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TMI Blog2008 (2) TMI 630X X X X Extracts X X X X X X X X Extracts X X X X ..... nt filed C.A. No. 428 of 2003 praying similar relief in respect of land admeasuring 97.71 acres in Agnampudi, Talarivanipalem and Sanivada villages (hereafter, schedule "B" lands). This common order shall dispose of both the company applications. The fact of the matter in brief as pleaded by the Government may be noticed. The Andhra Pradesh Refractories Ltd., (in liquidation) (hereafter, "the APRL") approached applicants for allotment of land for establishing a medium scale industry for manufacturing refractories-highly fire resistant lining bricks used in steel industry, as an ancillary to the Visakhapatnam Steel Plant (VSP). The Government initiated acquisition proceedings. A draft notification under the Visakhapatnam Steel Project (Acquisition of Land) Act, 1972 (hereafter, "the VSP Act") was issued on June 29, 1978, proposing to acquire lands in four villages. Another notification, dated December 14, 1978, was also issued for other extents of land. It was proposed to acquire an extent of 60.70 acres under Part II of the Land Acquisition Act, 1894 ("the LA Act", for brevity) in favour of the Andhra Pradesh Industrial Infrastructure Corporation Ltd., and to acquire an extent of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dhra Pradesh Refractories Ltd., requested the Government not to resume land. In 1986, the Board for Industrial and Financial Reconstruction forwarded its opinion to this court that it is just and equitable to wind up the Andhra Pradesh Refractories Ltd. In the meanwhile, M/s. Dalmia Cements (Bharat) Ltd., filed a company petition being C. P. No. 40 of 1986 for winding up. By order, dated December 30, 1991, this court ordered winding up of company. Within ten days thereafter, the Government issued G.O. Ms. No. 24, dated January 8, 1992, declaring alienation of unutilised land to the Andhra Pradesh Refractories Ltd., admeasuring 158.43 acres as null and void. The Government also ordered to forfeit one-fourth of the amount paid by beneficiary duly refunding balance amount. The District Collector, Visakhapatnam was requested to take action to resume land. It is alleged that in pursuance of the Government Order, Mandal Revenue Officer took possession of land on March 8, 1992. In 1999, A. P. Refraction Land Losers Welfare Society filed W.P. No. 26189 of 1999 seeking direction to the Government, the Andhra Pradesh Industrial Infrastructure Corporation Ltd., the District Collector and the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f agreement, dated December 17, 1980. The liquidator of the Andhra Pradesh Refractories Ltd., (official liquidator attached to this court) filed reports separately opposing the Government and the Andhra Pradesh Industrial Infrastructure Corporation Ltd. raising following contentions. The application filed by the Government for resumption of land is not maintainable. The Government cannot take possession of land without obtaining leave of this court when properties are vested in company court. The action was initiated by the Collector in 1986 for resumption of land, but the Government kept quiet and moved this application with considerable delay when winding up proceedings commenced before this court. The Government and the Andhra Pradesh Industrial Infrastructure Corporation Ltd., are not clear as to who are claiming rights over land because the Government is seeking resumption of land to the extent of 97.71 acres and the Andhra Pradesh Industrial Infrastructure Corporation Ltd., is seeking resumption of land to the extent of 60.72 acres. The land has not been separately demarcated and particulars of land are not given. The ground on which land is sought to be taken back is irrele ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ch stood vested in the Andhra Pradesh Refractories Ltd., is specifically denied. The locus standi of the Andhra Pradesh Industrial Infrastructure Corporation Ltd. to file such application is also demurred. Learned Special Government Pleader Sri. A. Satya Prasad submits that the Government allotted acquired land as well as porambok land to the Andhra Pradesh Refractories Ltd., subject to conditions of alienation. Having accepted these conditions of alienation/allotment, the allottee is now bound by such binding conditions and cannot turn around and urge that such conditions are unreasonable. Keeping the land vacant without utilising the same as stipulated in the conditions amounts to breach of conditions and therefore, the Government is entitled to withdraw allotment and resume unutilised portion of the land. Lastly, he submits that even if the Government had permitted the Andhra Pradesh Refractories Ltd., to create charge in favour of respondents Nos. 2 to 8 for raising loans, the same does not render the covenant to resume the land ineffective. Therefore, learned counsel submits that G. O. Ms. No. 24, dated January 8, 1992, is enforceable against allottee. Learned counsel relied ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... resume land; (v) the agreement, dated December 17, 1980, allegedly executed by the Andhra Pradesh Refractories Ltd., with the Andhra Pradesh Industrial Infrastructure Corporation Ltd., is not conclusive and valid as it is not executed in accordance with section 46 of the Companies Act. Even if it is valid, there is no right reserved to the Andhra Pradesh Industrial Infrastructure Corporation Ltd., to resume the land, because time is not stipulated for utilization of land ; (vi) the G.O. Ms. No. 24, dated January 8, 1992, is void for want of notice to the Andhra Pradesh Refractories Ltd. ; (vii) the Andhra Pradesh Industrial Infrastructure Corporation Ltd. has not even issued notice of resumption before filing the application, and therefore, application is not maintainable ; (viii) the Andhra Pradesh Industrial Infrastructure Corporation Ltd. has no proprietary interest in the land and it is only a facilitator as the land was acquired by the Government for the Andhra Pradesh Refractories Ltd., through the Andhra Pradesh Industrial Infrastructure Corporation Ltd., who collected 10 per cent, service charges at the time of acquisition ; and (ix) the Andhra Pradesh Industrial Infrastruc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the District Collector gave notice on February 20, 1986, followed by the Government s notice on November 22, 1988, the Government did not issue any notice at the time of issuing G. O. Ms. No. 24 (ineffective order as held by this court in W. P. No. 26189 of 1999) cancelling allotment. Indeed, the Andhra Pradesh Industrial Infrastructure Corporation Ltd. did not issue any notice of resumption nor initiated any such action as per clause 9 of agreement. Validity of allotment instrument and role of the Andhra Pradesh Industrial Infrastructure Corporation Ltd. Though learned Special Government Pleader refers to proceedings of the District Collector, dated March 15, 1983, whereunder 97.71 acres was allotted to the Andhra Pradesh Refractories Ltd., in spite of giving a direction, the same is not produced nor records are placed before this court. A true copy of order of alienation is placed before the court. As per this, the Government allotted land for construction of factory building office buildings, quarters, etc. A period of three years was stipulated for fulfilling the purpose, for which it is allotted. The Government reserved the right to cancel allotment, forfeit the amounts and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ates that the Andhra Pradesh Refractories Ltd., shall not be entitled to mortgage or transfer of property without previous sanction of the Government. The Government granted such sanction, as a result of which, admittedly charge was created under section 125 of the Companies Act. However, the order of alienation does not provide for enforcement of right of chargeholder/ mortgagee in the event of purported cancellation of grant and resumption of land. In such an event, equity steps in, and it is always presumed that any grant or agreement under which the sovereign has alienated/granted land to incorporated company, is subject to rights of third party mortgagee, who in this case are public sector banks/financial institutions. Therefore, while considering the right, if any of the Government of Andhra Pradesh, the chargeholders cannot be ignored as it would jeopardise larger public interest. The agreement of the Andhra Pradesh Industrial Infrastructure Corporation Ltd., dated December 17, 1980, though contains resumption clause for non-compliance of setting up of factory unit, no time is stipulated therein. Admittedly, the said agreement or schedule thereto is not signed by any author ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r not signing agreement by the Andhra Pradesh Refractories Ltd., would have left adverse effect on its enforceability. Equally, if the Andhra Pradesh Industrial Infrastructure Corporation Ltd., has not signed the agreement, a valid agreement cannot be inferred especially when drastic action of cancelling allotment and resumption is proposed. Therefore, this court finds force in the submission of learned senior counsel for financial institutions and learned counsel for official liquidator in this regard. Whether the Andhra Pradesh Industrial Infrastructure Corporation Ltd. has any role at all ? The agreement signed by the Andhra Pradesh Refractories Ltd., on December 17, 1980, stipulates that the Andhra Pradesh Refractories Ltd., should deposit a sum of Rs. 2,75,000, that it should bear escalation costs as well as legal costs for the land and also pay ten per cent, service charges as compensation to land owners. This only shows that, whatever be the reason, the Government desired to acquire land for the Andhra Pradesh Refractories Ltd., through the Andhra Pradesh Industrial Infrastructure Corporation Ltd. The latter was only a facilitator. The revenue officials handing over possess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... under sub-section (2) thereof by summary process. Due process of law in a case like the present necessarily implies the filing of suit by the lessor, i.e., the Union of India, Ministry of Works and Housing for the enforcement of the alleged right of re-entry, if any, upon forfeiture of lease due to breach of the terms of the lease," (emphasis supplied) Whether the Andhra Pradesh Industrial Infrastructure Corporation Ltd. can file a suit ? This is an academic question and needs to be decided by appropriate forum as and when such suit is filed for eviction and recovery of possession. The agreement contemplates execution of sale deed by the Andhra Pradesh Industrial Infrastructure Corporation Ltd. It was not done and thus mutual obligations are not completely performed. When the enforce-ability of an agreement depends on performance of mutual obligations, a unilateral agreement-not signed by one party-would not be binding on other party to agreement. Secondly, as per clause 9 of the agreement, any violation of condition would result in extreme step of resumption of land. If the violation of condition is with respect to utilising land fully, it is necessarily with reference to time ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1986. In the said report, Collector informed that an extent of 15 acres was utilised, that loans were obtained from seven banks/financial institutions and that company cannot be allowed to retain unutilised land till the project is completed in phased manner. In the meanwhile company became sick. On reference to the Board for Industrial and Financial Reconstruction, winding up was recommended in 1986. After winding up order was passed by this court, the Government issued show-cause notice on November 21, 1988. A reply was sent by the Andhra Pradesh Refractories Ltd., on November 30, 1988, informing about the pendency of proceedings before the Board for Industrial and Financial Reconstruction and requested to extend the same treatment as was given to Visakhapatnam Port Trust, Bharat Heavy Plates and Vessels Ltd., and Hindusthan Zinc Ltd., etc., who are allowed to retain unutilised lands for future expansion. The Andhra Pradesh Refractories Ltd., asserted that they did not commit any breach of the conditions stipulated and that delay in implementation of project was due to circumstances beyond their control. The Government then issued G. O. Ms. No. 24, for resumption of schedule "A" ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s) : "Sub-section (1) of section 446 of the Act contemplated two categories of applications for leave being filed before the company court. They are : (i)applications seeking leave to file a suit or commence a legal proceeding against the company, after an order for its winding up has been made. (ii)applications seeking leave to proceed with a pending suit or legal proceeding against a company, filed or initiated before the order for winding up of such company . . . In so far as the first category of applications under section 446(1) of the Act is concerned, there is no question of any period of limitation. The period of limitation is to be calculated, not with regard to the application seeking leave to file a suit or proceeding, but in regard to the suit/proceeding itself. An illustration may clarify. If the proposed suit is to enforce payment of money secured by a mortgage by the company, the period of limitation for such suit is 12 years. Surely, an application seeking leave to file such suit, cannot be rejected by applying article 137 on the ground that three years have elapsed from the date of the order of winding up, even though the 12 years' period for filing the suit ha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s. The first part is whether there are grounds for the Government to take such extreme step of cancelling allotment and resuming the land. The second part of the question is whether secured creditors having a charge over the property can be denied equity ? A re-look at the facts would show that the Government acquired the land only to enable the Andhra Pradesh Refractories Ltd. to set up refractories factory as an ancillary unit for the Steel Plant at Visakhapatnam. It is an assisted unit of Andhra Pradesh a Industrial Development Corporation Government of Andhra Pradesh undertaking ‑‑ to give fillip to industries. Even as per approved project/master plan report of the Andhra Pradesh Refractories Ltd., the refractories unit is to be fully grounded in four phases. The implementation of each phase requires incremental extents of lands to cater to various operations. It is the case of the Andhra Pradesh Refractories Ltd., that as and when the Visakhapatnam Steel Plant is implemented in phases, the Andhra Pradesh Refractories Ltd., would also take up further expansion. They completed first phase by 1985 and commenced production. They tried for a tie-up with Associated Ceme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... opment Corporation Ltd., AIR 1999 SC 296, the Supreme Court considered the question whether Haryana State Industrial Development Corporation Ltd., could have validly resumed the land for non-compliance with the conditions of allotment. Industrial plot of 450 sq. mts. situated in industrial complex at Dundahera in Gurgaon district, was conveyed by the Haryana State Industrial Development Corporation Ltd., under registered deed dated December 10, 1992. The allottee was M/s. York Printers, who did not establish the industrial unit. Clause 7 provided that the allottee shall commence construction of building within six months and complete the same within two years, and complete installation of machinery within three years failing which the Haryana State Industrial Development Corporation Ltd., is entitled to cancel agreement and resume possession. The Haryana State Industrial Development Corporation Ltd., resumed land on March 16, 1984. A suit was filed by the allottee for declaration that resumption is illegal and void. When the suit was pending, Indu Kakkar purchased property under registered sale deed dated December 27, 1989. He got impleaded in suit. The suit was decreed but the fir ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d. v. U. T, Chandigarh [2004] 2 SCC 130, the Union Territory of Chandigarh allotted lands on leasehold basis. Such allotment is regulated by the Capital of Punjab (Development and Regulation) Act, 1952, Chandigarh Leasehold of Sites and Buildings Rules, 1973 and Public Premises (Eviction of Unauthorised Occupants) Act, 1971. Clause 8A of the allotment letter empowered estate officer to cancel allotment if amount is not paid within a stipulated period or within the delayed period with interest. Teri Oat Estates constructed six storeyed building but could not market built up space for various reasons. They did not pay the balance amount. The estate officer, therefore, issued notice under Public Premises Act and passed cancellation and resumption orders on December 21, 1995. The allottee's appeal was dismissed by Chief Administrator, Chandigarh. This was confirmed by Punjab and Haryana High Court. The case, therefore, landed in apex court. The Supreme Court did not consider question whether such a clause is enforceable or such a clause is unconscionable in case of absolute alienation. What was considered by the Supreme Court was the question whether estate officer could invoke the dra ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rnment permitted mortgage of land to financial institutions for raising the loans. A charge was also created under section 125 of the Companies Act. A charge was also registered with the Registrar of Companies. As per section 126 of the Companies Act, the Government shall be deemed to have notice of the charge from the date of registration with the Registrar of Companies. Unless the mortgage so created is discharged, the secured creditors are entitled to enforce their debt. Section 68 of the Transfer of Property Act gives right to mortgagees to sue for the mortgage money and under section 73 thereof a mortgagee has a right to claim payment of mortgage money as and when the mortgaged property is sold owing to failure to pay arrears of revenue or over other charges of public nature or rent due in respect of such property. Clause (b) of conditions of alienation provides that the Andhra Pradesh Refractories Ltd., shall pay to the Government annually appropriate assessment or ground rent as the case may be. Section 73 of the Transfer of Property Act also applies when property is sold, owing to failure on the part of mortgagor (the Andhra Pradesh Refractories Ltd.) to pay other charges o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e doctrine in whatever area or field the promise is made-contractual, administrative or statutory. To put it in the words of the court : 'The law may, therefore, now be taken to be settled as a result of this decision, that where the Government makes a promise knowing or intending that it would be acted on by the promisee and, in fact, the promisee, acting in reliance on it, alters his position, the Government would be held bound by the promise and the promise would be enforceable against the Government at the instance of the promisee, notwithstanding that there is no consideration for the promise and the promise is not recorded in the form of a formal contract as required by article 299 of the Constitution. [Equity will, in a given case where justice and fairness, demand, prevent a person from insisting on strict legal rights, even where they arise, not under any contract, but on his own title deeds or under statute.] Whatever be the nature of the function which the Government is discharging, the Government is subject to the rule of promissory estoppel and if the essential ingredients of this rule are satisfied, the Government can be compelled to carry out the promise made by i ..... X X X X Extracts X X X X X X X X Extracts X X X X
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