The High Court
Case Details
IN THE HIGH COURT OF ORISSA AT CUTTACK W.P.(C) No.17890 of 2015 M/s. Kandoi Automobiles (P) ltd. ..... Petitioner (s) Mr. Millan Kanungo, Senior Advocate along with associates -versus- Odisha Industrial ..... Infrastructure Development Corporation (IDCO) & Ors. Opposite Party (S) Mr. Jnanindra Pani, CGC Mr. P. K. Mohanty, Senior Advocate along with associates Mr. Mr. Anand Prakash Das, Adv. Mr. Partha Sarthi Nayak, Adv. For O.P No.4 CORAM: THE HON’BLE DR. JUSTICE SANJEEB K PANIGRAHI Order No. 8. ORDER 05.12.2025 1. This matter is taken up through hybrid arrangement. 2. The Petitioner, by instituting the present Writ Petition under Articles 226 and 227 of the Constitution of India, seeks quashing of the notices dated 21.03.2015, 21.05.2015, and 11.09.2015, issued under Annexures–22, 25 and 26, respectively. The Petitioner further prays for a direction restraining the Opposite Parties from evicting it from the Page 1 of 13. Signature Not Verified Digitally Signed Signed by: GITANJALI NAYAK Reason: Authentication Location: OHC Date: 12-Dec-2025 17:51:42 leasehold premises. In addition, the Petitioner seeks a mandamus directing the Opposite Parties to accept the charges prescribed by IDCO under the applicable circulars for change of activity to warehousing, and to permit the Petitioner to operate warehousing activities over the leasehold properties. 3. The briefs facts of the case are that the Petitioner’s industrial unit is situated at Jagatpur Industrial Estate on the outskirts of Cuttack.The Odisha Industrial Infrastructure Development Corporation (IDCO), Opposite Party No.1, leased out in favour of the Petitioner an area of Ac.0.30 dec. (13,050 sq. ft.) along with the building shed bearing No. S-3/8 on 13.03.1987 (Annexure-1). Subsequently, an adjoining parcel of land of the same extent, together with the shed bearing No. S-3/7, was leased to the Petitioner on 07.05.2002 (Annexure-2). Both leases were granted for the purpose of establishing and operating a Tyre Retreading unit and carry a tenure of 90 years, which continues to remain in force. 4. The Petitioner was operating its industrial units smoothly from 1987 until 2010. However, due to various constraints, including periodic changes in Government taxation policies, the tyre-retreading business suffered a significant Signature Not Verified Digitally Signed Signed by: GITANJALI NAYAK Reason: Authentication Location: OHC Date: 12-Dec-2025 17:51:42 setback, resulting in substantial financial losses. Page 2 of 13. Consequently, the Petitioner could not continue its industrial operations and, for the purpose of sustaining itself, temporarily sublet the leasehold premises. IDCO had, in fact, issued a circular dated 23.12.2010 (Annexures-4 and 5) permitting subletting, albeit subject to strict terms and conditions. 5. The Petitioner had been operating its industrial units smoothly from 1987 until 2010. However, due to various constraints, including periodic changes in Government taxation policies, the tyre-retreading business suffered a significant setback, resulting in substantial financial losses. Consequently, the Petitioner became unable to continue its industrial operations and, for the purpose of sustaining itself, temporarily sublet the leasehold premises. IDCO had, in fact, issued a circular dated 23.12.2010 (Annexures-4 and 5) permitting subletting, albeit subject to strict terms and conditions. 6. Upon discovering the Petitioner’s subletting of the premises to M/s. Ultratech Cement Ltd., IDCO issued a show-cause notice dated 15.11.2011 (Annexure-6), proposing cancellation of the allotment. The Petitioner furnished its reply on 01.01.2012 (Annexure-7), explaining the reasons for subletting and requesting permission to let Signature Not Verified Digitally Signed Signed by: GITANJALI NAYAK Reason: Authentication Location: OHC Date: 12-Dec-2025 17:51:42 out the sheds temporarily until the tyre-retreading unit Page 3 of 13. could be revived. Pursuant to IDCO’s communication dated 17.03.2012, the Petitioner submitted the rental agreement along with written information on 30.03.2012 (Annexure-8). IDCO thereafter sought further documentation, which the Petitioner provided to the extent practicable vide its letter dated 12.04.2012 (Annexure-10). 7. Despite several correspondences exchanged between the parties, IDCO ultimately issued an order dated 19.08.2014 (Annexure-14) cancelling the Petitioner’s lease allotment. In compliance with the said order, the Petitioner preferred an appeal before the Chairman-cum-Managing Director, IDCO (Annexures-15 and 16), which is stated to be still pending adjudication. 8. Notwithstanding the exchange of several correspondences
Legal Reasoning
between the parties, IDCO ultimately issued an order dated 19.08.2014 (Annexure-14) cancelling the Petitioner’s lease allotment. Pursuant thereto, the Petitioner preferred an appeal before the Chairman-cum-Managing Director, IDCO (Annexures-15 and 16), which is still pending consideration before the Appellate Authority. 9. Subsequent to the filing of the appeal, IDCO, by communication dated 26.09.2014 (Annexure-19), issued notices for hearing the grievances of all units whose Signature Not Verified Digitally Signed Signed by: GITANJALI NAYAK Reason: Authentication Location: OHC Date: 12-Dec-2025 17:51:42 allotments had been cancelled. The Petitioner appeared Page 4 of 13. before the competent authority and submitted the requisite documents along with a representation dated 09.10.2014 (Annexure-20), praying for restoration of the allotment. Thereafter, by another representation dated 15.01.2015 (Annexure-21), the Petitioner requested IDCO to permit change of use of the allotted sheds from industrial activity to warehousing activity, upon restoration of the allotment. 10. Considering the Petitioner’s grievance, IDCO revoked the earlier cancellation by issuing a letter dated 21.03.2015 (Annexure-22), though subject to specific terms and conditions. The Petitioner claims to have complied with those conditions and intimated IDCO accordingly vide letter dated 07.05.2015 (Annexure-23). Thereafter, by a further representation dated 21.05.2015, the Petitioner requested IDCO to consider its pending appeal and to permit change of use of the sheds from tyre-retreading to warehousing, in line with the prevailing norms and circulars. The Petitioner once again, vide letter dated 24.06.2015 (Annexure-24), sought expeditious disposal of the pending appeal. 11. Upon receipt of the payments stipulated under Annexure- 22, IDCO issued a communication dated 21.05.2015 (Annexure-25) directing the Petitioner to vacate the sublet Signature Not Verified Digitally Signed Signed by: GITANJALI NAYAK Reason: Authentication Location: OHC Date: 12-Dec-2025 17:51:42 portion of the premises and to resume the originally Page 5 of 13. sanctioned activity. By a further letter dated 11.09.2015 (Annexure-26), the Petitioner was called upon to comply with all terms and conditions within six months, failing which the cancellation would stand revived. Aggrieved thereby, the Petitioner has approached this, Court. A. Submissions on behalf of the Petitioner 12. Learned counsel for the Petitioner submits that the Petitioner had operated the tyre-retreading unit for nearly 25 years, but owing to severe financial distress and policy-related constraints, it was compelled to temporarily sublet the premises for warehousing purposes. It is further submitted that warehousing has been included as an "industrial activity" under the Industrial Policy Resolution (IPR) and that IDCO has issued circulars dated 24.10.2014 and 01.07.2015 governing regularization of change of activity and fixation of land rates for warehousing projects. These assertions, made at paragraph
Decision
16 of the Writ Petition, have not been specifically denied in the counter affidavit. 13. Ld. Sr Counsel further contends that the Petitioner had requested change of use even prior to the revocation order dated 21.03.2015, vide its representation dated 15.01.2015, and that IDCO itself acknowledged the possibility of regularization by revoking the cancellation. It is argued that Signature Not Verified Digitally Signed Signed by: GITANJALI NAYAK Reason: Authentication Location: OHC Date: 12-Dec-2025 17:51:42 directing the Petitioner to vacate the premises and resume Page 6 of 13. tyre-retreading, without considering its request for change of activity, is arbitrary and contrary to IDCO’s own policies. Reference is made to Paragraph 16 of IDCO’s counter affidavit, wherein IDCO admits having permitted change of activity in favour of other similarly placed entrepreneurs. It is submitted that the Petitioner stands ready and willing to comply with all terms and conditions for regularization of warehousing activity, and has expressly undertaken so in the Writ Petition. Therefore, denial of similar treatment to the Petitioner is alleged to be discriminatory and unreasonable. 14. Learned counsel reiterates that IDCO refused to regularize the Petitioner’s warehousing activity solely on the ground that the Petitioner had not strictly complied with the revocation order (Annexure-26). According to the Petitioner, this stance is hyper-technical, particularly when it has expressed its willingness to comply fully, and IDCO’s policy framework itself envisages regularization of change of activity upon payment of prescribed charges. Submissions on behalf of the Opposite Parties 15. Per contra, learned counsel for the Opposite Parties submits that IDCO had earlier issued a first show-cause notice dated 10.08.1992 for misutilization of the allotted shed by stacking coal therein. A second show-cause notice dated Signature Not Verified Digitally Signed Signed by: GITANJALI NAYAK Reason: Authentication Location: OHC Date: 12-Dec-2025 17:51:42 15.10.2011 was issued alleging breach of lease conditions, Page 7 of 13. including unauthorized subletting, non- utilization/misutilization of the premises, and unauthorized construction. The Petitioner responded vide letter dated 01.02.2012, admitting closure of the industrial activity w.e.f. 01.04.2011 and indicating plans to set up a new unit. 16. It is submitted that upon verifying the Petitioner’s submissions, IDCO discovered that Sheds S-3/7 and S-3/8 had been unauthorizedly let out to a cement company without prior approval. Accordingly, the Divisional Head, IDCO, Cuttack, issued a notice dated 17.03.2012 seeking the rental agreement, approved building plan for the additional constructions made without permission, and rent receipts. As the response was unsatisfactory, a third show-cause notice dated 31.05.2014 was issued. The Petitioner’s reply being inadequate, cancellation of allotment was ordered on 19.08.2014. 17. It is further contended that the Petitioner sublet the sheds to M/s. Ultratech Cement Ltd., which is neither an IT/ITES nor an industrial unit falling within the permissible categories. The Petitioner submitted only the rental agreement and a processing fee of Rs.5,000/-, but failed to submit other mandatory documents such as PRC/EM-I/EM-II from DIC, as required under Clause 2 of Circular No.25392 dated Signature Not Verified Digitally Signed Signed by: GITANJALI NAYAK Reason: Authentication Location: OHC Date: 12-Dec-2025 17:51:42 Page 8 of 13. 23.12.2010. The Petitioner also failed to provide approved building plans for unauthorized constructions. 18. On account of these deficiencies, IDCO did not encash the processing fee, and the request for subletting could not be considered. The Petitioner had itself admitted in its reply to the show-cause notice dated 15.10.2011 that due to heavy financial losses it had let out the sheds without approval which was a clear violation of IDCO norms. 19. It is further submitted that the rent agreement submitted by the Petitioner lacked the seal and signature of the alleged tenant company, raising doubts about the genuineness of the document. This was communicated to the Petitioner vide letter dated 05.04.2012 (Letter No.1386). As the Petitioner failed to comply with the checklist and mandatory requirements, processing could not be undertaken. 20. Learned counsel also submits that there is no record of any tenancy agreement with M/s. Ambuja Cement Ltd., despite the Petitioner’s averments in the Writ Petition. After the 2014 show-cause notice, the Petitioner submitted rent receipts only for 20.06.2011 to 31.03.2012 relating to Ultratech Cement. Upon physical inspection, it was found that the sheds were being used exclusively as a cement godown, contrary to the sanctioned purpose of tyre-retreading. The Petitioner also Signature Not Verified Digitally Signed Signed by: GITANJALI NAYAK Reason: Authentication Location: OHC Date: 12-Dec-2025 17:51:42 Page 9 of 13. failed to furnish approved plans for the additional structures erected within the sheds. 21. It is further submitted that upon due consideration of the Petitioner’s application dated 15.01.2015, the Opposite Party No.2 / the Chief General Manager (MSME), IDCO, revoked the order of cancellation earlier issued by the Divisional Head, Cuttack Division, subject to strict compliance with the following conditions: a) The Petitioner shall resume and utilize the leasehold property for the purpose for which the sheds were originally allotted, i.e., Tyre Retreading, within a period of six months, and submit documentary proof evidencing such utilization; b) The Petitioner shall vacate the cement godown and remove all subletting arrangements with third parties; c) Any unauthorized construction raised within the premises shall either be demolished or approval shall be obtained from the competent authority; and d) The Petitioner shall deposit a sum of Rs.1,02,500/- towards damages for the cancellation period. Signature Not Verified Digitally Signed Signed by: GITANJALI NAYAK Reason: Authentication Location: OHC Date: 12-Dec-2025 17:51:42 Page 10 of 13. Additionally, the Petitioner is required to furnish an undertaking in the form of an affidavit on non-judicial stamp paper worth Rs.21/-, affirming that the cement godown and all subletting arrangements had been vacated and that industrial activities would be resumed within six months. Although the Petitioner deposited the damage charges of Rs.1,02,500/- vide A/c Payee Cheque No.158065 dated 07.05.2015 drawn on Axis Bank Ltd., it did not comply with the remaining conditions, nor did it furnish the requisite affidavit. Consequently, IDCO issued Letter No.6176 dated 21.03.2015, directing the Petitioner to comply with the terms of the revocation order. As there was still no compliance, IDCO issued Letter No.11220 dated 21.05.2015, and thereafter Letter No.20609 dated 11.09.2015, granting further time of six months to fulfil the stipulated conditions, failing which the cancellation would stand revived in accordance with the revocation letter. 22. In these circumstances, although the Petitioner has expressly stated in Para 19(a) of the Writ Petition that it is willing to comply with all conditions prescribed by IDCO for change of activity to warehousing, it has failed to act upon the revocation order within the time permitted. Instead, the Petitioner has chosen to challenge the same before this Court. Page 11 of 13. Signature Not Verified Digitally Signed Signed by: GITANJALI NAYAK Reason: Authentication Location: OHC Date: 12-Dec-2025 17:51:42 According to the Opposite Parties, such conduct renders the Writ Petition devoid of merit. 23. With regard to the issuance of the show-cause notices and the subsequent cancellation order, it is contended that Opposite Party No.3, and not Opposite Party No.2, is the competent authority to issue such notices. As per the norms of IDCO, show-cause notices are issued when deviations are noticed, such as non-operation of industrial activity, utilization of premises for purposes other than those sanctioned, or violation of lease covenants. If the explanation furnished is unsatisfactory, the Divisional Head, being the competent authority under the Corporation Rules, is empowered to cancel the allotment. It is therefore submitted that the impugned actions are valid and the Writ Petition is liable to be dismissed. 24. Having heard learned counsel for the parties and upon perusal of the pleadings, and without entering into the merits of the factual disputes involved, this Court directs as follows: i. The Petitioner shall remove the entire structure erected by the cement company and vacate the godown within a period of two weeks from today. ii. The Petitioner shall thereafter comply with all the Signature Not Verified Digitally Signed Signed by: GITANJALI NAYAK Reason: Authentication Location: OHC Date: 12-Dec-2025 17:51:42 conditions stipulated in the revocation and Page 12 of 13. consequential notices dated 21.03.2015, 21.05.2015, and 11.09.2015 (Annexures–22, 25 & 26), and shall resume the industrial activity for which the sheds were originally allotted. iii. If the Petitioner intends to shift to any other industrial or commercial use, it shall obtain prior written permission from IDCO and deposit the applicable charges as prescribed. If the damage charges have already been paid, no further demand shall be insisted upon on that account. 25. In the event of non-compliance within the stipulated period, it shall be open to IDCO to take over the land and premises in accordance with law, without further reference to this Court. 26. The Writ Petition is accordingly disposed of. 27. Any interim order passed earlier stands vacated. Judge (Dr. Sanjeeb K Panigrahi) Gitanjali Signature Not Verified Digitally Signed Signed by: GITANJALI NAYAK Reason: Authentication Location: OHC Date: 12-Dec-2025 17:51:42 Page 13 of 13.