Reserved Judgment THE HIGH COURT OF UTTARAKHAND AT NAINITAL Writ Petition (M/S) No. 735 of 2008. M/s Polar Industries Ltd. A-105, Sector-5, Noida through its President Finance & Corporate Affairs. … Petitioner. Vs. State of Uttarakhand and three others. …Respondents. Mr. V.K.Kohli, Senior Advocate, with Mr. H.S.Dhillon, Advocate, learned counsel for the petitioner. Mr. K.P.Upadhyay, learned Additional C.S.C. for the respondent no.1. Mr. L.P.Naithani, Senior Advocate, with Mr. Vipul Sharma, Advocate, learned counsel for the respondent no. 2 to 4. Date July 28, 2010. Hon’ble B.S.Verma, J. By means of this writ petition, the petitioner has sought the following relief:- 1. To issue a writ, order or direction in the nature of certiorari quashing the impugned order dated 10-10-2006 passed by respondent no. 3 which has been communicated to the petitioner company through letter dated 11-10-2007 numbered as Ref: 8451/MD/SIDCUL/SC/07 restoring the position to status prior thereto by continuing the allotment and lease deed on the same terms and conditions. 2. To issue a writ, order or direction in the nature of mandamus commanding the respondents treat the period of construction and production as being extended in the case of the petitioner company, in the facts and circumstances of the case till the attainment of production as intimated to the Excise Department under clause 1.1(a) of the lease deed. 3. To mould and issue any other writ, order or direction, which this Hon’ble Court deems just and proper in the circumstances of the case. 4. To award the cost of the petition to the petitioner. 2 2. Brief facts giving rise to the present writ petition, according to the petitioner, are that the petitioner is a public limited company. The petitioner company was allotted a plot measuring 20265 sq.mt. on 6-1-2004, which is marked as Plot No. 1, Sector 2, Integrated Industrial Estate ( for short IIE) Ranipur, Haridwar. The petitioner company made a request to the respondent nos. 2 to 4 for execution of lease deed in its favour. The Deputy General Manager of the SIDCUL by letter dated 23-9-2004 informed the petitioner company that the matter of execution of lease deed is under process and as soon as circle rates are finalized by the District Authorities, the same shall be executed. On 30-12-2005 the lease deed of the plot in question was executed for a term of 90 years vide Annexure-4 and finally the possession of the plot was delivered to the petitioner on 15- 2-2006. The petitioner company started its construction process on the plot and submitted building plan on 20-1-2006 to the respondents. Provisional permission to raise construction was granted to the petitioner company on 27-3-2006, but no final approval of the plan was given in favour of the petitioner company. The petitioner company alleges to have made sincere efforts to start production. In the mean time, the respondent no. 4 sent a notice dated 25-1-2006 to the petitioner company complaining therein that the petitioner company had not taken effective steps for utilization of the plot within a period of 24 months and failed to complete the construction of building of its unit thus committed breach of the provisions of allotment. The petitioner company sent reply to the Officer concerned of the respondents by its letter dated 3-2-2006 and assured that the commercial production would commence by or before 31-3-2007 in the unit. The petitioner company requested to withdraw the notice sent to it. Thereafter, a meeting was held on 29-8-2006 between the officials of the respondents and the petitioner company and in consequence of the said meeting, petitioner company submitted a progress report to the respondent by letter dated 31-8-2006. However, the respondents cancelled the allotment of the plot in question vide its 3 letter dated 31-8-2006. Copy whereof has been annexed as Annexure- 12 to the writ petition. 3. According to the petitioner, on 25-9-2006 a representation was made to the respondents by the petitioner company with the request for withdrawal of order of cancellation of plot, but no heed was paid to the representation of the petitioner by the respondents. The petitioner thereafter filed Writ Petition No. 1359 of 2006(M/B) before this Court. The writ petition was ultimately allowed by order dated 16-12-2006 and the petitioner company was granted a period of six months for completion of the construction work and to commence commercial production. The petitioner company started its construction in full swing. The petitioner company made a request to the respondents to grant provisional clearance of the drawings submitted to them but to no avail. On 3-4-2007 the petitioner company again filed a writ petition bearing No. 365 of 2007 (M/B) with the prayer that the respondents be directed to approve the upgraded drawings of the petitioner company so that the construction may be completed within the time as per direction of the Court. Ultimately, the commercial production in the unit commenced on 30- 4-2007. On 15-3-2007 the respondents without waiting for the six months’ period to expire as allowed by the High Court, preferred Civil Appeal No. 5382 of 2007 before the Apex Court assailing the order dated 16-12-2006 passed by this Court. The operation of the order dated 16-12-2006 was stayed by the Supreme Court by order dated 30- 3-2007/4-4-2007. The Civil Appeal was allowed by order dated 1-8- 2007. The order dated 16-12-2006 was set aside. It was directed that the petitioner company shall file independent representation before respondent no. 3 within two weeks and the respondents shall pass appropriate order in each case within six weeks. The petitioner made a representation to the respondent no. 2 with a request to recall the order of cancellation of plots passed by SIDCUL, but the representation of the petitioner dated 13-8-2007 was rejected by order dated 10-10- 2007. 4 4. On behalf of the respondent nos. 2 to 4, counter affidavit has been filed. It is stated in the counter affidavit that the petitioner had not adhered to the terms and conditions of the lease deed inasmuch as the petitioner had not been able either to construct the factory or to start commercial production within two years from the date of allotment. Consequently, the allotment order was cancelled vide order dated 31-8-2006. The order was challenged before the High Court in WPMB No. 1359 of 2006, which was disposed of finally by order dated 16-12-2006. Another writ petition bearing WPMB No. 365 of 2007 was filed by the petitioner, which was dismissed as withdrawn by order dated 25-6-2007. The petitioner is before this Court in third round of litigation against the order of cancellation of plot. It is also stated that on the representation made by the petitioner, the Managing Director, SIDCUL heard the petitioner as well as the parties concerned and personal hearing was given in the matter. An inspection was also made of the site by Mr. Ashish Gujral an architect of the State Industrial Development Authority (SIDA) on 14-9-2007 and the following permanent structures were found at the site:- 1. One factory shed on 1242 sq.mt. 2. one guard room area 27.12 sq.mt. 3. one Panel room of 12.42 sq.mt. 4. Boundary wall on all the four sides with one extra gate. 5. According to the respondents, the petitioner company has not utilized the plot, therefore, the plot of the petitioner was rightly cancelled by order dated 31-8-2006. 6. It is also stated in the counter affidavit that the petitioner violated the terms and condition of allotment as well as of lease deed because the petitioner had not been able either to construct the factory or to start commercial production within two years from the date of allotment. In reply to the averments made in paragraph nos. 3 and 4 of the writ petition it is stated that the petitioner was allotted a plot measuring 20265 sq.mt. in IIE BHEL Haridwar on 6-1-2004 and a 5 lease deed was executed between the parties on 30-12-2005. The petitioner was required to complete the construction on the plot and start commercial production within two years from the date of allotment of plot, which was to commence from 6-1-2004. The petitioner did not comply with the condition of lease deed so as to start the commercial production within the stipulated time, therefore, the allotment of plot in favour of the petitioner was cancelled by order dated 31-8-2006. The petitioner assailed the order in W.P.M.B. No. 1359 of 2006 M/s Polar Industries Vs. State of Uttaranchal and others. A Division Bench of this Court while deciding the writ petition by order dated 16-12-2006 granted six months’ more time to the petitioner to complete the construction and start commercial production. The SIDCUL filed Special Leave Petition before the Apex Court. Ultimately, the appeal of the respondents was allowed. The order dated 16-12-2006 passed by the High Court was quashed. Liberty was given to the petitioner to make a representation to the SIDCUL and the Managing Director was to decide the representation of the petitioner. As per directions of the Apex Court the SIDCUL decided the representation of the petitioner and held that the plot of the petitioner was rightly cancelled. It is further stated that the petitioner failed to make payment for a long time. The lease deed was executed only on 30-12-2005 due to inaction on the part of the petitioner. It is also stated that the SIDCUL sent a number of notices to the petitioner demanding him to come and execute the lease deed. 7. In the counter affidavit, it is further stated that the petitioner company itself did not come forward to take possession of the plot. It has been denied that there was delay in delivering possession on the part of SIDCUL. It is stated that the petitioner did not furnish the requisite stamp papers for execution of lease deed until 30-12-2005. It is denied that the petitioner had done lot of work within one month of the execution of lease deed. There has been default on the part of the petitioner in not commencing commercial production within stipulated period of two years of date of allotment. 6 It is also stated that notice dated 3-2-2006 was given to the petitioner as a warning. It is also stated that possession of plot was given to the petitioner on 15-2-2006 and there was no bar to start construction activities without taking possession certificate. In the progress report dated 31-8-2006 submitted by the petitioner, there is no mention as to what progress was made by the petitioner on the plot so far, while the allotment was liable to be cancelled six months prior to 31-8-2006 for default on the part of the petitioner. It is further stated that the Hon’ble Supreme Court had passed an order of status quo vide order dated 30- 3-2007, therefore, admission of the petitioner contrary to the status quo order amounts to contempt of the order of the Apex Court. It is also stated that the petitioner was not liable to make any construction in view of the said order passed by the Apex Court. The averments of the petitioner that he continued to make construction in the factory and started commercial production in the unit on 30-4-2007 is in defiance of the status quo order passed by the Supreme Court of India. It is further stated that in compliance of the order of the Apex Court the representation of the petitioner was decided on merit by a speaking order. 8. The petitioner has filed rejoinder affidavit. 9. On behalf of the respondent nos. 2 to 4 supplementary affidavit has been filed, wherein it is stated that as per clause 9 of the lease deed, all the disputes and differences between the parties subject to arbitration. The interpretation and implementation of the contract cannot be a subject matter of writ petition. The writ petition therefore is not maintainable. 10. I have heard learned counsel for the parties at length and perused the entire material placed before this Court and have also pondered over all the aspect of the case. 7 11. It finds place to mention here that the respondent nos. 2 to 4-SIDCUL while cancelling the allotment of plot of the petitioner passed an order dated 31-8-2006 which reads as under:- “Order M/s Polar Industries Ltd. Was allotted plot no. 1 in Sector 2 at IIE-BHEL-Haridwar vide this office letter no. 2416/MD/SIDCUL/2003-04 dated 06-01-2004. The condition no. 14 of the terms of allotment inter alia states that the unit has to be established and start commercial production within two years from date of allotment. It has been brought to the notice of this office that despite the elapse of 31 months the allottee company has failed to commence commercial production on the allotted land. This is a clear cut violation of the aforementioned clause of allotment. The company has also been a defaulter in making payment and even 50% of the land cost which was supposed to be deposited by 30-04-06 was not deposited by the captioned company within stipulated period. Accordingly payment notice no. 1292/DGM/SIDCUL/04 dated 02-09-04 was issued to deposit 50% cost of the plot. The co. did not make the payment and again requested to extend the time for depositing this amount. The date was further extended and cancellation was withheld way back in September 04. Since then the co. has been irregular in making the payment & there has been no real initiate from the co. to make the unit operational. Again notice no. 4297/DGM/SIDCUL, dated 19-04-05 and “Final Notice for Cancellation” no. 6824/DGM/SIDCUL/05 dated12-07-05 & letter no. 18845/DGM/SIDCUL/05 dated 21-12-05 for execution of lease deed was also issued. All these notices substantiate the fact that the co. has never been serious in putting up the industry. The legal utilization notice No. 267/DGM/SIDCUL/06 dated 568/DGM/SIDCUL/06 dated 03-02-06 were issued in reference to the clause 1(a)(i) of lease deed. Since then there has been no attempt by the company for making the unit operational & there has been no activity on the captioned plot for over last six months. 8 In the aforesaid circumstances, we are left with no other recourse but to reluctantly revoke the allotment letter no. 2416/MD/SIDCUL/2003-04 dated 06-01-2004 & termination of lease deed dated 30-12-05 and forfeiture of deposits made by the firm/company as per the rules of the Corporation. Sd/Alok Kumar, Managing Director.” 12. Aggrieved by the aforesaid order dated 31-8-2006, the petitioner company preferred Writ Petition No. 1359 of 2006(M/B) M/s Polar Industries Vs. State of Uttaranchal and others before this Court. A Division Bench of this Court by a common order dated 16- 12-2006 passed in Writ Petition No. 999 of 2006 (M/B) M/s Falcon Pvt. Ltd. Vs. State of Uttaranchal and others disposed of the writ petition with the following observation:- “3. The object of putting such a condition or purpose behind our order granting some time to start the production was only that the production may start and the object for which the scheme has been formulated, may be achieved. Therefore, in furtherance of the achievement of the object, we provide that from today, if the production is not started by the petitioners from a period of six months, their allotments shall stand cancelled, as already sufficient period as per the allotment order has been elapsed and no production has been started yet. After the expiry of the aforesaid period of six months, the SIDCUL will be at liberty to resale the plots allotted to the petitioners at the market value of the land after accumulating the investment made by the previous lessee in respect of the development of plots and construction raised, if any, and that shall be the minimum price in the proclamation of auction sale.” 13. The respondent-SIDCUL feeling aggrieved by the said order passed a Division Bench of this Court has preferred Special Leave Petition before the Apex Court and it appears that the operation of the order dated 16-12-2006 passed by this Court was stayed by the 9 Apex Court by an interim order passed in the SLP. Ultimately the Apex Court by a common order dated 1-8-2007 passed in Civil Appeal No. 3402 of 2007, State Industrial Development Corporation of Uttaranchal Ltd. And others Vs. M/s Jyoti Industries along with 7 other Civil Appeals arising out of the order dated 16-12-2006 passed by the Division Bench of this Court disposed of all the civil appeal. The order dated August 1, 2007 reads as under:- “Order Leave granted in all the SLPs. Having heard the learned counsel for the parties, we are of the opinion that for doing complete justice to the parties, the order of the High Court should be set aside and following directions be issued: (1) Each of the entrepreneurs who were respondents before us, shall file independent representation before the Managing Director of the appellant-Corporation within two weeks from date questioning the legality or validity of the order of the order of cancellation of allotment and/or for restoration of the properties, as the case may be. (2) The Managing Director of the appellant-Corporation shall hear the parties or their authorized representative, within two weeks thereafter. It will be open to the entrepreneurs to produce such evidence or evidences before the said authority as they may intend to do. (3) The Department may also produce their evidences before the said authority. (4) If found necessary, the Managing Director may inspect the site himself or cause it to be inspected by some other duly authorized officer in this behalf. (5) The Managing Director shall pass appropriate speaking order in each case separately, within six weeks from the date of filing the respective representations. 10 (6) It will be open to the concerned entrepreneurs also to point out that in their cases, either possession had not been handed over or the lease deed/transfer deed had not been executed. (7) Status quo in respect of the properties shall be maintained by the parties in the meantime. The appeals are disposed of with the aforementioned directions and observations.” 14. The instant writ petition has been filed by the petitioner in consequence of the rejection of its representation dated 13-8-2007, which was preferred before the Managing Director of the respondents in pursuance of the order dated 1-8-2007 passed by the Apex Court in Civil Appeal No. 3407 of 2007 (arising out of SLP © No. 5382 of 2007) which was decided by an order passed in Civil Appeal No. 3402 of 2007 as referred to above. 15. Learned Senior Advocate Mr. L.P.Naithani appearing for the respondent nos. 2 to 4 has raised a preliminary objection on the maintainability of the writ petition and contended that the present writ petition is not maintainable because the petitioner has an alternate remedy to invoke the arbitration clause under the lease deed. Learned counsel has argued that the disputes relating to contract between the parties could not be a subject matter of adjudication by a writ court and that even if it is assumed that the terms of the contract were violated, the matter could only be heard in a civil court or in an arbitration proceeding. Reliance was placed by the learned counsel in the cases of Pimpri Chinchwad Municipal Corporation and others Vs. Gayatri Construction Company and another [(2008) 8, Supreme Court Cases, Page 172], Midi Extrusions Limited, Noida Vs. U.P. Industrial Development Corporation Ltd. Lakhanpur, Kanpur Nagar and others, [2007 (4) AWC 3835] and Kisan Sahkari Chini Mills Limited and others Vs. Vardan Linkers and others [(2008) 12, SCC, Page 500]. 11 16. I am not inclined to accept the contention of the learned Senior Advocate that the present writ petition is not maintainable and the best course open to the petitioner is to invoke arbitration clause. It is pertinent to mention that the matter of cancellation of plot had been agitated before the Hon’ble Supreme Court. In my view if the arbitration clause was required to be involved, the Apex Court itself could have issued such a direction when the respondent-SIDCUL itself filed Special Leave Petition before the Supreme Court, rather the Apex Court relegated the parties to make a representation before the Managing Director of the SIDCUL. Moreover, the propriety of the order of rejection of the representation made by the petitioner can very well be examined by the writ court under Article 226 of the Constitution of India, particularly because the decision of the authority rejecting a representation could not be a matter of dispute as envisaged by the arbitration clause under the lease deed. The contention of the learned counsel for the SIDCUL on the maintainability of writ petition is rejected. 17. Moreover, the controversy regarding invoking arbitration clause by the petitioner has been resolved by this Court in Writ Petition No. 1008 of 2008(M/S) M/s Falcon Contracts Pvt. Ltd. Vs. State of Uttarakhand and others, decided on 23-3-2010. 18. The undisputed facts of the case are that by an order dated January 6, 2004, the petitioner was allotted Plot No. 1, in Sector 2, for setting up an industrial unit to manufacture electrical fans, water lifting pumps, geysers, water purifiers, laminations. The area of plot as mentioned in the order is approximately 20400 sq.mtr. as per site plan. It was also informed that the period of lease is for 90 years. The petitioner was required to complete all necessary formalities including execution of the lease deed and payment. The SIDCUL by its letter dated 23-9-2004 informed the petitioner that the matter of execution of lease deed was under process and as soon as the circle rates are finalized by District authorities, the lease deed would be executed in 12 its favour. The lease deed was executed in favour of the petitioner on 30-12-2005. Possession of the plot in question was delivered to the petitioner on 15-2-2006. Provisional permission to start construction activities at the site was granted to the petitioner only on 27-3-2006. It is also undisputed fact that the petitioner submitted its building designs/plan on 20-1-2006 after execution of lease deed, but the respondent-authority had not yet been granted final approval of the plan by the SIDCUL. In the lease deed it is provided that the lessee shall complete the construction and commence manufacturing and production from the unit within the stipulated period, which is two years from the date of the lease deed or the date on which the physical possession of the demised land was handed over to the lessee, therefore, this period if reckoned from the date of lease deed was to expire on 30-12-2007 and if the date of possession is taken into account, it was to expire as late as 15-2-2008. Admittedly the allotment order was cancelled by an order dated 31-8-2006. 19. For a just decision of the case, a reference to Clause 1.1 (a) (i), (ii), (iii), (iv) and (v) of the lease deed executed between the parties is necessary, which reads as under:- “(a) (i) Within the period of twenty Four (24) months from the date of letter of allotment of the Demised Land i.e. 06-01-04 (“Stipulated Period”) the Lessee shall built and erect construction, execute works and complete installation of plant and machinery and commence production in its Unit. (ii) However, in case the Lessee is unable to commence production in its Unit, within the Stipulated Period for reasons attributable to the Lessor or any State/Central Governmental authority or any local authority/body having jurisdiction, on an application from the Lessee with supporting document, the Lessor shall extend the Stipulated Period, by such period(s). (iii) In addition, in case the Lessee is unable to commence production in its Unit, within the Stipulated Period, for reasons not covered under the preceding sub-clause, on an application from the 13 Lessee, the Lessor shall consider such application, on merits and may grant such extension(s), as it may deem appropriate, subject to payment of Extension Fee, as may be specified by the Lessor. In case, the Lessor grants extension, the Stipulated Period shall stand extended and thereupon the obligation hereunder