The Allahabad High Court dismissed the writ petition filed for seeking direction to the respondent not to interfere in the peaceful possession of the land in the license agreement dated 30.4.1992. A division bench of this Court comprising Hon’ble Justice Sangeeta Chandra and Manish Kumar held that where a statutory regulation governs the grant of lease, it will be permissible for the authority to cancel a deed even if possession has been delivered.
Brief Facts:
The respondent-Uttar Pradesh State Industrial Development Corporation Ltd. ("Corporation") for the purpose of encouraging industrialization in the backward District of Hardoi, developed an industrial area in which the petitioner company with an intent to establish a chemical industry applied for allotment of an industrial plot for the said purpose. The land was allotted to the Petitioner. Subsequently, the Chemical Industry, which the Petitioner intended to set up, could not establish because of a ban on the import of finished goods. The Petitioner applied for an extension which was given.
The respondent, by the impugned order dated 10.3.2008, informed the Petitioner that it had cancelled the allotment made in their favour on 17.7.1991 and also the license agreement dated 30.4.1992 as the Petitioner had failed to comply with the stipulation under Clause 4(e) of the agreement. This petition was filed by the Petitioner for quashing of the order dated 10.3.2008, and for the direction to the respondent not to interfere in the peaceful possession of the land in the license agreement dated 30.4.1992.
Contentions of the Petitioner:
The learned Counsel for the Petitioner submitted that when the Petitioner had made an application for an extension of time in 2005 in response to the show cause notice issued to it, it was under the bonafide impression that the Corporation would consider and decide such application for extension of time and the Corporation would follow the due process for re-enter.
Even thereafter, the impugned order was passed. It was argued on the basis of judgment rendered by the Hon'ble Supreme Court in State Of U.P. & Ors vs Maharaja Dharmander Prasad Singh [1989 SCC (2) 505] that once a lease agreement is signed, then it could be only cancelled through a civil suit and by adopting due process of law for resuming the possession. Therefore, the respondents could not have cancelled the allotment when the application of the Petitioner for an extension of time was pending.
Contentions of the Respondent:
The learned counsel for the Corporation submitted that the Corporation is a statutory corporation established by the State Government for the industrial development of the State of Uttar Pradesh. The State for the Corporation acquired the land for allotment to deserving applicants for setting up Small and Medium Scale Industries. The land acquired has been given at a subsidized rate to applicants who are genuinely interested in raising industrial units as stipulated in the agreement.
The reliance was placed on the judgment of the Hon'ble Supreme Court in ITC Limited Vs. State of U.P. [2011 (7) SCC 493], in which the issue raised was similar to the present Case. In that Case, the SC held that if a lessee commits default in paying either the premium or the lease rent or other dues, or commits breach of any term of the lease deed or breach of any rules or regulations under the Act, the Chief Executive Officer of NOIDA can resume the leased plot or building in the manner provided in the statute, without filing a civil suit. The authority to resume implies and includes the authority to unilaterally cancel the lease.
Observations of the Court:
This Court finds that the facts mentioned in this Case are almost the same as the land in question has been given to the Petitioner on lease by a statutory Corporation under the fixed terms of the lease agreement and twice an extension was granted to the Petitioner. It was noticed that the allotment of these plots having been done in 1991, and the lease agreement having been signed in 1992, the Corporation waited till 2008 for cancellation of the lease agreement. The Petitioner had to make construction and start manufacturing within two years from the date of the lease agreement, as admittedly, the lease agreement was executed on 30.4.1992 and the two years' period expired on 30.4.1994. Even after that on the request of the Petitioner, twice the time was extended but the Petitioner has neither made any construction nor started manufacturing which is in violation of Clause 4(e) and Clause 5 of the lease agreement.
Therefore, in view of the above-mentioned facts and observations, it was reiterated that where the grant of lease is governed by a statutory regulations, it will be permissible for the authority to cancel a deed even if possession has been delivered without filing a civil suit.
The decision of the Court:
The Allahabad High Court dismissed the petition being devoid of any merit.
Case Title: M/S Vaid Organics And Chemical Industries Ltd. Thru Director vs State Of U.P. Thru Secy. Ind. And 3 Ors.
Coram: Hon’ble Justice Sangeeta Chandra and Manish Kumar
Case no.: WRIT - C No. - 2835 of 2008
Advocate for the Petitioner: - Akhilesh Kalra,Akhilesh Kumar Kalra,Jyotiresh Pandey,Narendra Shanker Shukla,Narendra Shukla,Pooja Singh
Advocate for the Respondents: - C.S.C.,A.K.Chaturvedi,Alka Verma,Kartikey Dubey,Manoj Sahu
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