The Supreme Court has asserted that equities cannot work in favour of litigants whose conduct is callous, laconic and in clear violation of the applicable rules and regulations. The Supreme Court, in exercise of its extraordinary jurisdiction under Article 136 of the Constitution of India, would be loath to substitute its own discretion for that of the State Government in commercial decisions regarding the grant of industrial plots at concessional rates, especially when the appellant-company has failed to make out a case for grant of equitable relief due to its failure to adhere to the mandatory terms and conditions of the lease deed.
The Supreme Court has upheld the Uttar Pradesh State Industrial Development Authority’s (UPSIDA) cancellation of Piaggio Vehicles industrial plot lease in Greater Noida, citing years of non-utilisation and breach of lease terms. It found the company failed to start construction or industrial production despite taking possession in 2002 and rejected its pleas for extension or equitable relief.
The Court therefore directed the appellant-company to handover the vacant and peaceful possession of the subject plot to UPSIDA, within thirty days, which would be at liberty to deal with the plot as per law. The amount of Rs.10.95 crores, deposited by the appellant–company in this Court, shall be refunded to the appellant–company, along with the accrued interest thereon.
The Three Judge Bench comprising Justice Vikram Nath, Justice Sandeep Mehta, and Justice N.V. Anjaria observed that the primary purposes behind the establishment of an industrial area are to generate revenue, create employment opportunities, and foster overall economic development of the area in question. To achieve these salutary objectives, the allottees are granted large tracts of land at subsidised rates and are mandated to strictly comply with the terms and conditions of allotment, including time-bound schedules for project implementation.
The Bench noted that Clauses 3(e) and 3(o) of the lease deed make it abundantly clear that the lessee, upon execution of the lease deed and handing over of possession, would be under an obligation to raise construction of the industrial unit within the stipulated period of six months, or within such extended period as may be allowed.
Right from the date of the grant of lease to the sister concern of the appellant-company on 14th December, 2001 till the events leading to cancellation of the lease deed on 25th August, 2008, the appellant-company failed to demonstrate any convincing effort or bona fide intent to establish a full-scale industrial manufacturing unit on the plot in question, and did not even submit any proposal for approval of a layout plan, added the Bench.
The Bench found that the fresh lease deed dated 10th July, 2007, was executed merely to reflect the change in name of the lessee, and the fundamental conditions of the original lease dated 19th March, 2002 remained unaltered; hence, the inviolable conditions requiring the appellant-company to raise construction within the stipulated period were never modified, altered or extended.
The omission of mandatory conditions in the submitted affidavits was calculated and intentional, as furnishing the affidavit in the prescribed format would have legally bound the appellant-company to undertake the construction within three months of grant of extension and to commence the production within nine months thereof, added the Bench.
The Bench went on to observe that the lackadaisical conduct of the appellant-company in failing to adhere to the terms and conditions of the lease deed, and thereby delaying development of the industrial plot by almost six to seven years, as against the mandatory period of six months prescribed under the lease deed, would equally disentitle it to discretionary relief.
It is absolutely in the domain of the State Government to consider the case of a particular applicant for grant of an industrial plot at concessional rate, and the Court, in exercise of its extraordinary jurisdiction under Article 136 of the Constitution of India, would be loath to substitute its own discretion for that of the State Government in such commercial decisions, added the Bench.
Briefly, the industrial plot in question was originally allotted on 16th May, 1985 to M/s. Stallion Shox Limited, which transferred its rights and interests to the appellant-company’s predecessor, Piaggio (India) Pvt Ltd., and the said transfer was ratified and approved by UPSIDA on 14th December, 2001. A formal lease deed was subsequently executed between M/s. Piaggio (India) Pvt Ltd. and UPSIDA on 19th March, 2002. Following an amalgamation sanctioned by the High Courts of Mumbai and Delhi, the lease of the industrial plot was transferred to M/s. Piaggio Vehicles Pvt Ltd., and a fresh lease deed dated 10th July, 2007 was executed by UPSIDA in the name of the appellant-company.
By order dated 25th August, 2008, UPSIDA forfeited the lease of Plot No. A-1, Site-B, admeasuring 33 acres at Surajpur Industrial Area, on account of breach of terms and conditions stipulated under sub-clauses (e) and (o) of Clause 3 read with Clause 5 of the lease deed, specifically for failing to complete construction of the factory building within the stipulated period or the extended time permitted thereunder. The appellant-company admitted that owing to compelling circumstances, specifically the pressure to rapidly scale up manpower and facilities at its alternate facility at Baramati, Maharashtra, the entire industrial set-up could not be installed at the location in question.
A letter dated 31st January, 2008 was issued by the Regional Manager, UPSIDA, apprising the appellant-company that to seek a one-year extension, it must deposit a sum of Rs. 35.93 lakhs and furnish an affidavit in the annexed format. The appellant-company failed to deposit the extension fee within the stipulated thirty days, depositing it only after the cancellation letter dated 25th August, 2008 was issued by UPSIDA, and the affidavits submitted deliberately omitted mandatory conditions of the prescribed format. The High Court dismissed the petition preferred by the appellant-company, thereby affirming the order of forfeiture.
Appearances:
AOR Suman Kukrety, for the Appellant
Senior Advocate Atmaram N S Nadkarni, AORs Shashank Shekhar Singh and Salvador Santosh Rebello, along with Advocates Abhinav Singh, Ruchira Gupta, Pooja Tripathi, Mohtisham Ali, Yashika Sharma, Sumriddhi Agrawal, and Nitender Yadav, for the Respondent
