THE HON’BLE SRI JUSTICE B.SESHASAYANA REDDY Writ Petition No.22854 of 2006 (Dated : 24-12-2010) Between: M/s. VJIL Consulting Limited Rep. by its Joint Managing Director Manchala Satyendra, R/o Hyderabad. ….Petitioner A n d Andhra Pradesh Industrial Infrastructure Corporation rep. by its Vice Chairman And others …Respondents THE HON’BLE SRI JUSTICE B.SESHASAYANA REDDY Writ Petition No.22854 of 2006 ORDER: The writ petitioner is a company incorporated under the provisions of the Companies Act, 1956 having its registered office at Secunderabad. The Andhra Pradesh Industrial Infrastructure Corporation (for brevity, “APIIC”) is a Government company within the meaning of the provisions of the Companies Act. APIIC acquired land in Survey No.203 Part of Manikonda Jagir village, Rajendranagar Mandal, Ranga Reddy District to allot plots/land to entrepreneurs. The petitioner-company made an application to the APIIC for allotment of land. APIIC allotted 5 acres of land in Sy.No.203 Part of Manikonda Jagir village, Rajendranagar Mandal, Ranga Reddy District, vide letter dated 23.10.2003. A Memorandum of Understanding (`MOU’) came to be executed between the writ petitioner and APIIC. As per the terms of the MOU, APIIC executed registered agreement of sale as well as a conditional sale deed dated 18.8.2005 in respect of 5 acres of land in Survey No.203. The petitioner paid entire sale consideration. APIIC issued a notice to the petitioner on 10.5.2006 to commence construction. The petitioner-company prepared building plans and chalked out schedule for completing construction. The petitioner could not proceed with the construction because of non-sanction of plan by the statutory authority. The petitioner has been approaching the statutory authority for approval of plans. But the authorities are rejecting the same by indicating certain changes in the plans. While so, APIIC resorted to cancel the allotment on the ground of non- implementation of I.T.Software Development Centre, by a proceeding dated 23.10.2006. The said proceeding is under challenge in this writ petition. For better understanding of the grievance of the writ petitioner, I deem it appropriate to refer paras 7 and 8 of the affidavit filed in support of the writ petition, which read as hereunder:- “7. I submit that the petitioner cannot proceed with the construction unless the statutory authority sanctions the plans for construction. It takes some time for approving the plans by the Authority. It is not as if the petitioner has kept quite in the matter. The petitioner has been approaching the Authority for approval of the plans and they are rejecting the same by informing the petitioner to change the same in view of the set backs being changed as per the latest Governmental orders. Merely because the statutory authority has taken some time the petitioner cannot be blamed for the same. 8.It is unfortunate that the respondents are Governmental Agencies/instrumentalities have to behave in such a fashion. On a reading of the impugned order it can be seen that the respondents have taken a decision that the petitioner company should surrender the land within 15 days. In fact, the said order, apart from being ex-facie illegal and arbitrary it is also violative of principles of natural justice. The respondents cannot cancel the allotment after having executed sale deed as is sought to be done under the impugned order. Once the entire sale consideration is through, the ownership vests with the petitioner. The respondents have to see whether the allotment of the land done in favour of the petitioner is being utilized for the purpose for which the same has been allotted and nothing beyond that. At any rate, their grievance is that we have not commenced construction. The petitioner cannot commence the construction unless there is approval of the competent statutory authority and the petitioner cannot be blamed for the delay in the matter of granting sanction. It is not the case of the respondents that steps were taken by the petitioner for making application. All that states in the impugned order is that the construction has not commenced. On this ground the impugned order suffers from the vice of non application of mind. Hence, on this score also the impugned order is liable to be interdicted and set aside by this Hon’ble Court as being violative of Articles 14 and 300-A of the Constitution of India. I submit that there is nothing in the impugned order to show that the petitioner has to be faulted or blamed.” 2. Rule nisi came to be issued on 03.11.2006. Respondents 1 and 4 filed counter affidavits. 3. The petitioner filed W.P.M.P.No.34864 of 2008 seeking impleadment of Hyderabad Metropolitan Development Authority as party respondent in the writ petition as well as in W.P.M.P.No.29083 of 2006 and 29084 of 2006. The said W.P.M.P came to be allowed on 02.8.2010 and Hyderabad Metropolitan Development Authority came to be impleaded as respondent No.5. The 5th respondent also filed counter affidavit. 4. The counter affidavit of respondents 1 to 3, in brief, is:- Allotment of 5 acres of land in Sy.No.203/Part of Manikonda village, Rajendranagar Mandal, Ranga Reddy District to the petitioner-company on out right sale basis for setting up an IT Software Development is not disputed. The petitioner made final payment of land cost on 8.6.2005. Thereafter, an agreement of sale and also a sale deed came to be executed in favour of the petitioner on 18.8.2005 and possession of the land came to be delivered to the petitioner on the same day. The purpose of handing over possession of the land to the petitioner is for establishment of IT Software Development Centre and not for any other purpose and the same is evident as per clauses (5) and (6) of the sale deed. APIIC is empowered to resume the land in case construction is not made within a specified period. Since the petitioner failed to utilize the land for which it has been allotted, APIIC issued a notice on 10.5.2006 calling upon the petitioner to commence construction of work and informing him that necessary action should be taken if the conditions of allotment and sale agreement are violated. The petitioner by letter dated 15.5.2006 informed APIIC that delay in construction work was due to getting approval of the drawing designs. A letter dated 18.8.2006 was addressed to the petitioner informing that the Secretary to Government, IT & C Department has given permission for commencement of construction work by 30.9.2006. The petitioner by letter dated 21.9.2006 informed APIIC that the process of getting approval from HUDA, Fire Department and other regulatory authorities was in progress. But the petitioner has not made any efforts to start the construction work on the land allotted to it. Since no action has been taken for commencement of construction by the petitioner-company even after an year of handing over possession of the land, the allotment of the land came to be cancelled on 23.10.2006. The petitioner agreed for the terms and conditions of the Memorandum of Understanding, wherein cancellation of the allotment is stipulated in the event of the petitioner not commencing construction activity in the land allotted to them within a period of six months from the date of taking possession of the land, vide clause 2(d) of the Memorandum of Understanding. 5. The counter affidavit of 4th respondent, in brief, is:- The Government of Andhra Pradesh took a policy decision to develop ICT Industry and brought out ICT Policy 2002-2005 through G.O.Ms.No.27, dated 27.6.2002. The Information Technology and Communications Department evolved strategies to promote and percolate the Information Technology Industry to the last mile of the State. One of the strategies to attract new ICT industries in the State is to allot requisite extent of Government lands to ICT companies to enable them to construct their own campuses and set up their operations. The allotment of Government lands has been made through APIIC to the ICT companies. The allotment of Government land has been made to ICT companies after entering into Memorandum of Understanding. Accordingly, the petitioner entered into Memorandum of Understanding with the Government on 29.8.2002 for allotment of 5 acres of land in Sy.No.203 Part, Manikonda Jagir village, Rajendranagar Mandal, Ranga Reddy District. Subsequently, a fresh MoU came to be entered on 14.7.2003. One of the conditions in the MoU is `M/s-VJIL will in turn construct and develop facilities/campus within the 5 acres of Plot by investing an amount of Rs.20 Crores………. On the scheduled land and build office space of about 1,20,000 sq., ft., within three years from the date of taking over possession of the land and build a total of 2,00,000 sq. ft in five years. VJIL shall commence construction of the facility within a period of (6) months from the date of taking possession of the plots. GoAP may cancel the allocation of the land after affording a reasonable opportunity to VJIL in case VJIL does not commence the construction within the aforesaid period of (6) months’. The petitioner in its letter dated 3.7.2006 indicated the commencement of civil work before 30th September, 2006. But the petitioner has not honoured its commitment and thereby, violated the terms and conditions of the MoU. Cancellation of allotment of the land in favour of the petitioner came to be made by the 1st respondent after giving due opportunity to the petitioner. Paragraph 14 of the counter affidavit needs to be noted and it is thus:- “14. In reply to Para No.(8) of the affidavit, it is submitted that the petitioner should have taken necessary steps and action for getting statutory approvals from the competent authorities right from the date of entering into MoU with the Government of AP on 23.10.2003 whereunder it is agreed that the petitioner shall commence construction of the facility within a period of six(6) months from the date of taking possession of the land failing which the allotment was liable to be cancelled having agreed to the conditions of the MoU, allotment, sale Agreement and Sale Deed, the petitioner has no right to question the action of the 1st Respondent in canceling the allotment according to the terms and conditions of the documents aforementioned. The sale transaction is subject to certain conditions and the petitioner has violated the conditions or acted in derogation of the terms or undertaking given by the petitioner.” 6. The counter affidavit of the 5th respondent, in brief, is:- This respondent received a letter dated 29.11.2006 from Project Manager (IPV) of the 1st respondent wherein the 1st respondent requested this respondent not to entertain any application for grant of building permission over an extent of Ac.5-00in Sy.No.203 P of Manikonda village as allotment of land has been cancelled. This respondent received an application dated 16.12.2006 for grant of building permission in Sy.No.230 of Manikonda village. This respondent rejected the application of the petitioner, vide Lr.No.14692/BP/CDA/HMDA/2006, dt.10.11.2008 pursuant to the letter of the 1st respondent. 7. The issue involved in this writ petition is: Whether the respondents after execution of the registered sale deed are empowered to cancel the registered sale deed on the ground that the land is not put to use ? 8. The counsel appearing for the parties submitted that the issue involved in this writ petition is squarely covered by common order passed in W.P.No.7320 of 2006 and batch dated 16.7.2010 and therefore, the writ petition deserves to be allowed. A Photostat copy of the order passed in W.P.No.7320 of 2006 and batch is placed on record. It has been held in the above-referred common order as follows:- “ There is no denial that the agreement entered into by APIIC and the petitioners in these cases, does not contain any clause in the above terms nor clause 7 in the registered sale deed can be construed as “condition super added”. This Court is not able to countenance the submission of the counsel that the phrase in clause 7 of the sale deed reading “… … shall use the said plots for the aforesaid purpose of putting up factory or factories duly permitted by the competent Authority and for another purpose” should be construed as upper added clause”. As held by this Court in K.Gopal Reddy, when once sale deed is registered by the seller in favour of buyer, contract is concluded and no party can enforce sale agreement covenants. Therefore, this Court holds that insofar as these cases are concerned, APIIC has no such power or jurisdiction to cancel the allotment, which has effect of nullifying the sale deed.” 9. For the reasons recorded in the above W.P.No.7320 of 2006 & batch, this writ petition is also allowed. No costs. ____________________________ B. SESHASAYANA REDDY, J Date : 24.12.2010 RAR THE HON’BLE SRI JUSTICE B.SESHASAYANA REDDY Writ Petition No.22854 of 2006 (Dated : 24-12-2010)