IN THE HIGH COURT OF JUDICATURE AT MADRAS DATED : 30.09.2011 CORAM THE HONOURABLE MR.JUSTICE K.CHANDRU W.P.No.123 of 2011 and M.P.No.1 of 2011 M/s.Suraj Precision Engineering Works (P) Ltd., No.26,B-7, SIDCO Industrial Estate, Ambattur, Chennai-600 098. rep by its Managing Director, Mr.Sushil Haridass .. Petitioner Vs 1.M/s.SIPCOT, rep by the Chairmen and Managing Director, No.19-A, Rukmani Lakshmipathy Salai, Egmore, Chennai-600 008. 2.M/s.Corporation Bank, Ambattur Branch, Ambattur, Chennai rep by its Manager. .. Respondents This writ petition is preferred under Article 226 of the Constitution of India praying for the issue of a writ of mandamus to direct the first respondent to issue the NOC to M/s.Corporation Bank the Second Respondent herein as per Clause 42 of the Lease Deed dt.29.10.2003 and as per clause 32(a) of the modified lease deed dated 29.9.2008 entered into between the petitioner and First Respondent and forbearing them from canceling the allotment of the lands in Plots 12-A and 14 Industrial Estate Irungattukottai allotted under order dt.9.3.2004 bearing Ref:D1/IRU/SURAJ/2004 and Plot No.D5 allotted under order dt.2.1.2003 bearing Ref.No.D1/IRU/SURAJ/2003. For Petitioner : Mr.Vijay Narayan, SC for Mr.M.Aravind Subramaniam For Respondents : Mrs.Narmadha Sampath for R-1 MrR.Santhanam for R-2 https://hcservices.ecourts.gov.in/hcservices/ ORDER Heard the arguments of Mr.Vijay Narayan, learned Senior Counsel leading for Mr.M.Aravind Subramaniam, counsel for the petitioner, Mrs.Narmadha Sampath, learned counsel for the first respondent and Mr.R.Santhanam, learned counsel for the second respondent Bank. 2.This writ petition came to be posted on being specially ordered by the order of the Hon'ble Chief Justice, dated 23.9.2011. The petitioner is the private limited company. They have come forward to file the present writ petition seeking for a direction to respondent SIPCOT to issue a No Objection Certificate to the second respondent Bank in terms of clause 42 of the lease deed dated 29.10.2003 and as per clause 32(a) of the modified lease deed dated 29.9.2008 entered into between the petitioner and the first respondent SIPCOT and also to forbear them from cancelling the allotment of lands made in plot Nos.12A and 14, Industrial Estate, Irungattukottai allotted vide order dated 9.3.2004 and plot No.D5 allotted under order dated 02.01.2003. 3.The writ petition was admitted on 5.1.2011. Pending the writ petition, this court had granted an interim injunction initially for a limited period and it was extended from time to time, i.e. On 2.3.2011, 9.3.2011, 29.4.2011, 7.6.2011, 22.6.2011, 27.7.2011, 3.8.2011, 26.8.2011 and 28.09.2011. Though in between the order dated 22.6.2011 and 27.7.2011, the date was fixed for final hearing on 6.7.2011, but the matter was not taken up. On behalf of the first respondent SIPCOT, a counter affidavit was filed on 21.3.2011 and rejoinder was filed by the petitioner on 25.4.2011. 4.The prayer made by the petitioner is twofold. One is that in terms of Clause 42 of the lease deed dated 29.10.2003, the petitioner was imposed with several conditions for compliance and failing with any one of the compliance, it was stated that the lease can be cancelled and the plots can be restored. Under paragraph 42(a), the SIPCOT was enabled to grant the lease holder no objection with or without conditions to enable them to mortgage its interests in the said allotted plots at any time after taking possession for obtaining financial assistance from financial institutions and banks for implementing the project. It is under this clause, the petitioner had applied for grant of NOC and the same was also granted in respect of mortgage of Plot No.D-5 to an extent of 3 acres with the State Bank of India, Siruthozhil Branch. But later it was claimed by the petitioner that they have shifted the banker to that of the second respondent. When they sought for NOC to mortgage the entire three plots including plot Nos.D-5, 12A and 14, the SIPCOT had refused and claimed that unless they surrender the two unused plots, i.e., Plot Nos.12A and 14, they will not grant any NOC. Notice was also exchanged for non compliance with the conditions of lease. It was the apprehension of the petitioner that they have proposed to terminate https://hcservices.ecourts.gov.in/hcservices/ the lease for violation of conditions. It was also claimed that they had obtained necessary planning permission and NOC from the fire department and that they will complete the construction. It is at this stage, the writ petition came to be filed based on the apprehension. 5.The first respondent in its counter affidavit had stated that the petitioner had violated the conditions of lease and they cannot retain the unused portion of lands, i.e., comprising in plot Nos.D-12A and 14 to an extent of 2 acres and only if they surrender the said plots, the question of issuing NOC will arise. They have also constructed only 6580 sq.ft of building and have utilized only 1.50 acres out of 3 acres allotted in Plot No.D-5 even after lapse of 7 years. Therefore, they have proposed to take action and that a show cause notice was issued. It was also stated that they had obtained a report that the petitioner company was not functioning in the plot. It was contended by Mrs.Narmadha Sampath, learned counsel that the grant of NOC was the discretion of the SIPCOT and no direction can be given. A reference was also made to the arbitration clause found in paragraphs 37 and 38 of the lease deed, which reads as follows: "37.During the currency of the lease, any question of dispute or difference in relation to or in connection with the terms of the lease deed shall not be raised by the Party of the Second Part and, if at all raised such question of dispute or difference shall be referred to the Managing Director of the Party of the First Part whose decision shall be final and binding. 38.Only the Courts situate in the City of Chennai shall have jurisdiction to decide upon any dispute or litigation between the parties to this lease deed." 6.The learned Standing Counsel also referred to the other clauses in the same lease deed, which provided for cancellation of lease deed and resumption of land. She also questioned the maintainability of the writ petition based upon apprehension even before any adverse orders are passed. 7.The petitioner filed a rejoinder stating that the action taken by the first respondent was illegal. They attempted to take over the plot with a view to sell it to some multi national companies at higher price. This contention was stoutly denied by the learned counsel appearing for the SIPCOT. 8.In the present case, the prayer of the petitioner comprised of two parts. The first portion relates to the grant of NOC to the bankers, i.e. second respondent for mortgaging all the three plots. The second portion comprised of a restraint order on the SIPCOT from cancelling the lease. So far as the first prayer is concerned, the grant of NOC is discretion of the SIPCOT and even assuming that the subordinate officials are expressing disinclination to grant NOC, as already stated it provides for arbitration to the Managing Director if any issues arising out of the interpretation of the lease deed. Therefore, the first prayer cannot be countenanced by this court. The https://hcservices.ecourts.gov.in/hcservices/ course open to the petitioner is to invoke the arbitration clause. On this ground, the prayer is liable to be rejected. 9.The second portion is based upon the apprehension that there are no order passed by the SIPCOT till date cancelling the lease deed given in favour of the petitioner. Therefore, at this stage, the issue whether the petitioner has violated any terms of lease and whether the respondents are justified in attempting to cancel the lease cannot be gone into. Unless the petitioner suffers an injury in the form of final order, the question of invoking power of this court to judicially review such order does not arise. Though both sides have cited several judgments, they were all rendered in the context of final order being reviewed. This court is not inclined to refer those judgments as the propositions of law laid down therein are well known in the context of dealing with the transactions relating to the Corporation having power of State Financial Corporation. Even if a final order is passed, the scope of judicial review came to be considered in several judgments of the Supreme Court. 10.The Supreme Court in U.P. Financial Corpn. v. Gem Cap (India) (P) Ltd., reported in (1993) 2 SCC 299 has held that it is only in case of statutory violation on the part of the SIPCOT or only when they had acted unfairly or unreasonably, the question of jurisdiction under Article 226 can be invoked. The following passages found in paragraphs 3,12 and 10 from the said judgment reads as follows: "3.With great respect to the learned judges who allowed the writ petition we feel constrained to say this: a reading of the judgment shows that they have not kept in mind the well-recognised limitations of their jurisdiction under Article 226 of the Constitution. The judgment reads as if they were sitting as an appellate authority over the appellant-corporation. Not a single provision of law is said to have been violated. ...... 12.While this is not the occasion to examine the content and contours of the doctrine of fairness, it is enough to reiterate for the purpose of this case that the power of the High Court while reviewing the administrative action is not that of an appellate court. The judgment under appeal precisely does that and for that reason is liable to be and is herewith set aside. 10.It is true that the appellant-corporation is an instrumentality of the State created under the State Financial Corporations Act, 1951. The said Act was made by the Parliament with a view to promote industrialisation of the States by encouraging small and medium industries by giving financial assistance in the shape of loans and advances, repayable within a period not exceeding 20 years from the date of loan. We agree that the corporation is not like an ordinary money-lender https://hcservices.ecourts.gov.in/hcservices/ or a Bank which lends money. It is a lender with a purpose — the purpose being promoting the small and medium industries. At the same time, it is necessary to keep certain basic facts in view. The relationship between the corporation and the borrower is that of creditor and debtor. The corporation is not supposed to give loans once and go out of business. It has also to recover them so that it can give fresh loans to others. The corporation no doubt has to act within the four corners of the Act and in furtherance of the object underlying the Act. But this factor cannot be carried to the extent of obligating the corporation to revive and resurrect every sick industry irrespective of the cost involved. Promoting industrialisation at the cost of public funds does not serve the public interest; it merely amounts to transferring public money to private account. The fairness required of the corporation cannot be carried to the extent of disabling it from recovering what is due to it. While not insisting upon the borrower to honour the commitments undertaken by him, the corporation alone cannot be shackled hand and foot in the name of fairness. Fairness is not a one way street, more particularly in matters like the present one. The above narration of facts shows that the respondents have no intention of repaying any part of the debt. They are merely putting forward one or other ploy to keep the corporation at bay. Approaching the courts through successive writ petitions is but a part of this game. Another circumstance. These corporations are not sitting on King Solomon's mines. They too borrow monies from Government or other financial corporations. They too have to pay interest thereon. The fairness required of it must be tempered — nay, determined, in the light of all these circumstances. Indeed, in a matter between the corporation and its debtor, a writ court has no say except in two situations: (1) there is a statutory violation on the part of the corporation or (2) where the corporation acts unfairly i.e., unreasonably. While the former does not present any difficulty, the latter needs a little reiteration of its precise meaning. What does acting unfairly or unreasonably mean? Does it mean that the High Court exercising its jurisdiction under Article 226 of the Constitution can sit as an appellate authority over the acts and deeds of the corporation and seek to correct them? Surely, it cannot be. That is not the function of the High Court under Article 226. Doctrine of fairness, evolved in administrative law was not supposed to convert the writ courts into appellate authorities over administrative authorities. The constraints — self- imposed undoubtedly — of writ jurisdiction still remain. Ignoring them would lead to confusion and uncertainty. The jurisdiction may become rudderless." https://hcservices.ecourts.gov.in/hcservices/ 11.The Supreme Court in Karnataka State Industrial Investment & Development Corpn. Ltd. v. Cavalet India Ltd., reported in (2005) 4 SCC 456, laid down parameters for exercise of the jurisdiction under Article 226. Hence it is necessary to refer to the relevant passage found in paragraph 19, which reads as follows: "19.From the aforesaid, the legal principles that emerge are: (i) The High Court while exercising its jurisdiction under Article 226 of the Constitution does not sit as an appellate authority over the acts and deeds of the Financial Corporation and seek to correct them. The doctrine of fairness does not convert the writ courts into appellate authorities over administrative authorities. (ii) In a matter between the Corporation and its debtor, a writ court has no say except in two situations: (a) there is a statutory violation on the part of the Corporation, or (b) where the Corporation acts unfairly i.e. unreasonably." (sub paras (iii) to (ix) omitted) 12.In the light of the above, this court is not inclined to entertain the writ petition even before final order is passed on the second relief. This court is not expressing any opinion one way or other on the relative contentions raised by the two sides and any finding rendered will only jeopardize the case of the petitioner. Hence the writ petition will stand dismissed. No costs. Consequently connected miscellaneous petition stands closed. Sd/- Asst.Registrar /True Copy/ Sub.Asst.Registrar vvk https://hcservices.ecourts.gov.in/hcservices/ To 1.The Chairmen and Managing Director, M/s.SIPCOT, No.19-A, Rukmani Lakshmipathy Salai, Egmore, Chennai-600 008. 2.The Manager. M/s.Corporation Bank, Ambattur Branch, Ambattur, Chennai + 1 C.C. to M/S.NARMADASAMPTH, Advocate SR.NO.61682 + 1 C.C. to M/S.R. SANTHAN, Advocate SR.NO. 61113 + 1 C.C. to M/S.M. ARAVIND SUBRAMANIAM, Advocate SR.NO. 6116 ORDER IN W.P.NO.123 of 2011 CO [ KJI ] RR 31/10/2011 https://hcservices.ecourts.gov.in/hcservices/