The State of Haryana & Anr. v. DCM Limited, Kanchenjunga Building & Anr.

The appellants contested the writ petition by asserting Letters Patent Appeal No. 890 of 2011 (O&M) 9 that as the company has not raised any construction or set up industry on the vacant land, it is guilty of violating covenants of the conveyance deed, thereby conferring a legitimate right on the government to resume vacant land. The writ petition has been allowed, the impugned orders and notices quashed by holding that power to resume is not absolute. The obligation to establish a textile mill was fulfilled and as the conveyance deed does not require the company to raise construction on every inch of the land, the order of resumption is illegal. It was also held that the mere filing of an an application for permission to sell a part of the land and buildings, does not raise an inference that the company has violated any covenant of the conveyance deed. It was also held that a notice of breach of the covenant and order of resumption could not be set into motion on the same day. The impugned judgment, in essence, holds that the company was not in breach of any covenant of the conveyance deed, so as to attract an order of resumption. The HSIDC and the HUDA have filed separate appeals, raising the following pleas: (i) the government was justified in resuming 250 acres of vacant land as the company failed to utilise this land; (ii) the learned Single Judge has erred in failing to appreciate that the conveyance is not absolute as it is subject to the right of the government to resume the land, if the vendee does not perform its obligation; (iii) though the company set up a textile mill, but as land, Letters Patent Appeal No. 890 of 2011 (O&M) 10 measuring 250 acres remained unutilised and vacant, it would raise an inference that the company has violated covenants of the conveyance deed, thereby conferring a legitimate right upon the government to order resumption of the vacant land. Counsel for the appellants contend that in view of the admitted existence of a clause in the conveyance deed requiring parties to approach the Financial Commissioner in case of any dispute, the learned Single Judge has wrongly held that there is no justification for referring parties to the Financial Commissioner, at this belated stage. It is also argued that the application for permission to sell vacant land is an admission that the respondent has not used this land and has violated covenants of the conveyance deed. The mill is not functioning and a large tract of the land has remained vacant since 1955-56. The power to resume arises from the conveyance deed and binds both parties. The contract was executed, obligations and liabilities determined and, therefore, the respondent cannot, after 50 years, plead that there is no right of resumption, but only a right to ensure that the project is executed as envisaged. The interpretation assigned in the impugned order would defeat the very purpose of the conveyance, i.e., industrialization. As the respondent could only use 150 acres of land, the State was well within its right to severe that part of the land, which remained unutilised and order its resumption. It is further submitted that the learned Single Judge has referred to a need for future expansion and, while doing so, has held that the conveyance deed does not require every inch of the land to be built up. The learned Single Letters Patent Appeal No. 890 of 2011 (O&M) 11 Judge, while holding as such, lost sight of the fact that if a large chunk of land, i.e., 250 acres remains vacant without setting up a mill or any possibility of such a Mill being set up, the government in exercise of its power to resume the property, in accordance with the contract, cannot be faulted. Counsel for the respondent, on the other hand, submits that the impugned order does not suffer from any error of jurisdiction or of law as would require interference. The action of the State Government in ordering resumption is mala fide. The findings recorded by the learned Single Judge, by referring to powers of the government and inter se obligations of parties are a correct interpretation of the law and the conveyance deed. Even if it is presumed that the conveyance deed confers an absolute power upon the government to resume property, the mere fact that some land has been left vacant, does not detract from the fact that the mill was set up, remained functional, for three decades, a large number of ancillary units, infrastructural facilities, like staff houses, building, sewage treatment plants, tubewells, power generation units, school etc., are in existence. An industrial concern grows over a period of time. The respondent-company submitted a proposal for revival of the company by sale of a part of the vacant land and at one stage, a proposal was invited to shift its factory from Delhi to Hisar, thereby clearly establishing that the respondent intended to utilise the land for purposes set out in the conveyance deed. It is also contended that the appellants have failed to place any material, on record, to show that the land which was resumed, was entirely Letters Patent Appeal No. 890 of 2011 (O&M) 12 vacant. A reference to the site plan appended with the original writ petition clearly reveals that the land was not entirely vacant and only a part of the land was left vacant, for future construction. The so called vacant land is used as a green belt, sewage treatment plant, houses, colonies etc. It appears that apart from the actual structure of the mill, the appellants have treated the other land as vacant. It is prayed that as the impugned order is legally correct, appeals should be dismissed. We have heard counsel for the parties at length, perused the impugned orders as well as the entire paper-book. Admittedly, 400 acres of land was sold to the respondent company pursuant to a conveyance deed dated 23.5.1996 for setting up a textile mill. The government delivered possession and as admitted, the respondent-company set up a textile mill, which came into production in the late 1950's and continued to operate for three decades upto 1984. It is not denied that the management of the mill constructed offices, residences for officers and staff, a sewage treatment plant, installed tubewells, a power generation plant, various other ancillary units, a school, two brick kilns etc. within the complex. It is, therefore, apparent that the respondent-company fulfilled its obligation to set up by a mill which remained operative upto 1984. For reasons of serious industrial unrest, detailed in the writ petition, coupled with the economics of running a textile mill, the mill was eventually shut down. The respondent-company filed an application to the government for sale of a part of the vacant land and building in an attempt to revive the mill. The application Letters Patent Appeal No. 890 of 2011 (O&M) 13 remained pending for almost three years before it was rejected on

27.4.1988. The government, thereafter, constituted an inspection team and after submission of a report, passed an order, in exercise of its powers, under clause 7 of the conveyance deed, cancelling the conveyance deed with respect to 250 acres of vacant land. The order cancelling allotment with respect to 250 acres has been set aside. An argument that as the respondent-company has violated terms and conditions of the conveyance deed by failing to raise any construction on 250 acres, in our considered opinion, disregards admitted facts that the textile mill, admittedly, came into operation and functioned from the late 1950s to 1984. The appellants do not plead that a mill did not come into operation but only plead that as part of the land remained vacant, the respondent-company has violated its obligation. The fact that 250 acres of land may have remained vacant, in our considered opinion, does not confer any right upon the government to resume this land. The learned Single Judge has rightly held that the conveyance deed did not place an obligation upon the company, to raise construction over every inch of the land. The only obligation was to set up a textile mill, which, admittedly, was set up and remained in production for about three decades. The respondent-company set up all necessary infrastructure as detailed in the operative part of the order and, therefore, cannot be said to have violated the conveyance deed. The covenants in the conveyance deed which place a restriction on the right of ownership, have to be construed strictly and it is not every and any alleged violation, that would invite resumption but a violation Letters Patent Appeal No. 890 of 2011 (O&M) 14 so fundamental as would travel to the foundation of the deed. The appellants could order resumption if the company had failed to fulfil its obligation to set up a textile mill. It is not denied that a textile mill was set up and remained functional till 1984. The fact that a part of the land was not put to use, in our considered opinion, is inconsequential and would not entitle the government to allege that the conveyance has been violated thereby conferring upon the Government a right to order resumption particularly when, it is admitted that a textile mill was established and remained functional. The fact that the respondent-company sought to transfer a part of the land, in our considered opinion, would not bring into play any clause of the conveyance deed or raise an inference that there was such a violation as should entail resumption. Admittedly, the factory and the premises came up and were used for the purpose for which the property was conveyed. A period of over three decades had elapsed before the government invoked the resumption clause, setting into motion a show cause notice to comply with conditions of the conveyance deed. The breach of covenants, as alleged, was a mere excuse to seek possession of the property duly established by a vital fact that notice of resumption was passed on the same day as the show cause notice was issued for compliance. The power of resumption, even where statutorily prescribed, is a last resort available against a person who, repeatedly, fails to comply with his obligations. We, therefore, have no hesitation in holding that findings recorded by the learned Single Judge with respect to the clause that Letters Patent Appeal No. 890 of 2011 (O&M) 15 envisages resumption and the finding that the order of resumption was not warranted, do not suffer from any error, whatsoever, as would require interference. The argument that in view of the arbitration clause, the writ petition should not have been entertained, was duly considered, dealt with and rejected, primarily, on the ground that the lis has been pending for the last more than two decades and exclusion of writ jurisdiction, even by an arbitration clause, is not absolute. We find no reason to differ with the opinion or to hold to the contrary and relegate parties after more than two decades, thereby initiating another round of litigation. In view of what has been stated hereinabove, the appeals as also the application, filed under section 5 of the Limitation Act, for condonation of delay of 226 days in filing the appeal (in LPA No.890 of 2011), are hereby dismissed. No costs. ( RAJIVE BHALLA ) JUDGE October, 2012 ( REKHA MITTAL ) JUDGE VK/ avin