CWP No.13863 of 2010 IN THE HIGH COURT OF PUNJAB & HARYANA AT CHANDIGARH Civil Writ Petition No.13863 of 2010 Date of Decision : December 06, 2010. JCT Electronics Limited ....Petitioner Versus State of Punjab and others ....Respondents CORAM : HON'BLE MR.JUSTICE SURYA KANT. Present : Mr.Hidayat Ulla Khan, Senior Advocate with Mr.Pavit Singh Mattewal, Advocate, for the petitioner. -.- 1. Whether Reporters of Local papers may be allowed to see the judgment? 2. To be referred to the Reporters or not? 3. Whether the judgment should be reported in the Digest? --- Surya Kant, J. The petitioner seeks quashing of the orders dated 26.2.2009 and 14.6.2010 (Annexures P-20 & P-25 respectively) as well as the letter dated 29.12.2008 (Annexure P-13) passed/issued by respondent No.2. 2] In order to appreciate the controversy, a brief reference to the facts is necessitated. 3] The petitioner-JCT Electronic Limited was earlier known as M/s Punjab Display Devices Limited. An industrial plot No.A-32 1 CWP No.13863 of 2010 measuring 31 acres, situated in ELTOP Complex at Industrial Focal Point Phase-VIII, S.A.S.Nagar, Mohali, was allotted to the petitioner in its previous name on 99 years’ lease hold basis by the Punjab State Electronics Development and Production Corporation Limited- respondent No.2 (in short `the Corporation’) vide allotment letter dated 23.4.1986 (Annexure P-1) for setting up an industrial unit for the manufacture of Colour Picture Tubes. A formal lease deed was also executed between the parties on 16.7.1987 (Annexure P-2) which, inter- alia, contained the following terms and conditions:- “xx xx xx xx X) The lessee shall not transfer its rights in the site for a period of 15 years from the date thereof. After the expiry of the said period, the lessee may be allowed by the Corporation to transfer, assign or to underlet his right in the site to any other person subject to the condition that 50% (fifty percent) of the unearned increase that may accrue to the lessee shall be paid to the Corporation before registering such transfers, assignment or under letting. The unearned increase will be valued by the Managing Director or any other authority which may be appointed by him whose decision shall be final and binding on the lessee. xx xx xx xx XII) The lessee shall not without the written consent of the Corporation carry on or permit to be carried on, in the plot or in any building constructed thereon, any other trade or business whatsoever or use the same or permit the same to be used for any other purpose other than that for which it has been allotted or do or suffer to be done there anything whatsoever which in the opinion of the Corporation may be a 2 CWP No.13863 of 2010 nuisance, disturbance or annoyance to the neighbours. XIII) The ownership of the demised premises shall remain with the Corporation. xx xx xx xx XXV) If the lessee in contravention of the terms and conditions herein contained uses the said property in a manner not permissible or lets the allotted property or any part thereof or keeps unauthorized person on the allotted property or fails to observe any of the stipulations on his part herein contained and thus commits a breach, then without prejudice to any other remedy available in respect of such breach under this agreement, the Corporation may take steps to remove the breach. xx xx xx xx ii) All differences and dispute arising out of or in any way touching or concerning this lease deed or the observance or the non-observance of the terms and conditions thereof shall be referred to the sole arbitration of the Secretary to Government, Industries Department, Chandigarh……..” (emphasis applied). 4] The record reveals that the industrial unit for manufacturing of Colour Picture Tubes was installed and it became functional also. Meanwhile, the majority stocks in the original Company to whom the Industrial Plot was allotted were taken over by an industrial group who had also set up a new integrated CPT Unit at Baroda (Gujrat) in the year 1994. The JCTEL thereafter started running into losses since the year 1997-98 “due to non-availability of working capital” as well as competition and liberalize policy of the Government. The JCTEL 3 CWP No.13863 of 2010 accordingly filed a reference under Section 15 (1) of the Sick Industrial Companies (Special Provisions) Act, 1985 before the BIFR on the basis of its balance sheet upto 31.3.2002 and got itself declared as a “Sick Industrial Company”. 5] The Sick Company proposed two options for its rehabilitation including the first one for the “sale of the land alongwith industrial unit at Mohali”. The proposal suggested to generate Rs.144 crores through the sale of the Mohali Unit alongwith its land. The secured creditors obviously preferred option No.1 recommending sale of the ‘land’ and `industrial unit’ at Mohali for easy recovery of their dues and it also got the seal of approval from the BIFR. Various aggrieved persons including the Government of Punjab who had allotted the land to the petitioner through the Corporation, Workers and Employees Unions as well as Bank of Baroda etc. preferred their respective appeals before the Appellate Authority for Industrial and Financial Reconstruction, who vide its detailed order dated 29.9.2008 (Annexure P-11) acknowledged the fact that the land was owned by the Government of Punjab and was allotted to the petitioner at a highly concessional rate as a part of its policy on industrial development. The Appellate Authority thereafter proceeded to dispose of the appeals by directing that: “………the Government of Punjab should consider the application filed by JCTEL for conversion of leasehold land to freehold land in accordance with the existing policy. In the event the Government of Punjab permits conversion of the lease hold land to free hold land and its sale alongwith change in land 4 CWP No.13863 of 2010 use, if applied for, the sale should take place through the Asset Sale Committee constituted by BIFR. If the sale of land fetches a price higher than Rs.119 crores, BIFR should modify the scheme to provide for a dispensation for distribution of the excess amount towards payment of crystallized workers dues and upfront OTS payment to secured creditors. Alternatively, Government of Punjab should consider permitting sale of lease hold land and conversion of end use of land subject to payment of 50% of the unearned increase that may accrue to the lessee in accordance with the lease deed. In this case the means of finance will be required to be modified since the scheme is predicated on receipt of Rs.119 crores from the sale of land. Therefore, any shortfall will have to be financed by way of promoters contribution or by sale of other surplus assets……” (emphasis applied) 6] No sooner did the petitioner was declared a `sick unit’ by the BIFR on 17.2.2006, then it moved an application to the Corporation for conversion of the subject plot from `leasehold’ to `free-hold’ rights. The petitioner then sent reminders followed by its another request dated 18.12.2008 to the Managing Director of the Corporation, alongwith a copy of the previous decision of the Board of Directors as well as the policy circular formulated by the State Government permitting conversion of lease-hold plots to free-hold plots. Pursuant to these applications/representations as well as the order dated 20.9.2008 passed meanwhile by the AAIFR that the Corporation vide its one of the impugned orders dated 29.12.2008 (Annexure P-13) informed the 5 CWP No.13863 of 2010 petitioner that the Empowered Committee of the State Government in its meeting held on 25.11.2008 has decided to transfer the plot in favour of the petitioner “on payment of 50% unearned increase” in accordance with the terms and conditions contained in the lease deed executed between the parties. The aforesaid order further informed that the petitioner was liable to pay the enhanced compensation alongwith interest and transfer fee and that the subject land shall be used only for setting up the unit in the field of IT, ITES, Electronics, Telecommunication, IT Park and ITSEZ. 7] Since the conditions contained in the above-stated order dated 29.9.2008 especially the one regarding payment of ‘50% unearned increase’ were not acceptable to the petitioner, it made a representation to the Chief Minister, Punjab, on 12.1.2009 (Annexure P-14) followed by its letter dated 16.1.2009 (Annexure P-15) to the Corporation for conversion of the plot from lease hold basis to free-hold basis. The petitioner also appended a demand draft of Rs.15,00,400/- as well as two other demand drafts of Rs.11,704/- and Rs.5,55,148/- respectively towards the residual lease rental dues and the enhanced cost of the plot. 8] Respondent No.2-the Corporation in response to the above- stated applications, asked the petitioner vide letter dated 4.2.2009 (Annexure P-18) to deposit a sum of Rs.1,12,95,535/- towards interest upto 15.2.2009 on the delayed payments of enhanced compensation. The petitioner, however, again represented on 10.2.2009 for the waiver of interest and to consider its earlier request to convert the plot from lease-hold to free-hold basis but it was turned down again by the 6 CWP No.13863 of 2010 Corporation vide memo dated 26.2.2009 (Annexure P-20) whereby the petitioner’s demand draft of Rs.15,00,400/- towards “conversion charges” was also returned. The petitioner thereafter submitted yet another representation to the Chief Secretary, the Government of Punjab, on 21.7.2009 (Annexure P-21) naming several instances of transfer and conversion of plots from lease-hold to free-hold basis but having failed to extract any response that the petitioner served the Corporation with a legal notice dated 15.2.2010 (Annexure P-22) and then approached this Court in Civil Writ Petition No.6163 of 2010 which was disposed of on 6.4.2010 with a direction to the Managing Director of the Corporation to treat the writ petition as a representation and take an appropriate decision as per the law within a period of eight weeks after giving an opportunity of personal hearing. 9] Pursuant to these directions that the impugned self explanatory order dated 14.6.2010 (Annexure P-25) has been passed rejecting the petitioner’s claim for conversion of the industrial plot from lease-hold to free-hold basis without payment of 50% of unearned increase. 10] Aggrieved, the petitioner has approached this Court again. 11] Mr. Hidayat Ulla Khan, learned senior counsel for the petitioner was heard at length on 6.8.2010 and the case was adjourned on his request to enable the petitioner to file an additional affidavit giving better particulars in support of his plea of discrimination in the matter of conversion of plots from lease hold to free hold basis. 7 CWP No.13863 of 2010 12] An affidavit dated 28.8.2010 has been brought on record, inter-alia, explaining that the action of the Corporation squarely falls in the teeth of Article 14 of the Constitution of India as there are atleast 30 instances where conversion from lease hold to free hold was allowed as per the Government policy on payment of conversion fee of Rs.5/- per square yard and/or at other rate as prescribed from time to time. The affidavit further explains that Clause-X of the lease deed relied upon by the Corporation is inapplicable as it applies to ‘transfer’ of lease-hold rights and not on ‘conversion’ to free-hold rights. The affidavit also explains that out of 30 instances where conversion was allowed, many of them have ‘sold’ the land to third parties besides diversifying the business to the activities like education, wood work, call centers and the like. The affidavit also reveals that the unreasonable restriction of not permitting the use of the plot for any purpose other than those relating to the I.T. Sector also offends Article 19(1)(g) of the Constitution of India. 13] One more affidavit dated 29.9.2010 has been placed on record on behalf of the petitioner alongwith the information received under the Right to Information Act in order to demonstrate that the conversion from ‘lease hold’ to ‘free-hold’ has been consistently permitted in the past in consonance with the Policy Annexure P-28 without any restrictions on the right of the transferee to use the land in the manner it wanted. It is explained that one of the allottees, namely, Devinder Singh to whom the plot was allotted on 5.5.2000 for ‘electronic items’ has been allowed to change its user on 27.8.2009 for 8 CWP No.13863 of 2010 I.T./Knowledge Industry but the petitioner is sought to be discriminated in violation of its fundamental rights. 14] Learned senior counsel for the petitioner has been heard at length on 4.10.2010 also and the record including the additional affidavits have been perused. It was reiterated that (i) various allottees as per the details given in Annexures P-31 & P-32 have been allotted conversion from ‘lease-hold’ to ‘free hold’ basis without imposing the conditions/restrictions to which the petitioner is being subjected to and the impugned action cannot stand on the touchstone of Article 14 of the Constitution of India; (ii) the petitioner’s request for conversion deserves to be considered as per the policy guidelines laid down by the Board vide resolution annexure P-28 and not by arbitrarily imposing the conditions laid down in the Transfer Policy; (iii) there are atleast 22 allottees who are not using the plots for the purpose(s) for which these were allotted to them and the petitioner cannot be treated differently. 15] Learned senior counsel relied upon a decision of the Hon’ble Supreme Court in State of Haryana versus Gurcharan Singh 2004 (12) SCC 540 to contend that once the Government has acted on the policy decision and granted relief to other persons, it cannot discriminate and refuse to apply the same to other similar situated persons. Much emphasis was laid to urge that the petitioner has made out a prima-facie case of infringement of its fundamental rights and this Court need to call upon the respondents instead of summarily dismissing the writ petition. The decisions in Century Spinning and Manufacturing Company Limited and another versus The 9 CWP No.13863 of 2010 Ulhasnagar Municipal Council and another, 1970 (1) SCC 582 and Madan Lal Jaggi versus The District Magistrate, Delhi and another, 1971 (3) SCC 867 have been pressed into aid to support the above- noticed contentions. 16] Having given my thoughtful consideration to the issues raised, I am of the considered view that the same are devoid of any merit worth its name. In the absence of any Statute or Statutory Regulations governing the contractual obligations, the parties are to abide by the terms and conditions contained in the lease deed dated 16.7.1987 (Annexures P-2) which categorically recite that the lessee can be allowed to “transfer, assign or underlet” his right in the site to any person subject to the condition that 50% of the unearned increase that may accrue to the lessee, shall be paid to the Corporation before registering said transfer, assignment or underletting. The lease deed expressly stipulates that the plot or the building constructed thereon cannot be used without the written consent of the Corporation for any trade or business other than for which it has been allotted. The AAIFR, while directing the Government of Punjab to consider the petitioner’s application for conversion of the ‘lease hold’ plot to ‘free-hold’, has also categorically observed that such a request shall be considered by the State Government “subject to the payment of 50% of the unearned increase that may accrue to the lessee in accordance with the lease deed”. 17] The petitioner has not assailed the order passed by the AAIFR and has accepted the same in its entirety. 10 CWP No.13863 of 2010 18] The petitioner’s contention that Clause-X of the lease deed applies only in the case of transfer of ‘lease-hold rights’ and not for conversion from lease-hold to free-hold basis though looks attractive but is totally hollow and misconceived. The very object of Clause-X of the lease-deed is to put the allottee under an obligation to part with 50% of the un-earned increase as this component of the ‘profit’ is earned by the allottee effortlessly. If the sharing of such profit is a pre-condition even for the transfer of the restricted right of lease-hold how can it be assumed to have been waived off in the case of transfer of absolute rights and title. The expression “transfer” and “assign” are expansive enough to include all types of transactions other than succeeding to the lease rights only. If the petitioner’s contention is taken to a logical conclusion then the lease-deed does not at all permit for the transfer of owner-ship rights. The petitioner has driven home its entitlement for conversion to free-hold right on the strength of the order dated 29.9.2008 passed by the AAIFR which expressly imposes the condition of payment of 50% of the un-earned increase. There is not even a whisper against the imposition of the said condition nor a challenge to the AAIFR’s order. 19] The petitioner has absolutely got no indefeasible right to seek transfer from lease-hold to free-hold basis as the ownership of the demised premises still vests in the Corporation who cannot be compelled to part ways with its title through the judicial command. 20] The Policy Guidelines (Annexure P-28) laid down by the Board of Directors of the Corporation, also do not advance the 11 CWP No.13863 of 2010 petitioner’s case. The first resolution permits “conversion of lease hold allotment to free-hold by relaxing the condition of prior coming into production of the unit of the allottee…….”. The aforesaid relaxation is inapplicable in the instant case. The other resolution bearing No.168.29 simply permits conversion of lease-hold plots into free-hold plots where full payment of plots have been made by an allottee and the unit had gone into production. Even this decision cannot be capitalized by the petitioner as its industrial unit is admittedly lying closed and is not in production since the date it applied for conversion of the plot from lease-hold to free-hold basis. 21] It needs no special mention that in order to promote industrialization, the State Government ventures into various attractive policy decisions and offers incentives like allotment of industrial plots on concessional rates, uninterrupted supply of electricity, infrastructural facilities and creation of an easy market for the end products etc. These policy decisions are essentially meant to generate `revenue’ for the State and ‘employment’ for the public and are not to be construed to bestow State’s largesse to the rich and influential people who want to be richer than ever by thriving upon the State’s concessions promised on reciprocal basis only. 22] The petitioner, to whom a huge chunk of land measuring 31 acres was allotted in one of the most sought after and a prime urbanized sector of the State, ran the industrial unit hardly for a few years and decided to transfer the ‘plant and machinery’ to its Baroda Unit. The petitioner has not even a degree of similarity with those Industrial Units 12 CWP No.13863 of 2010 (Ref.: Annexures P-31 & P-32) who are still generating ‘revenue’ and ‘employment’ both and have been permitted to modernize their activities from ‘Electrical/Electronics Software etc.” to “I.T./Knowledge Industry”. 23] Adverting to the petitioner’s plea against discrimination, suffice it to mention here that as per the information brought on record, the conversion from the lease-hold to free-hold basis has been allowed to some of the allottees for carrying on the business of I.T./Knowledge Industry. The petitioner has also been put to similar terms and conditions vide memo dated 29.12.2008 (Annexure P-13) as well as the subsequent order under challenge. The petitioner’s plea that the plot allotted to one Daviner Singh (at Sr.No.10 of Annexure P-31) for ‘electronic items’ has been allowed to be ‘converted’ for the “IT/Knowledge Industry” is apparently baseless for the reason that the ‘electronic items’ in today’s context is an obsolete expression and the ‘I.T./Knowledge Industry’ is a rather wider expression to meet the latest challenges in the field of Science & Technology. Moreover, if the State Government or the Corporation have, in a given case, granted any illegal concession to an allottee in utter disregard to the binding terms and conditions of the lease deed, the petitioner cannot claim such a benefit as a matter of right on the plea of discrimination. 24] In Union of India (Railway Board) and others versus J.V. Subhaiah and others, 1996 (2) SCC 258, it was held that the principle of equality enshrined under Article 14 does not apply when the order 13 CWP No.13863 of 2010 relied upon is unsustainable in law and is illegal. Such an order cannot form the basis for holding that the others have been discriminated. 25] M/s Faridabad CT Scan Centre versus D.G.Health Services, 1997 (7) SCC 752, holds that Article 14 cannot be attracted in a case where wrong orders are issued in favour of others as such orders cannot be perpetuated on the plea of discrimination. 26] In M/s Vishal Properties Pvt. Ltd. Versus State of U.P. and others, 2007 (11) SCC 172, the Hon’ble Supreme Court ruled as follows:- “…..12. Even otherwise, Article 14 is not meant to perpetuate an illegality. It provides for positive equality and not negative equality. Therefore, we are not bound to direct any Authority to repeat the wrong action done by it earlier. In Sushanta Tagore and others versus Union of India and others, (2005 (3) SCC 16), this Court rejected such a contention as sought to be advanced in the present case by observing:- “Only because some advantages would ensue to the people in general by reason of the proposed development, the same would not mean that the ecology of the place would be sacrificed. Only because some encroachments have been made and unauthorized buildings have been constructed, the same by itself cannot be a good ground for allowing other constructional activities to come up which would be in violation of the provisions of the Act. Illegal encroachments, if any, may be removed in accordance with law. It is trite law that there is no equality in illegality.” 13. This view also finds support from the judgments of this Court in Snehprabha vs. State of U.P. and others, (AIR 1996 SC 540); Secretary, 14 CWP No.13863 of 2010 Jaipur Development Authority, Jaipur v. Daulat Mal Jain and others, 1997 (1) RCR (Civil) 379: (1997(1) SCC 35), State of Haryana and others vs. Ram Kumar Mann, 1997 (3) SCT 135: 1997 (3) SCC 321) and Faridabad C.T.Scan Centre vs. D.G.Health Services and others, 1997 (4) SCT 463: (1997(7) SCC 752)…..” 27] The petitioner’s plea that this Court should call upon the respondents as a prima-facie case of discrimination has been made out, also does not cut much ice for the reason that there is no legal compulsion to give opportunity to the Corporation to further improve its case by supplementing the reasons especially when no valid ground to interfere with the reasons already assigned in the impugned order is made out. It was imperative upon the petitioner to prove positive discrimination by demonstrating that a particular benefit has been granted to similarly placed allottees but denied to it without any reasonable classification. Learned senior counsel for the petitioner fairly admitted on a query that the petitioner has no intention to revive the project or run the industrial unit. He could not deny the fact that as per the orders passed by the BIFR and the AAIFR, the petitioner, after getting the plot converted into free-hold basis, wants to sell the same to earn premium and discharge its loan liability. It is for the petitioner to explain as to how it places itself at par with those who, abiding by their commitments, have actually established the Industrial Units and running the same in furtherance of the State Policy. The petitioner’s hue and cry 15 CWP No.13863 of 2010 for similar treatment is rather a crude attempt to seek equality amongst unequals. 28] The fact that the controversy has arisen out of the terms and conditions contained in the lease deed Annexure P-2 which also provides the remedy to invoke arbitration proceedings, need not be gone into by this Court.