2008 (4) TMI 721 - HC - Indian Laws

Summary

Issues Involved:
1. Restoration of the Sub-lease Deed.
2. Quashing of the notice/order dated 19th October, 2000 issued by DDA.
3. Conversion of leasehold rights into freehold rights.
4. Violation of Clause II Sub-Clause 14 of the Sub-lease deed.
5. Service of show cause notices.
6. Use of the property for software development and Information Technology enabled services.

Detailed Analysis:

Restoration of the Sub-lease Deed and Quashing of the Notice/Order:
The petitioner, M/s. Panacea Biotech Limited, sought the restoration of the Sub-lease Deed dated 17th April, 1978, and the quashing of the notice/order dated 19th October, 2000, issued by the Delhi Development Authority (DDA) cancelling the Sub-lease Deed. The court noted that the cancellation order was cryptic and non-speaking, failing to specify the reasons for the cancellation. The court emphasized that such an order affects substantial rights and should be elaborate, clearly specifying the reasons for cancellation.

Conversion of Leasehold Rights into Freehold Rights:
The petitioner also sought a writ of mandamus directing the DDA to convert leasehold rights into freehold rights. The court referenced the conversion scheme launched by DDA in 2003, which allows leasehold rights to be converted into freehold rights upon payment of conversion charges and penalties. The court noted that there was no specific denial of the averments made by the petitioner regarding this scheme in the counter affidavit filed by the DDA.

Violation of Clause II Sub-Clause 14 of the Sub-lease Deed:
The substantive issue involved was whether there was a violation of Clause II Sub-Clause 14 of the Sub-lease Deed, which restricts the use of the industrial plot for purposes other than manufacturing processes or running an industry as per the Master Plan for Delhi. The court noted that the cancellation order did not specify how Sub-Clause 14 was violated and did not state the activity undertaken on the property resulting in the violation.

Service of Show Cause Notices:
The petitioner contended that the show cause notices were never served. The court noted that the DDA failed to establish the service of notices as required under Section 43 of the Delhi Development Act, 1957. The court held that the petitioner appeared to be correct in asserting that the show cause notices were never served.

Use of the Property for Software Development and Information Technology Enabled Services:
The petitioner argued that the property was predominantly used for software development and Information Technology enabled services, which should be considered as industrial activities. The court referred to the Master Plan of Delhi 2001 and 2021, noting that software development and Information Technology enabled services are recognized as industrial activities. The court rejected the DDA's contention that these activities could not be categorized as manufacturing processes or industries.

The court emphasized that the terms "manufacturing process" and "industry" should be interpreted in a manner that accommodates changes and developments over time, including new technologies and societal needs. The court concluded that software development is a marketable product and should be considered a manufacturing process or industry under Sub-Clause 14 of the Sub-lease Deed.

Conclusion:
The court quashed the impugned order dated 19th October, 2000, and directed the DDA to issue a fresh show cause notice clearly elucidating the irregularities and violations of Sub-Clause 14 of Clause II of the Sub-lease Deed. The petitioner was to be given an opportunity to file a reply, and a speaking order was to be passed dealing with the petitioner's defense. The petition was disposed of with no order as to costs.