2021 (9) TMI 1441 - HC - Companies Law

Validity of cancellation of allotment of land standing in their favour - withdrawal of No Objection Certificate by the first respondent SIPCOT Limited. - HELD THAT - This court finds that the petitioners have got their allotment on various dates for different sizes of plots and a meagre development alone had taken place in some of the petitioners- cases. Though the default clause in the allotment order is in favour of the SIPCOT for cancelling the allotment and withdrawing the No Objection Certificates in the event of non implementation of the project within the stipulated period of 30 months the SIPCOT has come forward with a scheme for entertaining the same petitioners/industrial corporations to retain the land and implement the project rather than cancelling the allotment and forfeiting the amount paid by the petitioners however subject to payment of a penalty in proportion to the present value of the land and in consonance with the extent of non-implementation of the project. Whether the scheme proposed by SIPCOT in these cases are proper and acceptable or it requires any interference? - HELD THAT - Admittedly an allotment of land by the Government or its Agency on lease would be on affordable cost when it is compared with any private land taken on lease and it will be the same in case of outright purchase also. Such being the case the petitioners cannot expect the SIPCOT a Government Agency to leave the lands in the hands of some persons and wait endlessly for the petitioners to implement the projects - the allotment of lands by SIPCOT is not a sale but only a lease for ninety nine years. It comes with a default clause of cancellation of lease which indirectly intends for industrial development in the State within a reasonable period and the resultant revenue therefrom. One cannot dispute that the inaction or delay in implementation of the project will certainly have impact to a greater extent on the industrial development in the State. The petitioners-industrial corporations having already enjoyed such holiday period due to the inaction or flexible action taken by the officials of SIPCOT cannot expect that they can escape from the monetary liability. This court is of the view that the specific contentions raised by the learned counsel for the respective petitioners have been properly addressed by the learned Advocate General and the scheme suggested by SIPCOT is fully acceptable - the petitioners have to opt either to surrender the lands allotted to them and get refund of the amount paid by them after deducting the amount deductible as per the prevailing policy of SIPCOT; (OR) if the petitioners are willing to retain the lands allotted to them despite such a long delay in implementing the project they shall make payment of the penalty proposed by SIPCOT as indicated in the above mentioned table in 12 equal monthly instalments commencing from the 1st of the English Calendar month from the date of this order and also undertake to implement the project immediately and commence the commercial production within such period of 12 months. Petition disposed off.

Summary

Issues Involved:
1. Cancellation of land allotment and withdrawal of No Objection Certificate (NOC) by SIPCOT.
2. Petitioners' inability to implement projects within the stipulated time.
3. Maintainability of writ petitions.
4. SIPCOT's proposed scheme for revoking cancellations.
5. Specific contentions raised by petitioners regarding differential costs and penalties.
6. SIPCOT's response and justification for the penalties.

Detailed Analysis:

1. Cancellation of Land Allotment and Withdrawal of NOC:
The petitioners, various industrial corporations, challenged the cancellation of their land allotments and the withdrawal of NOCs by SIPCOT. The allotments were initially made for a 99-year lease to promote industrial development in Tamil Nadu. The petitioners had paid the lease amounts, including plot deposits and development charges, and were required to complete their projects within 30 months. Failure to comply led to the cancellation of allotments and withdrawal of NOCs as per condition No.3(viii) of the allotment order.

2. Petitioners' Inability to Implement Projects:
The petitioners argued that they could not implement their projects within the stipulated time due to delays in obtaining clearances from various departments and financial institutions. The COVID-19 pandemic was also cited as a reason for the delay. The court noted that the petitioners had different dates of allotment and varying levels of development, with some having made minimal progress.

3. Maintainability of Writ Petitions:
The Advocate General argued that the writ petitions were not maintainable as the relationship between the petitioners and SIPCOT was governed by a legally valid contract, not constitutional provisions. Several Supreme Court decisions were cited to support this argument.

4. SIPCOT's Proposed Scheme for Revoking Cancellations:
SIPCOT proposed a scheme to revoke the cancellations and NOCs subject to the payment of differential costs, which is the difference between the current land cost and the original allotment cost, in proportion to the extent of non-implementation. SIPCOT had already received payments from some companies and had agreements with others to pay the differential cost.

5. Specific Contentions Raised by Petitioners:
- M/s. Saravana Sastha Steel Pvt. Ltd.: Incorrect calculation of differential cost; SIPCOT clarified the correct amount.
- M/s. Milano International P. Ltd.: Alleged differential treatment and unwillingness to pay the full differential cost; SIPCOT justified the penalty based on the prevailing policy.
- M/s. Quest Healthcare P. Ltd.: Delay due to pending environmental clearance; SIPCOT clarified no exemption was provided in the agreement for such delays.
- M/s. Agranee Auto Ancillaries Pvt. Ltd.: Claimed the allotment year should be 2018 due to DTCP approval delay; SIPCOT refuted this, stating the original allotment was in 2008.
- M/s. S-CCI India Pvt. Ltd.: Query about retaining part of the land; SIPCOT clarified the policy for surrendering unused land.
- M/s. Dignity Innovations P. Ltd.: Alleged lack of amenities and non-receipt of show cause notice; SIPCOT provided evidence of amenities and notice served.
- M/s. Thar Technologies Pvt. Ltd.: Willingness to surrender part of the land for reduced differential cost; SIPCOT agreed to reduce the penalty accordingly.
- M/s. Geebee Garments P. Ltd.: Claimed lack of proper opportunity before cancellation; SIPCOT provided the timeline of opportunities given.
- M/s. 6th Sense Infrastructure Ltd.: Suggested surrendering land to reduce differential cost; SIPCOT agreed to the reduction upon surrender.
- M/s. JNS Instruments Ltd.: Claimed improper assessment of development; SIPCOT justified the penalty based on the lack of development.
- M/s. JCBL Marrel Tippers Pvt. Ltd.: Claimed recent transfer/re-allotment; SIPCOT clarified the history of the allotment and justified the penalty.
- M/s. GPR Power Solutions P. Ltd.: Claimed no response from SIPCOT on change of use request; SIPCOT denied receiving such a letter.
- M/s. Sri Balaji Enterprises: Subleased part of the land without permission; SIPCOT justified the cancellation and penalty.
- M/s. Cenza Technologies Pvt. Ltd.: Claimed entitlement to waiver due to pending litigation; SIPCOT considered the case unique and under active consideration.
- M/s. Mayara Enterprises Pvt. Ltd.: Claimed full use of the land; SIPCOT determined only 25% utilization and justified the penalty.

6. SIPCOT's Response and Justification for Penalties:
SIPCOT justified the penalties based on the prevailing policy and the extent of non-implementation by the petitioners. The court found SIPCOT's scheme reasonable and acceptable, emphasizing the need for industrial development and the petitioners' responsibility to adhere to the conditions of the allotment.

Conclusion:
The court concluded that the petitioners must either surrender the lands and get a refund after deductions or retain the lands and pay the penalties in 12 equal monthly installments while implementing their projects within 12 months. Failure to comply would result in cancellation of the allotment. The writ petitions were disposed of with these observations, and no costs were imposed.