CASE DETAILS v. KUMAON ENTERTAINMENT AND HOSPITALITIES PVT. LTD

12 S.C.R. 775 : 2023 INSC 871 CASE DETAILS KARNATAKA STATE ELECTRONICS DEVELOPMENT CORPORATION LTD. v. KUMAON ENTERTAINMENT AND HOSPITALITIES PVT. LTD. (Civil Appeal No. 8073 of 2022) OCTOBER 05, 2023 [VIKRAM NATH AND AHSANUDDIN AMANULLAH, JJ.] HEADNOTES Issue for consideration: Matter pertains to the demand raised by the State Undertaking from the allottee towards the charges for conversion of nature of use from IT Sector to Hospitality Sector. Land laws – Conversion of nature of use – Payment of conversion charges – Allotment of plot by State undertaking to the respondent- allottee for setting up Information Technology-IT industry on lease cum sale basis, but the allottee later sought conversion of nature of use from IT Sector to Hospitality Sector – Permission of change of use granted on payment of charges for change of activity, however a year later an audit objection raised that permission of change of use was granted at a much lower rate – Demand raised by the Undertaking towards conversion of usage charges – Allottee did not pay the same and fi led writ petition seeking execution of sale deed by the Undertaking – Allowed by the Single Judge of the High Court which was upheld by the Division Bench – Correctness: Held: Any loss suff ered by the appellant being a fully owned State Undertaking would be a loss to the public exchequer – Allottee shifted its purpose of setting up an IT related industry to a hospitality sector to set up a hotel – If the amount for such conversion of usage is not legally recovered from the allottee, loss being suff ered by the Undertaking would not be in public interest – Also all other similarly situated allottees have paid the rate determined in the Board Meeting of the Undertaking – Allottee got undue advantage merely because the clerical staff and the offi cer signing the 775 776 SUPREME COURT REPORTS [2023] 12 S.C.R. demand notice applied the lower rate – Neither of them competent to override or deviate from the decision taken in the Board Meeting – Furthermore, the Board Meeting took place prior to the allottee applied for change of use and issuance of the demand notice for conversion, thus, no justifi cation for not adhering to the decision taken in the Board Meeting – Bona fi de mistake could always be corrected – Allotment letter as also the lease agreement clear that the rate was tentative and the fi nal rate was to be determined later, which would be binding on the allottee – Once the fi nal rate is determined by the Board, being the prevailing rate of the Collector, would be binding on the allottee – Division Bench failed to exercise its discretion vested under the law in condoning the delay, thereby resulting into serious prejudice and fi nancial loss to the Undertaking-public entity – Thus, demand notice does not suff er from any infi rmity and allottee liable to pay the same – Judgments passed by the Division Bench and the Single Judge set aside – Constitution of India – Art.

136. [Para 22, 21, 24, 25, 28] LIST OF CITATIONS AND OTHER REFERENCES Karnataka Industrial Development Board Anr. vs. M/s Prakash Dal Mill and Ors. (2011) 6 SCC 714 : [2011] 5 SCR 26 – distinguished. M. Nagabhushana v. State of Karnataka (2011) 3 SCC 408 : [2011] 2 SCR 435; Dnyandeo Sabaji Naik v. Pradnya Prakash Khadekar (2017) 5 SCC 496 : [2017] 2 SCR 95; Vinod Kapoor v. State of Goa (2012) 12 SCC 378 : [2012] 8 SCR 1089; Sandhya Educational Society v. Union of India (2014) 7 SCC 701; Union of India vs. West Coast Paper Mill (2004) 3 SCC 458 : [2004] 2 SCR 642 – held not applicable.