IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH. Date of Decision: November 26, 2010 1. CWP No. 11744 of 2008 (O&M) M/s Janta Land Promoters Limited …Petitioner Versus State of Punjab and others …Respondents 2. CWP No. 18518 of 2008 (O&M) M/s Janta Estate and Housing Development Ltd. …Petitioner Versus State of Punjab and others …Respondents CORAM: HON'BLE MR. JUSTICE M.M. KUMAR HON’BLE MR. JUSTICE JORA SINGH For the petitioners: Mr. Rajiv Atma Ram, Senior Advocate, with Mr. Sunish Bindlish, Advocate, For the respondents: Mr. Suvir Sehgal, Addl. AG, Punjab. Mr. Sanjeev Sharma, Senior Advocate, with Mr. Shekhar Verma, Advocate, and Mr. Vikram Sharda, Advocate. Mr. R.S. Khosla, Advocate. 1. To be referred to the Reporters or not? 2. Whether the judgment should be reported in the Digest? M.M. KUMAR, J. 1. These two petitions under Article 226 of the Constitution filed by sister concerns have raised two questions of law. Firstly we are required to determine whether agreement dated 24.06.2005 (P-7) has resulted in conferring illegal largess without considering public interest. The agreement was entered into between the State of Punjab and the petitioner- company-M/s Janta Land Promoters Ltd. The other issue is ‘if the CWP Nos. 11744 & 18518 of 2008 (O&M) agreement does not suffer from any such illegality then could it be said that the petitioners are liable to pay External Development Charges, licence fee and charges in lieu of change of land use or all these charges are exempted in pursuance of agreement dated 24.6.2005 (P-7)’. 2. The Ist petition is concerning ‘Mohali Project’. M/s Janta Land Promoters Limited (petitioner in CWP No. 11744 of 2008) has sought a mandamus directing the Competent Authority-respondent No. 6 under the Punjab Apartments and Property Regulation Act, 1995 (for brevity, ‘the Property Regulation Act’) to refund the amount of bank guarantee amounting to Rs. 1,37,17,000/- and advance External Development Charges of Rs. 29,37,083/-, which were deposited by it for obtaining a licence for developing a project of residential colony. A further prayer has been made for quashing order dated 21.5.2008 (P-19) whereby the petitioner has been asked to pay a sum of Rs. 121.56 crores on account of External Development Charges/Licence Fee/Change of Land Use for the Mega Project of the petitioner. Still further quashing of order dated 16.7.2004 (P-3) has been sought whereby the Punjab Small Scale Industries and Export Corporation-respondent No. 9 while granting its consent to provide connectivity to the petitioner for development of Janta Township at Sector- 91, Mohali, has raised a demand of Rs. 83.91 crores on account of share in unearned/tentative profits and proportionate development charges. A direction has also been sought directing the respondents to honour the agreement dated 24.6.2005 (P-7) and to fulfill all the obligations in relation to the project undertaken by the petitioner. 3. In the other petition concerning ‘Ludhiana Project’, M/s Janta Estate and Housing Development Ltd. (petitioner in the other writ petition No. 18518 of 2008), which is a sister concern of M/s Janta Land Promoters 2 CWP Nos. 11744 & 18518 of 2008 (O&M) Limited, has sought quashing of orders dated 8.7.2008, 3.7.2008 and 29.8.2008 (P-6, P-7 & P-13 respectively) asking the petitioner to deposit External Development Charges for the Mega Project so that its case for change of land use for group housing over an area of 13.63 acres at Ludhiana could be considered. A further prayer has also been made for directing the respondents to grant permission to the petitioner for change of land use for residential purpose in respect of 13.63 acres of land in village Bullara, District Ludhiana. MOHALI PROJECT – OLD & ABANDONED PROPOSAL: 4. Facts may first be noticed concerning Mohali Project. On 27.8.2003, the petitioner filed an application for grant of permission for change of land use in respect of approximately 120 acres of land situated in the revenue estates of villages Sohana and Lakhnaur near Mohali for development of a self contained and value added township near SAS Nagar Mohali (for brevity, ‘residential colony’). On 31.10.2003, the State Government allowed the said application under the provisions of the Punjab Regional Town Planning and Development Act, 1995 (for brevity, ‘the Town Planning and Development Act’) and the Punjab New Capital Periphery (Control) Act, 1952 (for brevity, ‘the Periphery Act’), subject to certain terms and conditions. The petitioner was required to obtain licences for development of the residential colony under the Property Regulation Act. It was also directed to purchase not less than 60 acres of the land within 90 days failing which the permission was liable to be treated as having lapsed. It is claimed that on 22.3.2004, the petitioner applied for grant of requisite licence for development of a part of land into a residential 3 CWP Nos. 11744 & 18518 of 2008 (O&M) colony in the revenue estate of villages Lakhnaur and Sohana (Mohali) falling under Sectors 90 and 91 SAS Nagar, Master Plan. The application was submitted to the Competent Authority-cum-Chief Administrator, Punjab Urban Development Authority (PUDA). However, the said application was rejected by the competent authority vide order dated 15.6.2004 (P-2) on account of various adverse reports received from various departments of the respondent State of Punjab (P-2). One of the objections raised by the Chief Town Planner, Punjab, was that there was lack of proper road connectivity of the proposed colony with the area developed by PSIEC and ‘No Objection Certificate’ from PSIEC was not produced. Feeling aggrieved, the petitioner filed an appeal under Section 33 of the Property Regulation Act before the Appellate Authority against the aforementioned order. 5. On 16.7.2004, a demand of Rs. 83.91 crores was raised by the PSIEC from the petitioner. The said demand included Rs. 78.50 crores on account of unearned/tentative share in the unearned/anticipated accrual from the sale of residential and commercial property that would accrue to the petitioner by use of the connectivity to be provided through the roads of PSIEC and Rs. 5.41 crores being the proportionate development charges including cost of land of PSIEC under roads and other services already laid by PSIEC (P-3). 6. On 2.8.2004, the Appellate Authority passed an order partly allowing the appeal of the petitioner and remanded the matter back to the Competent Authority to take a final decision after due enquiry on the original application of the petitioner for the grant of a licence to develop a colony. The Appellate Authority issued the following directions:- 4 CWP Nos. 11744 & 18518 of 2008 (O&M) “1. The scope of the enquiry on remand shall be limited primarily to rule 11(e) of the Punjab Apartment and Property Regulation Rules, 1995; 2. In order to further demonstrate its seriousness as well as cash liquidity, the appellant company shall furnish to the Competent Authority a bank guarantee equal to 25% of the estimated cost of development works, at the standard rates and also deposit the first instalment of the External Development Charges (EDC) at the standard rates in respect of this colony, to the Competent Authority, in advance. The Competent Authority, before hearing the case on remand, shall ensure that both these stipulations have been fulfilled; 3. Nothing in the aforesaid direction shall, however, preclude the Competent Authority from initiating separate proceedings to carry out a comprehensive assessment of the EDC amount and the bank guarantee amount (as a security for the execution of internal development works), if the licence is granted, and prescribing higher amounts, based on detailed calculations, after associating the promoter company; 4. The matters decided in this appeal shall not be re- opened; 5. The appellant company shall submit the documents it has omitted to do under rule 10(e) of the Punjab Apartment and Property Regulation Rules, 1995, or any other document which it feels is relevant, directly to Chief 5 CWP Nos. 11744 & 18518 of 2008 (O&M) Engineer, PUDA, as soon as possible, with a copy of the entire set to the Competent Authority; 6. The Chief Engineer, PUDA, shall after examining the documents so required to be submitted, and after associating the appellant company shall give a clear report to the Competent Authority, within a period of two weeks of the submission of these documents to him, on the three points enumerated in rule 11(2) of the Punjab Apartment and Property Regulation Rules, 1995 i.e. i. Whether the documents now submitted substantially conform to the requirements of the rule 10(e), and ii. Whether the plans and the designs of the development works submitted are technically sound and workable, and iii. Whether the estimated expenditure on water supply main on extra mural and outfall sewerage is commensurate with the size of the colony. 7. On the receipt of the report of the Chief Engineer, the Competent Authority after affording the present appellant a reasonable opportunity of being heard, and after considering the report of the Chief Engineer PUDA and conducting such further enquiry, in this respect, as it may deem fit, shall pass a final order, on merits and in accordance with law subject, of course to the directions 6 CWP Nos. 11744 & 18518 of 2008 (O&M) given in this order, in respect of the application of the appellant company for the grant of a licence to develop a colony under PAPRA. This shall be done, within a period of 2 weeks of the receipt of the Chief Engineer’s report. ……it is further directed that if and when the licence to develop this colony is granted, it shall also be made subject to the following terms and conditions, apart from the ones normally stipulated:  All the issues decided in this appeal shall form a part and parcel of the terms and conditions of the licence; and  All the terms and conditions contained in the HUDM’s quasi-judicial order dated 31.10.2003 shall also be deemed to be among the terms and conditions of the licence; and  The appellant company shall also remain responsible for the payment of all or any charges that may be payable under the provisions of any other law for the time being in force; and  It shall be the responsibility of the promoter company to comply with all the statutory requirements, including statutory clearances, if any, under any other law for the time being in force, in particular the Government of India, Ministry of Environment and Forest Notification No. S.O. 801 (E) dated 7.7.2004, 7 CWP Nos. 11744 & 18518 of 2008 (O&M) issued under the Environment (Protection) Act, 1986; and  With a view to secure the financial interest of the State Government regarding the recovery of the change of land use conversion charges, as laid down in the HUDM’s quasi-judicial order dated 31.10.2003 (condition No. viii, page 17 of the order), the appellate company shall submit, within 60 days of the issue of the licence, a bank guarantee at the rate Rs. 1.50 lakh per gross acre of this colony to the Competent Authority. This shall be retained till the issue of the Completion Certificate and may be returned/released thereafter under a specific order which the Competent Authority may pass at that time, considering the circumstances then prevailing.” 7. In pursuance to the aforementioned directions issued by the Appellate Authority, the petitioner furnished a bank guarantee of Rs. 1,37,17,000/- and also deposited advanced EDC instalment of Rs. 29,37,083 with the Competent Authority and it seeks refund of the aforesaid amount. 8. The PSIEC challenged the order dated 2.8.2004 (P-4), by filing a revision under Section 34 of the Property Regulation Act, which was partly allowed vide order dated 9.4.2005 (P-5). The Revisional Authority set aside the directions given by the Appellate Authority to PSIEC to construct roads and the method of deciding the quantum of compensation. However, it has upheld the order of remand of the Appellate Authority. In para 26 of the order it has been observed as under:- 8 CWP Nos. 11744 & 18518 of 2008 (O&M) “26. In view of the above discussion, I uphold the order of remand of Appellate Authority, sans the riders imposed, and direct that the competent authority shall decide the matter of the grant of licence to the applicant (JLPL) afresh. The issues formulated and decided by the Appellate Authority shall not constitute directions to the Competent Authority, but may be kept in mind by the Competent Authority as its considered views on those matters. Since the prerogative, the duty, as well as the responsibility to grant the licence is squarely with him, the Competent Authority shall decide the issue of grant of licence under Section 5 of PAPRA and rules 10, 11, 12 of PAPRA Rules, 1995 without the scope being hedged in by any directions.” 9. The first proposal had only gone this far. The petitioner had furnished bank guarantee amounting to Rs. 1,37,17,000/- and had also deposited a sum of Rs. 29,37,083/- as EDC for grant of CLU under the first and abandoned proposal. However, in respect of Mohali Project again a revised new proposal was mooted in pursuance of Industrial Policy-2003. NEW REVISED PROPOSAL UNDER INDUSTRIAL POLICY-2003 10. The State of Punjab had formulated an Industrial Policy-2003 providing for certain incentives to the investors and promoters who were interested in setting up of mixed use Mega Industrial Parks in the respondent State (P-5A). It is claimed by the petitioner that since no decision in terms of the orders dated 2.8.2004 (P-4) and 9.4.2005 (P-5) was taken by the Competent Authority, therefore, it had decided to abandon the project of residential colony and instead applied for setting up a Mixed Use 9 CWP Nos. 11744 & 18518 of 2008 (O&M) Industrial Park over the land which was to be utilized for residential colony. On 28.4.2005, the Empowered Committee of the respondent State, which was constituted under the Industrial Policy-2003, approved the Mega Industrial Project of the petitioner and permitted it to develop the industrial component of the project in Sector 82 and residential component in Sectors 90-91, Mohali as a part of the Mega Project. The decision of the Empowered Committee was communicated to the petitioner vide letter dated 25.5.2005 (P-6), which reads thus:- “ Please refer to your letter dated 17.12.2004 regarding your proposal to set up mixed use Mega Industrial Project in 500 acre at two location in Punjab i.e. Mohali and in distt. Ludhiana. The proposal was considered by the Empowered Committee constituted under Industrial Policy 2003 in its meeting held under the Chairmanship of Hon’ble Chief Minister, Punjab on 28.04.2005. Considering the proposal, the Committee approved the concessions as enumerated in Annexure-I for the mixed use mega Industrial Park to be set up in an area of 30 acres in Mohali with investment of Rs. 264.80 crore and the other in an area of 200 acres in district Ludhiana with an investment of Rs. 156.80 crore (total investment being Rs. 421.60 crore). Since it was noted that no single contiguous piece of land measuring 300 acres will be available in Mohali due to constraints imposed by the Master Plan of Mohali, therefore the committee allowed the company to develop Industrial, residential & commercial project components on non- contiguous pieces of land in the ratio of 60:30:10 as prescribed 10 CWP Nos. 11744 & 18518 of 2008 (O&M) under the scheme of the Industrial Park and the Guidelines framed there under, as a special dispensation. However, the proposed site, which as per the company comprise of two chunks at a distance of 2-3 Kms from each other, should conform to the Master plan of Mohali. Subject to the fulfillment of the conditions, the two portions of the project at Mohali will be treated as a single unit for all benefits available to industrial parks under the Industrial Policy-2003. …(sic)… developed on a contiguous piece of 200 acres of land. The project shall be further in accordance with guidelines notified vide No. CC/JDP/IP-2003/CLU/3497 dated 25.5.2005 by the Department of Industries & Commerce. Further, grant of above concessions will be subject to signing of an agreement as per draft enclosed (Annexure-I) by your company with Industries Department and complying with the terms & conditions of the agreement, failing which the said concessions will stand withdrawn.” 11. On 24.6.2005, an agreement was executed between the petitioner and the State Government through the Secretary, Department of Industries and Commerce (P-7). Clauses 5 and 6 of the agreement deserves to be quoted in extenso being relevant which read as under:- “5. Whereas the Government of Punjab has required the Company to enter into the Agreement with the Governor of Punjab hereinafter contained. Now this indenture witnessed that it hereby agreed and declared as follows:- (i) The Company shall make an investment of Rs. 264.80 crore including fixed capital Investment of atleast Rs. 11 CWP Nos. 11744 & 18518 of 2008 (O&M) 100 crore or above as defined by the Department of Industries by setting up a mixed use mega Industrial Park in an area of 300 acres at Mohali and investment of Rs. 156.80 crore including fixed capital investment of atleast Rs 100 crore or above as defined by the Department of Industries by setting up a mixed used mega industrial park in an area of 200 acres in Ludhiana, both projects shall be completed in a period of five years effective from 28.4.2005. The said projects shall have to be fully implemented and brought into commercial production within the said stipulated period. (ii) The company shall develop the Industrial Estate first and housing and commercial projects subsequently. Before developing the residential and commercial pockets, the company shall not only first develop industrial pockets but also dispose off atleast 50% of the industrial plots to industrial units which will be set up in the industrial pocket and the entire project shall come up with proposed investment level in stipulated period. (iii) The project of Industrial Parks shall be further subject to the provision of the guidelines notified by Department of Industries & Commerce. Some of relevant provision shall be:- a. A minimum of 60% of area will have to be developed as an Industrial Pocket, a maximum of 30% of area may be developed as residential 12 CWP Nos. 11744 & 18518 of 2008 (O&M) pocket and 10% of area can be developed as commercial pocket. Government in the Department of Industries may however, reduce the permissible limits for non-industrial use in particular cases. b. Permissible saleable area in the industrial pocket shall be 65%, in the residential pocket 60% and for the commercial pocket 40%. Balance of area shall be used for common facilities, open spaces, green belt etc., as per approved zoning plan and as per applicable byelaws. c. Zoning and Layout plan will be cleared by a competent authority declared by Director of Industries & Commerce, Punjab. d. Common facilities would include the facilities for air conditioning, roads (including approach roads), water supply, sewerage facilities, common effluent treatment facilities, telecom networks, generation and distribution of power, provided that the facilities are used for more than 2 industrial units in the industrial park. e. Infrastructure development would include roads (including approach roads) water supply and sewerage facilities, common effluent treatment facilities, telecom networks, generation and distribution of power, parking facilities, parks, street lights and such other facilities as are of 13 CWP Nos. 11744 & 18518 of 2008 (O&M) common use for industrial activities which are identifiable and are to be commonly used. f. Industrial Parks with a residential component shall have only non-polluting units and distance between industrial area and other areas will be in accordance with guidelines issued by Punjab Pollution Control Board from time to time. g. Necessary clearances from various central/state agencies will have to be obtained by the developers as per statutory requirements and on payment of such prescribed fees as required under the law. The Department of Industries & Commerce, Government of Punjab will be the single nodal agency for approving and facilitating the projects for getting clearances etc. and will also facilitate in getting resolved various issues which will relate to Government Departments/Agencies. h. An Industrial Park shall come up as one unit at single geographical location and shall be developed in contiguity. However, public service which already exists such as road, canal, park etc. shall not be construed to break the unity & contiguity of the park. However, in case of your Mohali project, the provision contained in para shall not be applicable as it was noted that no single contiguous piece of land measuring 300 14 CWP Nos. 11744 & 18518 of 2008 (O&M) acres will be available in Mohali due to constraints imposed by the Master Plan of Mohali, therefore the committee allowed the company to develop Industrial, residential & commercial project components on non-contiguous pieces of land. i. Benefits to industrial parks under industrial policy, if provided by the Government shall be withdrawn by State government in case the park is not put up/developed in accordance with the sanctioned plan within the prescribed time period. (iv) The Government of Punjab has agreed to provide the following reliefs and concessions:- a) As per the Industrial Policy 2003 exemption will be granted on 100% stamp duty and registration fee on sale/transfer of built up space of the units or land in side the project area. Such exemption shall extend to the project area upto first sale of developed area/plot/built up space to any party by them or to any of its affiliate. There shall be no stamp duty on lease instrument of units located in the project area. Such exemption shall remain operative till the completion of the entire project as per the agreement. b) State Government shall acquire land as per provision of the Land Acquisition Act to the extent of 10% of the total area of the project, if requested by the company. 15 CWP Nos. 11744 & 18518 of 2008 (O&M) c) The land use change in the area falling under the control of the Punjab Periphery Control Act shall be allowed without any charges levied by the Housing and Urban Development Department in accordance with the draft master layout plan of the periphery and periphery policy of the Government of Punjab. However, such concession would be subject to the decision of various cases pending in Hon’ble High Court of Punjab and Haryana on this issue. However, if any or whole part of land of the project area is not covered in any master plan or planning zone under PUDA Act, the land use thereof shall not be changed or amended and shall be incorporated as such and included in any future master plan or zoning which shall be prepared under the PUDA Act. d) Permission under Punjab State Tubewell act, 1954 to dig Tubewell in project area for requirement of the project was allowed. e) Exemption from the provision of Punjab Mines & Mineral Act shall be allowed within the project area for works relating to development of the project. f) High-rise buildings beyond 45 metres shall be allowed subject to clearance from Air Force Authorities. 16 CWP Nos. 11744 & 18518 of 2008 (O&M) g) work contract tax on construction material required for the project shall be charged at minimum floor rate. h) FAR of 2 shall be allowed for industrial and commercial purpose. However, the relevant Building Bye-laws/regulations shall be applicable to the area. i) The State Government shall ensure that connectivity to power, roads, accessibility, communication, civic and other infrastructure upto project is provided within 240 days from the date the same is applied for to the concerned department/agency/authority/local body on fulfillment of various terms and conditions required in this regard at such rates/fee etc. which shall not be less favourable to them compared to similarly placed project/customers. j) The project of industrial park shall be exempted from PAPR Act. k) Exemption from electricity duty (excluding cess) for 5 years shall be allowed from the date of release of connection by PSEB. l) State Government shall allow the company to connect the project area to the State