or change in the management or control or amalgamation with any other company or transfer of
interest to any third party either in whole or part, the SIndian Penal Code OT will give approval provided the allottee agrees to pay the cost as
determined by the SIndian Penal Code OT.
In the counter affidavit filed, it was stated that in the letter dated 22.11.2005 by the original allottee, it was notified that the share holdings of the
company was to be acquired by the Petitioner and that the entity will remain same without undergoing any changes. Subsequently, in a letter dated
17.2.2006, the change in the name of the company was notified. But even after original allotment, the conditions regarding starting of construction
and ending of construction and putting the factory for production was never done by the original allottee. Therefore, the original allotment was
cancelled and the present Petitioner was directed to put back the plot in possession of the SIndian Penal Code OT. The original allottee had also
violated clause 18 of the allotment order. While communicating the new name by a letter dated 17.2.2006, but they had failed to provide the
address of their registered office. The Petitioner had not made out any case either to challenge the cancellation order or the order to direct the hand
over of possession under the Public Premises Act.
The Supreme Court in U.P. Financial Corporation Vs. Gem Cap (India) Pvt. Ltd. and Others, has held that it is only in case of statutory
violation on the part of the SIndian Penal Code OT or only when they had acted unfairly or unreasonably, the question of jurisdiction under Article
226 can be invoked. The following passages found in paragraphs 3,12 and 10 from the said judgment reads as follows:
With great respect to the learned judges who allowed the writ petition we feel constrained to say this: a reading of the judgment shows that they
have not kept in mind the well-recognized limitations of their jurisdiction under Article 226 of the Constitution. The judgment reads as if they were
sitting as an appellate authority over the Appellant-corporation. Not a single provision of law is said to have been violated....
While this is not the occasion to examine the content and contours of the doctrine of fairness, it is enough to reiterate for the purpose of this
case that the power of the High Court while reviewing the administrative action is not that of an appellate court. The judgment under appeal
precisely does that and for that reason is liable to be and is herewith set aside.
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 industrialization 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 industrialization 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.
The Supreme Court in Karnataka State Industrial Investment and Development Corporation Ltd. Vs. Cavalet India Ltd. and Others, , laid
down parameters for exercise of the jurisdiction under Article 226. Hence it is necessary to refer to the relevant passage found in paragraph 19,
which reads as follows:
From the aforesaid, the legal principles that emerge are:
(i) The High Court while exercising its jurisdiction under Article 226 of the Constitution does not sit as an appellate authority over the acts and
deeds of the Financial Corporation and seek to correct them. The doctrine of fairness does not convert the writ courts into appellate authorities
over administrative authorities.
(ii) In a matter between the Corporation and its debtor, a writ court has no say except in two situations:
(a) there is a statutory violation on the part of the Corporation, or
(b) where the Corporation acts unfairly i.e. unreasonably.
(sub paras (iii) to (ix) omitted)
Subsequently, the Supreme Court in Punjab Financial Corporation v. Surya Auto Industries reported in (2010) 1 SCC 297 has also held that
relationship between the corporation ad the borrower is that of creditor and debtor and the action initiated by the corporation cannot be nullified
by the court unless there is violation of any statutory provisions. In paragraph 22, it was observed as follows:
The relationship between the Corporation and borrower is that of creditor and debtor.... The proceedings initiated by the Corporation....
cannot be nullified by the courts except when such action is found to be in violation of any statutory provision resulting in prejudice to the borrower
or where such proceeding/action is shown to be wholly arbitrary, unreasonable and unfair. The court cannot sit as an appellate authority over the
action of the Corporation and substitute its decision for the one taken by the Corporation.
In the present case, it is not clear as to how the Petitioner has locus standi to challenge either the cancellation order or the eviction notice. Even
if it is taken that the original allottee''s company was amalgamated with the present petitioner, they have no right to challenge the same. Such
amalgamation came long after the cancellation. Even now, there is no explanation for not proceeding with the construction. There is clear violation
of Clause 18 of the condition of allotment. This court do not find any unreasonableness in the action taken by the Respondents. Hence there is no
case made out.
The writ petition will stand dismissed. However, there will be no order as to costs. Consequently, connected miscellaneous petition stands
closed.