K.CHANDRUW.P.No.2022 of 2009 Ramakrishna Engineering Companyrep. by Managing PartnerDhinoo GopalakrishnanA10 and A11 v. The State Industries Promotion Corporationof Tamil Nadu

IN THE HIGH COURT OF JUDICATURE AT MADRAS DATED: 8.9.2011CORAM: THE HONOURABLE MR.JUSTICE K.CHANDRUW.P.No.2022 of 2009Ramakrishna Engineering Companyrep. by Managing PartnerDhinoo GopalakrishnanA10 and A11, Industrial EstateMMDA Colony, ArumbakkamChennai – 600 106... Petitioner Vs.The State Industries Promotion Corporationof Tamil Nadu, rep. by Chairman and Managing Director, 19A, Rukmani Lakshmipathy RoadEgmore, Chennai – 600 008... RespondentPRAYER: Petition under Article 226 of the Constitution of India forissue of writ of Certiorari to call for the records of the respondentpertaining to the order bearing DII/SIP/IRU/REC/2003, dated 13.1.2009and quash the same.For Petitioner:Mr.Srinath SridevanFor Respondent :Ms.Narmadha SampathORDERThe petitioner was an allottee of a developed plot in the SIPCOTIndustrial Park at Irungattukottai. The petitioner was allotted PlotNo.A1 (Part) to the extent of 4 Acres. In this writ petition, thepetitioner has challenged an order dated 13.1.2009 issued by therespondent/SIPCOT, wherein they have indicated their intention toresume the unutilised portion of the land to the extent of 2 Acres.It was stated that under the conditions of allotment and in paragraph14(1) of the Lease Deed it was stipulated that if the plot allottedto the allottee is not fully utilised, then there is no impedimentfor the respondent/SIPCOT to resume the land and it was found thatthe petitioner had not constructed in the area which is allotted toit as per the conditions of lease. https://hcservices.ecourts.gov.in/hcservices/

2. As per the conditions of lease which is appended in the typedset, it is stipulated that non compliance of the terms and conditionsof the allotment will result in cancellation of the lease, includingclaiming of amount paid towards plot and interest already paid. Oneof the conditions that is set out is that the allottee should put touse the land for the purpose for which it was allotted and if it isin excess of the actual requirement than the purpose for which it isallotted, the respondent/ SIPCOT can, at any time, cancel theallotment. It is also stated that the construction of the buildingwill have to be commenced within six months from the date of theallotment order and should be completed within 24 months from thedate of the allotment. 3. The lease was executed in favour of the petitioner on5.12.2003, pursuant to the allotment order made on 26.8.2003.Thereafter, after waiting for five years, a notice dated 31.1.2008was issued to the petitioner and in that notice the petitioner wasinformed that the petitioner has violated condition No.6(a) of theallotment order and condition No.14(1) of the lease deed and sincethe land was not put to use for the purpose for which it was allottedand it was also found to be excess of the actual requirement, theyhave right to cancel the allotment in respect of the land which wasnot utilized. The petitioner was asked to show cause on the same.4. The petitioner sent a reply dated 15.5.2008 stating that theyneed the entire land and they have also finalized their expansionplan for the next two/three years and they also require six to eightmonths for completing the work. They also sent furtherrepresentation dated 11.6.2008 indicating that they have furtherperiod of two years for completing the construction process.5. In the meanwhile, the respondent/SIPCOT, by communicationdated 12.6.2008, found that since the original condition was notcomplied with, they propose to resume the unutilised portion of landallotted to them. It is pursuant to the said warning the impugnedorder came to be passed on 13.1.2009. In the impugned order, it isstated that even after ninety days time was given for compliance ofdefects by the proceedings of the respondent dated 28.3.2008, thepetitioner had not complied with the same and it is also stated thaton inspection made by the respondent, it was found that they have noteven commenced civil works in the site and therefore, they weredirected to show cause as to why allotment should not be cancelled.Challenging the said show cause notice, the writ petition came to befiled.6. The writ petition was admitted on 2.2.2009. Pending the writpetition, interim stay was granted. On notice from this Court, therespondent/SIPCOT is represented by Ms.Narmada Sampath, learnedcounsel. Today when the matter came up, the learned counsel for thepetitioner produced further documents showing that they had madeapplication for building approval on 21.5.2008 and they have alsopaid the infrastructure and amenities charges and official planapproval was also obtained. But these conditions will not improve https://hcservices.ecourts.gov.in/hcservices/ the case of the petitioner. In any event, if the petitioner has agood case, they should give appropriate reply to the SIPCOT andconvince the SIPCOT about the necessity or legal right for it toretain the land. 7. Considering the fact that the transaction between thepetitioner and the respondent/SIPCOT is purely contractual andadmittedly, the contractual conditions have been violated, this Courtis not inclined to entertain the writ petition either to extend theterms and conditions of lease or to modify the lease conditions onthe basis of the difficulties pleaded by the petitioner. 8. In this context, it is necessary to refer to the judgment ofthe Supreme Court in Kerala State Electricity Board v. KurienE.Kalathil, AIR 2000 SC 2573 : [2000] 6 SCC 293. The Supreme Courthas held that a contract between the parties would not becomestatutory simply because it is for construction of a public utilityor because the allotment was made by a statutory body and every actof the statutory body need not involve the exercise of statutorypower. In such circumstances, the Court exercising power underArticle 226 of the Constitution of India cannot exercise itsdiscretion to interpret the terms and conditions of such contract.In paragraph [11] of the judgment, it was held as follows:"11. A statute may expressly or impliedly confer poweron a statutory body to enter into contracts in order toenable it to discharge its functions. Dispute arisingout of the terms of such contracts or alleged breacheshave to be settled by the ordinary principles of law ofcontract. The fact that one of the parties to theagreement is a statutory or public body will not byitself affect the principles to be applied. The disputesabout the meaning of a covenant in a contract or itsenforceability have to be determined according to theusual principles of the Contract Act. Every act of astatutory body need not necessarily involve an exerciseof statutory power. Statutory bodies, like privateparties, have power to contract or deal with property.Such activities may not raise any issue of public law.In the present case, it has not been shown how thecontract is statutory. The contract between the partiesis in the realm of private law. It is not a statutorycontract. The disputes relating to interpretation of theterms and conditions of such a contract could not havebeen agitated in a petition under Article 226 of theConstitution of India. That is a matter for adjudicationby a civil court or in arbitration if provided for inthe contract. Whether any amount is due and if so, howmuch and refusal of the appellant to pay it is justifiedor not, are not the matters which could have beenagitated and decided in a writ petition. The contractorshould have relegated to other remedies." https://hcservices.ecourts.gov.in/hcservices/

9. The Supreme Court subsequently in State of Bihar v. JainPlastics and Chemicals Ltd., AIR 2002 SC 206 : [2002] 1 SCC 216 hasreiterated the similar opinion and it was held that the Courtexercising jurisdiction under Article 226 of the Constitution ofIndia cannot deal with the breach of contract and grant relief to theparties on the basis of the explanation offered by one of the partiesto the contract. In paragraph [7], it was observed as follows:"7. In our view, it is apparent that the order passed bythe High Court is, on the face of it, illegal anderroneous. It is true that many matters could be decidedafter referring to the contentions raised in theaffidavits and counter-affidavits, but that would hardlybe a ground for exercise of extraordinary jurisdictionunder Article 226 of the Constitution in case of allegedbreach of contract. Whether the alleged non-supply ofroad permits by the appellants would justify breach ofcontract by the respondent would depend upon facts andevidence and is not required to be decided or dealt within a writ petition. Such seriously disputed questions orrival claims of the parties with regard to breach ofcontract are to be investigated and determined on thebasis of evidence which may be led by the parties in aproperly instituted civil suit rather than by a courtexercising prerogative of issuing writs."10. The learned counsel, Ms.Narmada Sampath, also brought to thenotice of this Court the judgment of the Supreme Court in U.P.Financial Corporation v. Gem Cap (India) Private Limited and others,[1993] 2 SCC 299 for contending that the Court can exercise poweronly when there is a statutory violation on the part of theCorporation or where the Corporation acts unfairly or unreasonably.The Court exercising the power under Article 226 of the Constitutionof India cannot sit as an Appellate Authority over the acts and deedsof the Corporation and seek to correct them. In that case, the Courtwas dealing with an organization like the respondent, which iscreated by the State Financial Corporations Act, 1951, and whiledealing with the transactions with the Corporation, the Court heldthat fairness is not a one-way street. It is necessary to refer tothe following passage found in paragraph [10], which is as follows:"10. It is true that the appellant-corporation is aninstrumentality of the State created under the StateFinancial Corporations Act, 1951. The said Act was madeby the Parliament with a view to promoteindustrialisation of the States by encouraging small andmedium industries by giving financial assistance in theshape of loans and advances, repayable within a periodnot exceeding 20 years from the date of loan. We agreethat the corporation is not like an ordinary money-lender or a Bank which lends money. It is a lender witha purpose — the purpose being promoting the small andmedium industries. At the same time, it is necessary tokeep certain basic facts in view. The relationship https://hcservices.ecourts.gov.in/hcservices/ between the corporation and the borrower is that ofcreditor and debtor. The corporation is not supposed togive loans once and go out of business. It has also torecover them so that it can give fresh loans to others.The corporation no doubt has to act within the fourcorners of the Act and in furtherance of the objectunderlying the Act. But this factor cannot be carried tothe extent of obligating the corporation to revive andresurrect every sick industry irrespective of the costinvolved. Promoting industrialisation at the cost ofpublic funds does not serve the public interest; itmerely amounts to transferring public money to privateaccount. The fairness required of the corporation cannotbe carried to the extent of disabling it from recoveringwhat is due to it. While not insisting upon the borrowerto honour the commitments undertaken by him, thecorporation alone cannot be shackled hand and foot inthe name of fairness. Fairness is not a one way street,more particularly in matters like the present one. Theabove narration of facts shows that the respondents haveno intention of repaying any part of the debt. They aremerely putting forward one or other ploy to keep thecorporation at bay. Approaching the courts throughsuccessive writ petitions is but a part of this game.Another circumstance. These corporations are not sittingon King Solomon's mines. They too borrow monies fromGovernment or other financial corporations. They toohave to pay interest thereon. The fairness required ofit must be tempered — nay, determined, in the light ofall these circumstances. Indeed, in a matter between thecorporation and its debtor, a writ court has no sayexcept in two situations: (1) there is a statutoryviolation on the part of the corporation or (2) wherethe corporation acts unfairly i.e., unreasonably. Whilethe former does not present any difficulty, the latterneeds a little reiteration of its precise meaning. Whatdoes acting unfairly or unreasonably mean? Does it meanthat the High Court exercising its jurisdiction underArticle 226 of the Constitution can sit as an appellateauthority over the acts and deeds of the corporation andseek to correct them? Surely, it cannot be. That is notthe function of the High Court under Article 226.Doctrine of fairness, evolved in administrative law wasnot supposed to convert the writ courts into appellateauthorities over administrative authorities. Theconstraints — self-imposed undoubtedly — of writjurisdiction still remain. Ignoring them would lead toconfusion and uncertainty. The jurisdiction may becomerudderless." https://hcservices.ecourts.gov.in/hcservices/ Under the said circumstances, this Court is not inclined tointerfere with the impugned notice. Hence, the writ petition isdismissed. This will not prevent the petitioner from filing hisexplanation and the time for filing explanation is extended byanother fifteen days from today. No costs. Consequently, M.P.No.1of 2009 is closed. Sd/Asst. Registrar/true copy/Sub Asst.RegistrarsasiToThe Chairman and Managing Director, State Industries Promotion Corporationof Tamil Nadu, 19A, Rukmani Lakshmipathy RoadEgmore, Chennai – 600 008.+ 1 cc to Mr. Srinath Sridevan, SR.55653+ 1 cc to M/s. Narmadha Sampath, Sr.55626W.P.No.2022 of 2009KJ(CO)Eu 19.9.11