i^^^^^^^f^^ w^ HIGH COURT OF CHHATTISGARHAT BILASFl W.P.fCl No.913 OF 2008 PETLTIONER Corporate Ispat Alloys Ltd. -1»; Vs RESPONDENTS State of Chhattisgarh 85 others. O R D E R ^ . POST ON 1'?' JUNE. 2008 1 ^ -\-<-' Sd/- DbirendraMishra Jud&e ii:i s "'"aSss-s' c^ HIGH COURT OF CHHATTISGARH AT BILASPUR W.P. (Cl No.913 OF 2008 Writ petition under Article 226 of the Constitution qf India. PETITIONER Corporate Ispat Alloys Ltd.- Through its Senior General Manager (Finance) Shri S.K. Moitra, Aged about 42 years, having its registered office at F-8, MIDC Industrial Area, Hingna Road, Nagpur-440 016. Vs RESPONDENTS 1. State of Chhattisgarh- Through the Secretary, Department of Revenue, DKS Bhawan, Raipur (CG) 2. State of Chhattisgarh- Through the Secretary, Department of Commerce and Industry, DKS Bhawan, Raipur (CG) 3. The Director of Industries, State of Chhattisgarh, Jeevan Beem Nigam Parisar, Pandari, Raipur, District-Raipur (CG) 4. Chhattisgarh State Industrial Development Corporation Limited, Through its Managing Director, having its Registered Office at Jeevan Beem Nigam Parisar, Pandari, Raipur, District-Raipur ACG]_ 5. The State Investment Promotion Board-Through its Convener, Near Secretariat (Renuka Dwar, Shashtri Chowk, Raipur, District- Raipur (CG) 6. The District Industries Center- Through its General Manager, Near Collectorate, Raipur, District-Raipur (CG) 7. The Collector, Raipur, Distt. Raipur (CG) 8. The S.D.0. Revenue Department, Raipur (CG) 9. Sharda Energy and Minerals Limited through Executive (^, Present: O RD E R (Passed on Q'^June, 2008) Dhirendra Mishra, J This petition under Article 226 of the Constitution of India is directed against the Letter of Intent dated 3rd January 2007 (Annexure P/9) issued by the respondent No. 4 in favour of Chhattisgarh Electricity Company Ltd. (now M/s Sharda Energy and Minerals Limited)/respondent No.9 whereby their applications for allotment of land has been considered and allotment of 61.287 hectares of land situated at Industrial Area, Siltara, PH-I (in short 'the land in question') for setting up Sponge Iron Plant, Power Plant, Steel Plant, Coke oven, Pelletizing and Sintering etc. has been proposed as per terms and conditions mentioned therein. 2. Facts necessary for the purpose of this petition are that one Rajendra Steels Ltd. (for brevity hereinafter referred to as "RSL") entered into a Memorandum of Understanding (MOU) dated 8.11.1994 to set up an integrated steel plant at Siltara, Raipur. The industry was allotted 113.927 hectares of land vide three successive lease deeds i.e. Annexure P/2 for 52.64 hectares, Annexure P/3 for 31.106 hectares and Annexure P/4 for 30.181 hectares. However, the aboye Director, Unit at Industrial Growth Centre, Face-1, Siltara, Raipur, District -Raipur (CG) Mr. Vivek Tankha, Sr. Advocate with Mr. Anurag Sharma, Mrs. Sushma Singh 8s Mr. Prateek Sharma, Advocates. 9• For the petitioner. Mr. Prashant Mishra, Advocate General with Mr. Shashank Thakur, Panel Lawyer. • 9 For respondents No.l, 2, 6, 7 8s 8. Mr. Prashant Mishra, Sr. Advocate with Mr.B.D. Guru, Advocate. For respondent No.4. Mr. Ravindra Shrivastava, Sr. Advocate with Mr. Kunal Verraa, Advocate. For respondent No.9. industry abruptly ceased working and operation. The promoters of the industry abandoned the plant and they could not be traced. The High Court of Allahabad appointed official liquidator. The petitioner purchased 52.64 hectares of land and the estate of erstwhile RSL unit along with plant and machinery in the auction conducted on 2.12.2005. The High Court of Allahabad vide order dated 12th December 2006 (Annexure P/7) passed in Company Petition No. 44/98 directed that possession of the remaining 61.278 hectares of lease hold land be handed over to CSIDC/respondent No.4. 3. M/s Sharda Energy and Minerals Ltd. entered into MOU dated 7.1.2005 for setting up an industrial project. On request of respondent No.9, the State Govt. denotified on 28.12.2005 and released the land admeasuring 61.807 hectares, adjacent to land in question, to enable the respondent No.9 to deal with the land owners directly. The respondent No.9, thereafter, applied for allotment of the land in question for carrying out their expansion programme, whereupon the State Investment Promotion Board/respondent No.5 directed the CSIDC/respondent No.4 to initiate proceedings for allotment and lease out the land in question in favour of the respondent No.9. The advertisement dated 1.12.2005 was published by respondent No. 5 inviting applications for allotment of 71.473 hectares of land, which also included the land in question. The offer of respondent No. 9 was accepted by the respondent No.4 and it was directed to deposit Rs.35,73,650/- being 10% of the proposed premium amount vide their letter dated 9.12.2005 and the same was deposited on 12.12.2005. However, in view of the stay order dated 18.11.2005 passed by Allahabad High Court in Company Petition No.44/98 filed against RSL, the respondent No.4 annulled its letter dated 9.12.2005 and communicated the petitioner that after the proceedings pending in the High Court of Allahabad are over, the land allotment proceedings will be again initiated. 4. The High Court of Allahabad vide final order dated 12.12.2006 directed the official liquidator to hand over possession of 61.287 hectares of land to CSIDC/respondent No.4. The respondent No. 4 by the impugned Letter of Intent has proposed to allot the land to respondent No.9. 5. The petitioner has impugned the Letter of Intent dated 3.1.2007 on the following grounds:- (i) that the same is in violation of the order dated 12.12.2006 passed by Allahabad High Court in Company Petition No.44/98, (ii) that the same is also in violation of the rules for allotment, which find mention in the order of the High Court of Allahabad dated 12.12.2006; (iii) that the Letter of Intent dated 3.1.2007 has been issued with manifest bad faith and the same is in violation of the State Industrial Policy as Sponge Iron Plant (coal based) and Thermal Plant (coal based) proposed by the respondent No.9 is not permissible in the said industrial area in view of the Industrial Policy of the State. 6. Mr. Vivek Tankha, learned Sr. Advocate vehemently contended that the High Court of Allahabad vide interim order dated 18.11.2005 had specifically observed that as per information received from CSIDC, the company was allotted 113.927 hectares of land, the entire land comes in the custody of the Court through the Official Liquidator. The possession of remaining land measuring 61.278 hectares must be handed over to the Official Liquidator. 52.64 hectares of land of RSL was put to auction, in which the respondent No.9 also participated along with the petitioner and the petitioner purchased the above land. Thus, the respondent No. 4 as also the respondent No. 9 were aware of ? > the interim order dated 18.11.2005, even then public notice regarding allotment of land in question was issued on 1.12.2005, offer of the respondent No.9 was accepted vide Memo dated 9.12.2005 and the ainount against allotment was deposited by the respondent No. 9 on 12.12.2005. The stand of the respondent No.4 in their return that the respondent No.9 had never withdrawn its application for allotment and it was CSIDC/respondent No.4 who had withdrawn its offer of allotment made to Sharda Energy and Minerals, runs contrary to the observations made by the Allahabad High Court in paragraph-14 of Annexure P/7 wherein it has been categorically observed that "Shri Verma states that Chhattisgarh Electricity Company has withdrawn its offer for allotment of land and that the allotment money has been returned to it. The CSIDC Ltd. has not yet decided to allot the land to anyone and that the allotment may be made to the eligible and deserving candidate in accordance with the existing rules of allotment." 7. The respondent No. 4 vide their letter dated 29.11.2006 communicated the respondent No. 9 that the allotment of land in question shall be done in accordance with the order of Allahabad High Court. Thus, from the sequence of events narrated above, public notification issued by respondent No. 4 dated 1.12.2005, allotment of the land in question in favour of respondent No. 9 on its application dated 1.12.2005 vide Memo dated 9.12.2005 and the deposition of premium amount, was in violation of the interim order dated 18.11.2005, the same was subsequently annulled by the respondent No. 4 and it was categorically declared that the allotment of land in question shall be done in accordance with the directions of the High Court of Allahabad. Therefore, contention of the respondents that the application of respondent No.9 was prior on the point of time, is not established from the documents available on record as the petitioner applied for allotment immediately ..-7 3 after the order was passed by the High Court of Allahabad on 12.12.2006. 8. It was further argued that the allotment of land for industries is governed by the Madhya Pradesh Industries (Allotment of Sheds, Plots and Land) Rules, 1974 (for brevity 'the Rules, 1974'). Rule 5 provides for priority for existing working industrial unit, which require land for expansion. Rule 8 provides for disposal of the applications, which mandates that the applications are to be considered in order of the date of receipt and all applications for allotment have to be decided after due examination within 15 days. In the instant case, the petitioner s application, though earlier on the point of time, has not been considered nor decided as per Rule 8 of the Rules, 1974. 9. Itwas further argued that the respondent No.4, an instrumentality of the State, has acted in complete bad faith by issuing Letter of Intent to respondent No.9 in utter violation of the decision of Allahabad High Court. The bad faith is writ large from perusal of the letter dated Is' December, 2005, the date on which 52 hectares of land was auctioned and purchased by the petitioner. There is a clear cut superimposition of figure "2" to "l". The subsequent conduct of the respondents No. 4 and 9 is also in utter disregard to the interim order dated 18.11.2005 passed by the Allahabad High Court. 10. Lastly, it was argued that the respondent No.9 had submitted an application with the Chhattisgarh State Environment Conservation Board for installation of coal based Sponge Iron and Thermal Plant. Since the State of CG had stated on oath that the State would not allow any coal based unit within 25 kms radius of Raipur city specifying Urla, Borjhara, and Siltara Industrial Area of Raipur, the proposal submitted by the respondent No.9 for the above stated plants, stood rejected. However, vide Letter of Intent C7^' dated 3.1.2007 a proposal has been made for allotment of the land in question for setting up Sponge Iron Plant, Power Plant, Steel Plant, Coke oven, Pelletizing and Sintering etc., though the proposed allotment could not be made in view of the State Govt. Industrial Policy, which does not permit coal based activity in Siltara industrial area. 11. Repelling the contention of the respondents based on delay and latches on the part of the petitioner, it has been submitted that the petitioner made continuous representations before the State Govt. and the CSIDC/respondent No.4 considered his representations and provided corridor of 80 meters through the land in question on 9.10.2007. The proposal was acceptable to the petitioner as there was no other alternative. However, the petitioner had never given up his claim over the entire 61 hectares of land. Though vide order dated 3.1.2008 a new corridor of 6 km was provided to the petitioner as an interim/temporary measure to save the project and survive, yet the same cannot be considered that the petitioner has acquiesced in the said grant. 12. Reliance is placed on the decisions of the Hon'ble Apex Court in the matters of V.S.Chara.ti_Vs. Hussein Nhanu Jamadar IDead) by Leaal Hrs.1. Church of South India Trust Association Vs. Telugu Church Council2, Palitana Suaar laills Pvt. Ltd. & Anr. Vs. Smt. Vilasini Ben Ramachandran_S^Qthers3, Ramana Dayaram. Shetty Vs. International Airport Authoritu & Others4 and Tata Cellular Vs. Union of India5. 13. On the other hand, Mr. Ravindra Shrivastava, Sr. Advocate appearing for the respondent No. 9 contended that the instant petition has been preferred after undue delay of ' AIR1999 SC 1488 2 1996(2)5cc520 3 AIR 2007 SC 1701 4 1979(3)5cc489 5 1994(6)8cc651 / r-i more than one year and one month since the CSIDC initiated proceedings for allotment of the land in question and Letter of Intent dated 3rd January 2007 in favour of respondent No.9 was issued. The High Court of Allahabad vide order dated 12.12.20.06 did not accept claim of the petitioner for allotment of the land. The petitioner is challenging the Letter of Intent dated 3rd January 2007 issued in favour of respondent No.9 and there is no explanation for filing this petition after one year and one month and thus, the instant petition is barred by delay, latches and acquiescence. 14. It was further argued that the petitioner does not require the land in dispute for any functional utility. It is clear from his communication dated 20th July 2007 that he needs a corridor in order to facilitate the transportation of hot metal and demanded 80 meter wide corridor for the above purpose. The petitioner has already accepted the alternate corridor land vide his letter dated 31st January 2008 (Annexure R-9/24) and lease for a period of 99 years of the alternate corridor has already been executed. Thus, from subsequent conduct of the petitioner, it is evident that he has waived his right and abandoned his claim, if any, and the instant petition is an afterthought. 15. The petition also suffers from suppression of material facts as the petitioner has suppressed the fact that he requested for allotment of 80 meter wide corridor vide his letter dated 20th July 2007 and was allotted land by the CSIDC vide order dated 10th September 2007. The petitioner has also suppressed the final letter of allotment dated 31st January 2008 and lease deed dated 6th February 2008 in his favour. Thus, the petitioner has not come before the Court with clean hands. 16. The order of allotment in favour of respondent No.9 cannot be interfered with unless the petitioner is able to /". ^y -B, j \J^SS^ demonstrate proof of malafide or illegal and arbitrary exercise of power in allotment. The petitioner does not have any justifiable right in claiming preference for allotment in his favour as there is no MOU between the State Govt. and the petitioner. The petitioner cannot claim any right on the basis of lease in favour of RSL, a liquidated company, as its successor since after liquidation of the said industry, no any actionable right passes in favour of the petitioner. 17. The respondent No.9 has entered into an MOU with the State of Chhattisgarh on 7th January 2005 whereby it agreed to facilitate through CSIDC and provide all necessary assistance in procuring land required for implementation of the project mentioned in MOU. The allotment has been made on the basis of actual need of the respondent No.9 and the land allotted is adjacent and contiguous to the land belonging to the respondent No. 9. The application of the respondent No. 9 was prior on the point of time, it had never withdrawn its offer and the observations made in paragraph-14 of the order of Allahabad High Court refer to the submission of learned counsel for the CSIDC and from the documents available on record as also return of respondent No.4, it would be evident that respondent No. 9 had never withdrawn its offer. The interim order dated 18.11.2005 passed by Allahabad High Court was communicated to the respondent No.4 vide letter dated 6th December 2005 which was received on 13th December 2005 and the High Court in the above order has observed that respondent No.4 has prima facie established that it had no knowledge of the order of liquidation and therefore, no contempt proceedings were drawn against respondent No.4, though the fact of allotment dated 19.12.2005 was brought to the notice of the High Court. The Letter of Intent was issued after the stay order dated 18.11.2005 was vacated by the High Court of Allahabad vide order dated 12.12.2006. 10 18. The letter dated 20th February 2008 issued by the Chhattisgarh Environment Conservation Board relates to only coal based projects already existing at Siltara industrial area. The respondent No.9 was granted necessary environmental clearance by Ministry of Environment and Forest (MOEP), New Delhi vide letter dated 28.9.2007 (Annexure R-9/20) and vide letter dated 5th March 2008 it has already revised its project and removed the coal based projects. Chhattisgarh Environment Conservation Board vide letter dated 26th March 2008 (Annexure R-9/21) has given environmental clearance to the respondent No.9 for expansion on the basis of its revised projects. 19. Reliance is placed on the decisions rendered by the Hon'ble Supreme Court in the matters of M/s Kasturi Lal Lakshini Redd-fi Vs. State of Jam.mu and Kashm.ir and Another6 and State of M.P^ ^ind others Vs. Nandlal Jaiswal and others7. 20. The respondent No. 4 in its return, apart from raising objections regarding delay and latches in filing the instant petition, has taken a categorical stand that the respondent No. 9 has never withdrawn its application for allotment and the offer was withdrawn by the CSIDC because of pendency of the liquidation proceedings. It has been further averred that respondent No.9 has been allotted land in accordance with the law, rules and procedure. The petitioner is not entitled for any priority as it does not have any existing working industrial unit adjoining to the land in question and there is no application for expansion of the existing working industrial unit by the petitioner. The application of the petitioner was later on the point of time than the application of the respondent No.9. The application was also for non-industrial unit. The petitioner has availed concessions/exemptions from the State Government for tj-ie '(1980)4SCC1 7(1986)4SCC566 11 / /' ^ 7 " establishment of new industry and therefore, Rule 5(c) of the Rules, 1974 is not applicable in case of the petitioner. The unit of the petitioner is not included within the definition of existing working industrial unit as defined in the industrial policy of the State Government for the year 2004 (Annexure R/l). Allegations of favouritism in favour of respondent No.9 has been denied and it has been further submitted that the petitioner has been already allotted land for transportation of hot metal and lease deed has been executed in his favour for the above land. Thus, the need of transportation of hot metalstands satisfied. 21. The State/respondents No. 1,2,6,7 8s 8 has not filed any separate return and has adopted the stand taken by the respondent No.4 in its return. However, the State has stated on affidavit that vide order dated 16th March 2007 (Annexure R/l) it has taken a decision that there shall be a ban on establishment of new sponge iron and coal based thermal power units in Urla, Borjhara, and Siltara Industrial Area of Raipur and the above industrial areas are consist of villages mentioned in the application. 22. I have heard learned counsel for the respective parties and gone through the material available on record. 23. The petitioner by the instant petition has prayed for various reliefs as mentioned in paragraph-7 of the petition. However, during oral arguments as also in the written submission, the petitioner has challenged the legality, validity and propriety of the Letter of Intent dated 3rd January 2007 issued in favour of respondent No.9 and prayed for quashing of the same. 24. The grounds upon which an administrative action is subject to control by judicial review is well settled. Judicial review is concerned with reviewing not the merits of the decision but the decision-making process itself. Since the power of judicial review is not an appeal from the decision, 12 the Court cannot substitute its own decision. Illegality, irrationality and procedural impropriety are some of the broad grounds, upon which an administrative action is subject to control by judicial review. 25. In the matter of Ramana Dayaram. Shetty4 the Hon'ble Supreme Court considering that today the Government in a welfare State is provider of large number of benefits including jobs, contracts, licences, quotas, mineral rights etc, has held that discretion of the Government in such matters is not unlimited. The Government cannot give or withhold largesse in its arbitrary discretion or at its sweet will and the same must be based on standards that are not arbitrary or unauthorized as the Government does not stand in the same position as a private individual. When the Government enters into a contract, it must do so fairly without discrimination and without unfair procedure. 26. In Tata Cellular's5 case also it has been held that only the decision making process and not the merits of the decision itself is reviewable by the Court as the Court does not sit as appellate Court while exercising power of review. Extensively referring catena of earlier judgments rendered in this regard, it has been held in para-94 of the above judgment as under: "94 The principles deducible from the above are : (1) The modern trend points to judicial restraint in administrative action. (2) The court does not sit as a court of appeal but merely reviews the manner in which the decision was made. (3) The court does not have the expertise to correct the administrative decision. If a review of the administrative decision is permitted it will be substituting its own decision, without the necessary expertise which itself may be fallible. (4) The terms of the invitation to tender cannot be open to judicial scrutiny because the invitation to tender is in the realm of contract. Normally speaking, the decision to accept the tender or award the contract is reached by process of negotiations through several 13 tiers. More often fhan not, such decisions are made qualitatively by experts. (5) The Government must have freedom of contract. In other words, a fair play in the joints is a necessary concoraitant for an administrative body functioning in an administrative sphere or quasi- administrative sphere. However, the decision must not only be tested by the application of Wednesbuiy principle of reasonableness (including its other facts pointed out above) but must be free from arbitrariness not affected by bias or actuated by mala fides. (6) Quashing decisions may impose heavy administrative burden on the administration and lead to increased and unbudgeted expenditure." 27. In the matter of M/s Kasturi Lal Lakshmi Reddy6 also it has been held that if the Government awards a contract or leases out its property or grants any other largesse, it is liable to be tested for its validity on the touchstone of "reasonableness" and "in public interest". If it fails to satisfy either test, it would be unconstitutional and invalid as the Government cannot act arbitrary, capriciously or in an unprincipled manner. However, in para-14 it has been further held thus: "14. ...................... There may be an infinite variety of considerations which may have to be taken into account by the Government in formulating its policies and it is on a total evaluation of various considerations which have weighed with the Government in taking a particular action, that the court would have to decide whether the action of the Government is reasonable and in public interest. However, there is always a presumption that the government action is reasonable and in public interest and it is for the party challenging its validity to show that it is wanting in reasonableness or is not informed with public interest. This burden is a heavy one and it has to be discharged to the satisfaction of the court by proper and adequate material. The court cannot lightly assume that the action taken by the Government is unreasonable or without public interest, but where it is clearly satisfied in that regard, it would be the plainest duty under the Constitution to invalidate the governmental action. This ground of invalidity, namely, that the governmental action is unreasonable or lacking in the quality of public interest, is different from that of mala fides though it may, in a given case, furnish evidence of mala fides." > ^^-SKft, 14 >