A.P Industrial Inf. Corp. Ltd vs S.N Raj Kumar

2. During 1996-97, the appellant-Corporation allotted industrial plots to the respondents/ entrepreneurs herein at Visakhapatnam and other places in the State of Andhra Pradesh. All the respondents are transport companies with their headquarters all over India and they got allotted the aforesaid plots in Visakhapatnam or other places in the State with the purpose of having branch offices. Intention was to construct transport offices and godowns. The allotment letters vide which allotments were made by the appellant-Corporation contained certain terms and conditions. Civil Appeal No. 3020 of 2018 & Ors. Page 2 of 18 One of the conditions, which is the bone of contention in these appeals, was that the respondents were supposed to establish their units within two years from the date of taking possession of their plots allotted to them for industrial purposes. It was also stipulated that contravention of any of the terms and conditions of the allotment would result in cancellation of such allotment. The relevant clauses signifying the aforesaid stipulation are worded as under:

3. Though initial allotments were made by issuing allotment letters as above, these were followed by agreements of sale which were entered between the appellant-Corporation and the respondents Civil Appeal No. 3020 of 2018 & Ors. Page 3 of 18 on different dates between 1997 and 1999. During this period, sale deeds were also executed by the appellant-Corporation in favour of the respondents, after receiving full consideration of the plots in question, thereby transferring the ownership rights in favour of the respondents herein. Almost six years after the execution of the sale deed, show-cause notices were issued to the respondents for cancellation of the plots on the ground that the respondents had failed to establish their industrial units on the said plots within the stipulated period and had kept them idle which was detrimental to the industrial development. The respondents submitted their separate replies to these show- cause notices wherein, broadly speaking, the position was taken that the appellant-Corporation did not provide basic infrastructure facilities like roads, water, electricity and, therefore, the plots could not be utilised for the purpose of construction of godowns.

17. Insofar as the judgment in Indu Kakkar’s case is concerned, the High Court has rightly held that that would not apply to the facts of this case. On the facts of that case, the Court, in the first instance, came to the conclusion that clause 7 of the agreement, which was entered into between the parties, was binding. As per clause 7, construction of the building for setting up the industry, in Civil Appeal No. 3020 of 2018 & Ors. Page 13 of 18 respect of which land was given to the appellant in that case, was to start within a period of six months and the construction had to be completed with two years from the date of issue of the allotment letters. Since the appellant had failed to commence or build the construction within the stipulated time, show-cause notice has been issued as to why the plot be not resumed as per clause 7 of the agreement. In this backdrop, the appellant had challenged the enforceability of clause 7 of the agreement taking aid of Section 11 of the Act. This contention was repelled in the following manner:

Such incidents include, when the property is land, the easements annexed thereto, the rents and profits thereof accruing after the transfer, and all things attached to the earth;

11. Restriction repugnant to interest created – Where, on a transfer of property, an interest therein is created absolutely in favour of any person, but the terms of the transfer direct that such interest shall be applied or enjoyed by him in a particular manner, he shall be entitled to receive and dispose of such interest as if there were no such direction.

6 (1978) 1 SCC 405 Civil Appeal No. 3020 of 2018 & Ors. Page 17 of 18 the prevailing market value in lump sum towards the cost of the plots. There is no legal basis for such a demand, more so, after the registration of the sale deeds in favour of the respondents thereby transferring the ownership in these plots in their favour.

22. As a result, all these appeals are dismissed with costs.

APRIL 10, 2018.

Civil Appeal No. 3020 of 2018 & Ors. Page 18 of 18